Desdelsur’s trade manager sees signs of growth in Argentina’s domestic pulse market.
Tell most Argentines that their country is a major exporter of pulses and you are likely to get a surprised reaction. On average, the South American nation exports at least 600,000 MT of pulses per year but consumes a paltry 700 to 750 grams per capita according to CLERA, the pulse industry’s national association. That compares to the world average of 7 kg per capita.
In Argentina, meat is king and the typical Argentine rarely encounters dry beans, dry peas, chickpeas and lentils at mealtime. Most of the population is therefore completely unaware of their country’s importance in the global pulse trade.
For decades, in deference to the country’s meat-eating tradition, Argentina’s pulse industry has been almost entirely export-oriented, producing black beans for Latin American markets at first and then expanding into the Mediterranean region with its prized alubia beans. More recently, it has added chickpeas and peas to the mix of pulses it grows primarily for export.
But at Desdelsur, a leading exporter of chickpeas and cranberry beans, and a GPC Gold level partner, trade manager Matías Macera sees potential in the overlooked domestic market.
“When we talk about Argentina’s pulse consumption, it amounts to no more than 35,000 MT per year, and half of that is lentils,” he says.
Yet even in a country renowned for its steak, the global trend towards plant-based eating is making inroads. It’s a phenomenon that has been accelerated by the COVID-19 pandemic.
“Because of the coronavirus, we have seen a marked increase in domestic demand,” says Matías. “I think this year we will see the consumption of pulses in general increase by 50%.”
The GPC reached Matías by telephone soon after the planting of Argentina’s chickpea crop and spoke with him about his experiences in Argentina’s pulse sector.
GPC: Tell us a bit about your professional background and how you got your start working with pulses.
Matías: I come from a marketing and advertising background. Ten years ago, I had a digital marketing firm that operated for nearly five years. Then we sold it to a Brazilian company. After that, I was looking to do something new, and my Uncle José and my father [Guillermo Macera] offered me a sales position in the family company, Desdelsur.
Desdelsur is very much a family operation. Relatives of mine run the key operations of the company, from the administrative side to the coordination of production to the financial aspects of the business. Because we are all family, we have a lot of faith in each other. It can be a challenge working with relatives, but in our case, everything is well coordinated and runs smoothly. Everyone comes from a different professional background that fits in with a central area of the company, making it a very productive operation.
GPC: In your case, how has your background helped you in your position?
Matías: Marketing and advertising demands creativity and an outgoing personality. That has enabled me to establish good relationships and dialogue throughout the sector and with clients, which has translated into sales. I’ve also brought creativity into the business, generating new and different approaches that have led to new business. I attribute a lot of my success to my background in marketing and advertising.
GPC: What is the best part of your job?
Matías: The interaction with such a great diversity of cultures and clients makes the job dynamic and attractive. It also gives you the opportunity to travel the world. Desdelsur ships to more than 60 destinations. Between travel to visit clients and to attend fairs and conferences, you get to visit many different countries. Right now, of course, all that is on hold because of the COVID-19 pandemic, but through all my travels, I’ve made personal friendships and that is a very gratifying part of the job.
GPC: Outside of work, what do you like to do in your spare time?
Matías: I love to cook, host friends, workout, play golf, ride motorcycles. But above all else, I like to spend time at home with my family.
We have three small children and at home and they love to eat pulses. We eat them practically every day, mostly as salads. There is always a Tupper full of pulses in the fridge.
GPC: Tell us about Desdelsur, especially about its history and involvement with pulses.
Matías: The company was founded 35 years ago by my uncle, José Macera. He used to be the general manager of the old Grain Board in Argentina, and making use of his international connections, he began developing his own business. He started buying land in the northern province of Salta and brought my father on board to be part of the project.
Over the years, Desdelsur has seen steady growth. Today, we own around 56,000 hectares in Salta, of which 28,000 ha. are farmed and the rest are set aside as a forest reserve. Desdelsur has two business divisions. About 60% of our business is agricultural production, focused mainly on pulses. The other 40% is cattle raising. We got into the cattle business about 15 years ago. We have a feedlot of 60,000 head of cattle and are looking to expand it to 80,000 head.
The two sides of the busines complement each other. We grow corn as feed for our cattle and also incorporate discarded pulse production into the feed formulations. And the cattle side gives the agricultural side stability, because, unlike agricultural production, the cattle business is constant all year around and is not weather dependent. So, they complement each other nicely.
GPC: And how did the company get into the pulse business?
Matías: My uncle had contacts in Mexico and the company started out selling sunflower oil into that market. Then it rented 300 ha. of farmland to grow black beans for the Mexican market and the company grew from there, buying land in Salta over the years.
Today, in terms of summer pulse crops, we also work with alubia beans, cranberry beans, dark red kidney beans, light red kidney beans, black-eye peas, mung beans and adzuki beans. And as winter crops we grow chickpeas, peas and lentils. The company produces about 50,000 MT of pulses a year, including 20 – 25,000 MT of chickpeas.
We grow chickpeas in Salta, but the major growing area is further south, in the Province of Córdoba. This year, however, because of the dry conditions, I would estimate 60% of the chickpea crop was seeded in Salta and other northern provinces, and only 40% was seeded in Córdoba.
But historically, Córdoba is where the bulk of Argentina’s chickpeas are grown. When we started working with chickpeas, we would buy product from Córdoba, and since it didn’t make sense to truck it up to Salta for processing, we set up a state-of-the-art plant in the port city of Zárate in Buenos Aires Province. Now that plant processes all of our chickpeas and also a good part of our beans.
