Research

Pulses remain niche but show potential for growth

27 August 2024 11:40 RaboResearch

Vito Martielli

Senior Analyst – Grains & Oilseeds

Pulses remain a niche segment in the grains and oilseeds market, but rising demand is creating new opportunities for new and established market players.

Pulses: A niche and fragmented segment within the global G&O industry

Global pulse production is estimated at around 100m metric tons annually, a niche compared to the other major grains such as corn (1.2bn metric tons), wheat (0.8bn metric tons), and rice (0.8bn metric tons). Pulses encompass some 20 different kinds of crop varieties. However, the major varieties of pulses are produced and exported by just a few major countries. The major pulse crops are chickpeas, dry peas, and lentils, which account for 40% of total global pulse production (see figure1). While chickpeas are mainly produced in India, the production of dry peas and lentils is more fragmented and mainly takes place in five other countries.

Figure 1: Global production of key pulses, ranked by major exporters, 2021/22-2024/25f

Fig 1 — Source: International Grains Council (IGC), RaboResearch 2024

Ever-increasing global demand and trade

There are two major factors driving demand for pulses globally:

Increasing consumption of pulses in emerging markets, as a key and cheap source of protein.

Increasing consumption of pulses in developed countries. This comes from pulses being a central ingredient in plant-based meat and dairy substitutes.

Global pulses trade has increased by 29% since 2015. From 2015 to 2024, the compound annual growth rate (CAGR) for trade was 3%. In 2024, global pulse trade is expected to reach approximately 21m metric tons (or 20% of global pulse production), according to the International Grains Council. However, these are relatively small volumes when compared to global wheat trade, for example, which stands at 210m metric tons. Dry peas, chickpeas, and lentils account for 68% of the total global trade of pulses (see figure 2).

Figure 2: Global traded volumes, 2024 estimates (20.8m metric tons in total)

Rabobank’s latest World Grains & Oilseeds Map included a map charting the global trade of pulses. As the map illustrates, there are just a few major players in both the export and import markets: Canada is the major exporter for dry peas and lentils; Australia plays a key role in the chickpea and lentils trade.

Future considerations for the pulses market

Pulses are relevant from a sustainability point of view

In addition to being an affordable source of protein for emerging and developed markets alike, pulses also tick a lot of boxes in making agriculture more sustainable:

They are nitrogen-fixing plants, and are therefore important for rebuilding soil fertility. In addition, pulses have the capacity to mobilize phosphorous and other nutrients essential to the soil. Their nitrogen-fixing capabilities come from absorbing nitrogen from the air, therefore absorbing greenhouse gases.

Pulses enhance soil structure, as their deep root system increases pore space and cohesion in the soil, increasing water-holding capacity and soil aeration.

Finally, pulses are an excellent rotational or cover crop. This adds to soil biodiversity by increasing microbial activity in the soil.

New market players are emerging in global trade

Trade flows are changing and we see new players emerging at the global level in both origination and destination.

Russia has increased its share of dry peas exports.

Argentina is now a key exporter of different kinds of beans.

Turkey has become a major hub in the Middle East and North Africa region for first-degree processing and pulses distribution.

Egypt is the largest buyer of fava beans globally.

Market transparency is needed to increase trade and attract more investments

Unlike grains, pulses are not (yet) considered commodities, and there are still barriers to entry in this niche industry. Prices are volatile and there is a lack of transparency in the price discovery process. In addition, there are few sources of data to provide market insights at a global level. Consequently, creating more market transparency will be the key to attracting investment to the industry, meeting the growing demand for pulses, and improving trade volumes and market functionality. These factors will help this growing niche industry to reach its full potential.