Chickpeas – perfectly positioned

Perspectives

Chickpeas – perfectly positioned

Agribusiness Bulletin

In this Agribusiness Bulletin, we look at the rise of chickpeas from an agronomic and economic perspective and why there has been a national move away from planting wheat and barley.

The Agribusiness Bulletin

The Agribusiness Bulletin focuses on national and local industry, as well as cross-industry insights and trends. This includes some of the drivers we expect to shape the future of the industry and potential challenges that may arise. To get more articles like this delivered straight to your inbox subscribe to the Agribusiness Bulletin.

Receive the Agribusiness Bulletin

Subscribe here

Chickpeas – perfectly positioned

The crop planting decision is a simple one that tends to be based on market price signals and seasonal conditions. So when farmers were making their planting decisions for the current winter crop they would have observed lower wheat and barley prices (compared with recent years) and wheat and barley prices less favourable than other winter crop options.

On the farm, drier soil moisture conditions were present across many winter cropping areas as a result of a long, hot, dry summer. However, there were prospects of a late seasonal break during the winter planting window as the prevailing El Nino conditions were forecast to break down.

An important distinction to make is that the seasonal cycles affecting Western Australian crops are not similarly effected by El Nino weather patterns. However, the nature of the soil types in farming areas is such that timely autumn rainfall is essential to planting programs. Thankfully, the autumn rain did arrive and the total area planted to winter crops in Western Australia is consistent with recent years.

In short, farmers were far less tempted to plant wheat or barley this year and their actions have been even clearer according to mid-season ABARES figures published in their Australian crop report June 2016:

The area planted to wheat in expected wheat area would fall by 75,000 hectares (6% of last year’s planted area), of which 35,000 fewer hectares were in New South Wales and 25,000 fewer hectares in Western Australia

The area planted to barley area would fall by 53,000 hectares – 90% of the reduction in planted area was in South Australia and Western Australia.

Given fewer wheat and barley hectares, does that mean a smaller winter crop for Australia? Well, no. The total area planted to winter crops increased by 1% to 12.7 million hectares and total winter crop production is forecast to increase a whopping 7% to 42.3 million tonnes.

Making the switch

At the national level, there has been a material switch away from wheat and barley this year but which crops have gained hectares and why?

  • In Western Australia, farmers have switched in the north to canola, and in other areas to oats and lupins
  • In South Australia, the switch has been to lentils
    In Victoria, more hectares were planted to canola, oats and lentils
  • In Queensland and New South Wales, we’ve got a record area planted to chickpeas of collectively nearly 700,000 hectares (with forecasters hoping the Australian crop will break 1 million tonnes for the first time).

Across Australia, all other winter crops (that is, excluding wheat, barley and triticale*) have increased planted areas this year. In forming an answer to the ‘why switch’ question, there are actually several questions to consider.

  1. Why not wheat or barley given these are the mainstay winter crops? The short answer is price. At the time planting decisions were being made, both wheat and barley were less attractive (in a price sense) than virtually any other winter crop option.
  2. Why any other crop? Again, it came down to price. At the time planting decisions were being made, any other winter crop stacked up very favourably to wheat and barley.
  3. Given the strong price signals for any other crop, why not go ‘all in’ and switch a larger planted area to any other crop?
  • Firstly, there is only so much quality planting seed available in Australia for the other crops. Additional seed could be sourced from overseas, but it is subject to lead times, varieties especially suited to Australian growing conditions, and biosecurity and quarantine restrictions such that it’s commercially difficult to secure large volumes of suitable seed on short notice.
  • Secondly, the maturity of the wheat and barley markets is such that there is underlying demand for these grains year in year out. Australia remains a significant exporter of wheat and barley, coupled with growing domestic demand and little historical evidence of importing grain to fill any domestic shortfall.
The rise of chickpeas

Finally, a look at the strength of the chickpea market and why so many hectares in Queensland and New South Wales have been planted to chickpeas this year.

An agronomic perspective

Chickpea is a deep-rooted plant which can extract soil moisture from depths that wheat and barley crops struggle to. This means they are likely to grow better than more shallow-rooted crops when the upper soil layers are dry but there is moisture at depth (i.e. following a long, hot, dry summer and El Niño type conditions). These soil conditions were present across large areas of southern Queensland and northern New South Wales at the time planting decisions were made.

Chickpeas do need to be able to access the moisture at depth which can result in deeper seed planting depth, more seeds planted per hectare and lower seedling emergence rates. But with quality soils and appropriate planter configurations, chickpea crops in Queensland and New South Wales have been performing well so far this season and appear to be on track to achieve record (or near record) yields.

A market perspective

Australia supplies around three quarters of India’s chickpea imports. Following two disastrous Indian chickpea crops, and the next crop not due for harvest until March-April 2017, there is a significant shortage of chickpeas currently being experienced in India. Local market prices are reportedly two-thirds higher than this time last year with prices continuing to rise. The immediate response from Indian farmers is to increase the area planted to wet-season legumes – somewhat of a substitute for chickpeas that will be harvested in October-November 2016. Later in 2016, Indian farmers are expected to plant their own record chickpea crop by area.

Conclusion

The particular seasonal agronomic advantage and strong market price signals provided the perfect situation for a potential record Australian chickpea crop (by volume) and significant returns to Australian growers (prices seem to peak just before the $1,000 per tonne mark).

In recognition of this confluence of favourable prices and favourable production (so far this season), and that such a happy confluence happens all too infrequently in agribusiness, we think many Australian farmers will celebrate 2016 as the unofficial year of the chickpea.

* Triticale is grown on a very small scale (relative to other crops discussed in this article) and the area planted from year to year is historically volatile.

Author

Jackie White

Did you find this useful?