We produce half of the chickpea crop on dryland and half under irrigation on rented fields. That gives us stable production and enables us to work with clients who want long-term contracts. We also have certifications that give us entry into markets that demand high quality. And we work with organic chickpeas. This year we are producing 3,000 MT of organic chickpeas for clients in the U.S. and Canada. Our organic chickpeas are vacuum packed for a longer shelf life.
We also produce peas and lentils as winter crops. Those crops are grown in Buenos Aires Province, near the Zárate plant.
I should add that we recently inaugurated a fractionation plant to offer our clients product in different sized bags as well as to package pulses under our own brand, DDS, which we started selling into the retail market here in Argentina and in neighboring countries, especially Chile, just this year.
GPC: Argentina is known more as a meat-eating country. Are there opportunities for pulses in the domestic market?
Matías: Yes. With the COVID-19 pandemic, consumption is definitely up. At the fractionation plant, demand is quintuple what we expected. We have three shifts running the plant 24/7. Right now, we are incredibly busy with export demand, which is also up because of COVID-19. At the same time, we are getting strong domestic and regional demand from supermarkets, distributors, NGOs and government buyers.
Pulses are an economical source of protein. Whenever there is a crisis, demand increases. But the trend was there even before the pandemic hit. Like in other parts of the world, people here are looking to eat healthier and are increasingly reducing their meat intake. For some time, health and organic food stores had been asking us for packaged product, and the launch of the DDS brand was in response to that.
If we consider just chickpeas, the hummus sector has had tremendous growth everywhere and Argentina is no exception. Five years ago, there were practically no hummus brands to be found here. You might see imported Israeli hummus from time to time at certain supermarkets. Fast forward to today and now you can find five or six locally produced brands. There are also several food companies here that are making vegetarian patties with legumes and pulse-based pastas, all of which is driving up demand here at home.
As a producer and exporter, we hope to see a healthy domestic market develop to help balance export prices. When the entire sector exports at the same time, that puts strong downward pressure on prices. But if you have steady local clients, you can better administer your sales.
GPC: Speaking of chickpeas, planting wrapped up recently. How is the crop coming along?
Matías: We had dry conditions at planting. Up north in Salta, the chickpea crop largely depends on the bean crops grown right before it. This summer, the beans got very little rain in April and May. We ended up with low yields and small caliber sizes. In Córdoba we also planted the chickpeas into ground with low soil moisture profiles. The scarcity of moisture is an issue because in Argentina not more than 25% of the chickpea crop is planted on irrigated lands. This year, that percentage may be a bit higher because many growers decided against planting chickpeas on dryland.
In a normal year, Córdoba seeds 65-70,000 ha. to chickpeas and Salta and other northern provinces another 35 – 40,000 ha. This year, I estimate that the chickpea area is down at least 50% and probably closer to 55% compared to last year. Based on our surveys, about 18 – 19,000 ha. were seeded to chickpeas in Córdoba and another 22,000 ha. in northern Argentina. All told, about 40,000 ha. were seeded to chickpeas this year, 70% of which are on dryland and will likely see reduced yields. Production, therefore, will be down even more significantly.
GPC: How do you see the market outlook for Argentine chickpeas this year? Are there old crop stocks remaining?
Matías: We have about 15,000 MT of old crop left, but half of that is not suitable for export and the rest should be gone by the time the new crop is harvested given the strong demand we are seeing, especially from Chile. So, we will start the 2020/21 campaign with zero carry-in.
Looking at chickpea production around the world, it has been reported that the chickpea area is down 30-33% in North America. I suspect the reduction is even greater than that. North America enters the marketing year with burdensome carry-in, but the reduced area should bring some balance to their supply-demand situation. In Mexico, they had a small crop and inventories are expected to sell well before the next harvest. Large caliber chickpeas are going to be in short supply, and we will see a bigger price gap between them and the smaller caliber chickpeas. Lastly, in Turkey, production is estimated at 250,000 MT, with internal consumption of 200,000 MT.
In my view, then, the market outlook is likely to improve as supplies tighten. I see a chance for prices to recover in 2021.
GPC: What are some of the challenges facing Argentina’s chickpea industry?
Matías: For some time now, Argentina has been an established player in the global chickpea trade, supplying even the most sophisticated European markets. We have a good reputation as a chickpea origin, and we need to maintain the quality of our production to keep that up.
We strive to maintain a steady client base, and that basically means supplying industrial customers. These customers demand stability in terms of quality and homogeneity. In recent years, we had some excessive rains that limited our supplies. We need to work hard to remain a reliable supplier that can meet client specs and therefore secure long-term contracts.
Argentina is now an important supplier for millers and hummus makers. The trend in Argentina is towards producing larger chickpeas. Historically, Argentina’s caliber distribution has been 15% of 7 mm, 70% of 8 mm and 15% of 9 mm. Today, that has improved to 15% of 7 mm, 50% of 8 mm and 35% of 9 mm.
At Desdelsur, we are conducting trials with larger caliber varieties and have produced 10 mm chickpeas on test plots.
GPC: As a longstanding member of the GPC family, what is the most satisfying aspect of your involvement with the organization?
Matías: It is especially gratifying to be in contact with the big decision makers in the industry. And when you have a prolonged engagement with the organization like Desdelsur has, you develop trust and lasting relationships, and you end up doing business with clients with which you have a certain degree of friendship, which makes the job all the more enjoyable.
It is also inspiring to see the GPC grow from one annual convention to the other, and to see it embrace new technologies. The GPC has created an environment where industry members can feel comfortable interacting with each other, and I look forward to being involved with the organization for many more years to come.