Pulse producers urged to be patient as supply chain issues bite

A shortage of shipping containers in particular is hurting legume exporters, with a far larger percentage of pulses exported in containers as opposed to bulk shipments than with commodities such as wheat.

Working through the supply chain this has meant limited inquiry for pulses at a farmgate level as exporters deem it too risky to write business given the current uncertainties regarding export executions.

"Farmers may have to be patient this year and wait for the logistics situation to improve," said Wilson International Trade director Peter Wilson.

He said the production sector was in a reasonably good position as they could satisfy cash flow requirements with wheat and canola, both at exceptional prices.

However, he said there were concerns for pulse buyers and exporters.

"The logistical constraints are everywhere, you can't get containers, there is difficulty getting shipping slots because of the demand for the bulk commodities, so you don't have to have much go wrong and you go from having a margin to a negative margin," Mr Wilson said.

"It's a concern as a lot of these middle men have some fairly hefty assets in concrete and steel so they want to be out there selling product."

There have also been issues getting containers up-country, with tight time lines for loading anything headed to port as freight lines look to keep limited container stocks moving.

He said while demand was there it was nowhere to the level seen in other commodities.

"We've seen the bad harvest in North America so India and the subcontinent in general is looking at our product but it is not at the levels I think some people believe it is," he said.

Old crop lentils hit prices of up to $1150 a tonne, but this does not guarantee good returns when the new crop comes online as pulse exporters are worried about getting shipping slots.

In other commodities, such as chickpeas and faba beans the prices are nowhere near as buoyant and farmers are expected to have to wait to make large scale sales post-harvest.

However, he said for commodities such as field peas, lupins and faba beans the local livestock feeder domestic market would continue to have an appetite for product creating some sales and clearing storage space.

Nick Goddard, Pulse Australia chief executive, said the industry had to be prepared for the logistics issues to drag on for some time.

"This issue with the supply chain it is not something that is going to be resolved quickly," Mr Goddard said.

He said on-farm storage could prove critical for farmers with pulses.

"Pulse producers often store their product for some time given the big price swings you can see, so it is not something foreign to them," he said.

"This year you would suggest a lot of the wheat and canola will be sold and that they may sit on their pulses and wait for things to become a little clearer on the logistics front."

"Speaking to the traders, India has become open for our lentils which is great but we haven't necessarily been able to meet that demand, the issues with shipping mean we probably haven't taken a great deal advantage of that," he said.

Mr Wilson said the situation off the west coast of America where hundreds of thousands of 20 foot equivalent containers were left stranded was having a huge flow-on impact.

Shortages of truck drivers and equipment such as trailers have contributed to the container 'traffic jam'.

"There's 700,000 20-footers sitting there and you can see how the problems work back down the line to our current situation where you've got vessels by-passing ports and a real uncertainty about what is happening."

Mr Wilson said he was not optimistic of a quick resolution, in spite of an easing in the COVID-19 crisis in many parts of the world.

"If the US stimulus package is passed, well we ain't seen nothing yet, that will drive container rates to further highs and it's going to remain tough for pulse exporters," he said.

Sean Barker, GrainCorp general manager of domestic commercial, said while his organisation traditionally focused on bulk grain it was aware of the issues in the pulse sector.

"We hear other storage and export channels that have traditionally focused on field peas, faba beans and lupins may be facing challenges," Mr Barker said.

Start the day with all the big news in agriculture! Sign up below to receive our daily Farmonline newsletter.