28 May 1999

PULSES: AGENDA 2000 HAS-BEENS?

Pulse prospects under Agenda 2000

are uncertain. Some say they face

a bleak future, while others firmly

believe pulse gross margins will

outpace oilseeds and second

wheats. Andrew Swallow reports

SPRING pulses are more profitable than winter oilseed rape on most farms – now, next year, and when Agenda 2000 reforms a finished – says Gerry Cook, managing director of Cebeco Seed Innovations.

But others in the grain and seed trade are not so certain.

"There is no doubt area will suffer in 2000," says Dalgetys oilseeds and pulse manager, Julie Goult. "At one time we were expecting the pulse area to drop by 50% under Agenda 2000, but we are not quite so pessimistic now."

After an initial dip in area the bottom line gross margins of pulses and knock-on benefits will maintain area at 80-100% of 1999 plantings, she estimates.

Based on high output figures from John Nixs Farm Management Pocketbook, the firm forecasts feed pea and bean margins in 2002 slipping to £473/ha (£191/acre) and £490/ha (£198/acre) for feed samples respectively. That compares with £529/ha (£214/acre) and £538/ha (£218/ha) for this harvest.

In contrast, Cebeco Seed Innovations figures for 2002 are £87/ha (£35/acre) and £46/ha (£19/acre) higher. But Banks Agriculture put a more pessimistic view, with gross margin calculations £72/ha (£29/acre) and £49/ha (£20/acre) lower than the Dalgety figure (see table).

Which will prove most accurate is open for debate. Much depends on the individual farm, stresses Miss Goult. Assumptions made must be matched with what is achievable on a growers own land.

Banks pulse and oilseed trader Graham Young echoes that point. "An inherent problem with gross margin forecasts is that they have to involve price assumptions. Our calculations assume the price of all non-cereal commodities stay the same," he adds.

Dalgety and Cebeco use constant prices, too, though the values differ slightly. Banks puts oilseed rape at £120/t, peas at £80/t, and spring beans at £82/t throughout. Dalgetys estimations are very similar, at £125/t, £80/t and £83/t, respectively, as are Cebecos at £120/t for oilseed rape and £85/t for both peas and beans on a feed basis.

The difference in gross margins forecast, and hence predictions on crop area, stems mainly from yields used and the variable costs applied.

Cebeco puts spring peas in at 5.3t/ha (2.1t/acre), and beans at 4.6t/ha (1.9t/acre). At the other extreme, Banks reckons a pea yield of 3.9t/ha (1.6t/acre) and 3.5t/ha (1.4t/ha) of beans to be prudent.

Cebeco puts pea variable costs at £179/ha (£72/acre) but Banks and Dalgety allow for £200/ha (£81/acre) on the feed crop. All three companies bean variable cost calculations are similar at £130-£140/ha, as are costs on winter oilseed rape at about £230/ha (£93/acre).

Area aid calculations, at £289/ha (£117/acre) for pulses and £251/ha (£102/acre) for oilseeds, are standard for 2002. But for harvest 2000 Banks believes Europe as a whole could fall short of the maximum guaranteed area of oilseeds. That would mean the oilseeds area aid is paid in full, at £351/ha (£142/acre) for harvest 2000, regardless of UK plantings.

Dalgety accept that is a possibility. In that event, their harvest 2000 oilseed rape gross margin forecast is boosted to a best case £652/ha (£264/acre). "But I certainly would not like to say which it is going to be," adds Miss Goult.

A point in favour of pulses is the chance to add value. Marrowfat peas, yielding 4.2t/ha (1.7t/ha) at £135/t, boost margins to £638/ha for 2002, according to Cebeco. "And there are new semi-leafless varieties coming through that stand better," says the firms Jonathan Wall.

Good samples of pea varieties such as Lantra or Elan can make micronising premiums, adding £50/ha (£20/acre) to margins with yields close to the highest feed types, says Miss Goult. "£10/t is not an optimistic premium on these blue peas."

Pulses are also benefiting from an anticipated demand for GM-free protein in the UK. "We have already seen a £10/t increase in new crop values, some of which is sure to be attributable to the GM issue as enquiries from compounders filter back through the trade." But Mr Young adds that that is largely speculation at this stage.

Cebeco is putting its money where its mouth is on pulses, with increased seed crop plantings this season. "Our seed production area is up 22% on peas, and 40% on beans," says contracts manager, Jonathan Wall.

Many of these contracts are to produce C1 seed that will be multiplied up for farm use as C2 in 2001. Varietal advances will help that expansion, he believes. "With better standing varieties there is no reason why peas should not replace spring oilseed rape or linseed on heavy ground." &#42

Protein source?

Soya pioneer Robin Appel does not believe pulses have a future as a main protein source in UK rations, even if the GM-free demand is sustained.

"We are not optimistic for peas and beans, as the buyer tells us they are worth the same as wheat in the ration. Hence in our gross margin forecasts we value them as wheat," says technical director, Edward Willmott.

Any GM-free premium is likely to be limited and short-lived, he adds. Multi-national commodity traders ADM and seed-house Pioneer, recently acquired by Du Pont, are linking forces and offering US growers contracts to produce identity preserved, certified GM-free soya.

Rotational benefits

Aside from individual crop gross margins growers need to consider rotational benefits and implications for overheads. Cebeco claims that first wheat after pulses produces an average extra 1t/ha over a second wheat crop, compared with 0.6-0.75t/ha after oilseed rape. Dalgetys Julie Goult adds that a pulse plus first wheat combination can give a higher gross margin more than growing a second or continuous wheats? That would also help spread workloads so reducing fixed costs.

2000/2002 Breakcrop gross margin comparison

CROP GROSS MARGIN FORECAST (£/ha)

Harvest 2000 Dalgety Banks Cebeco S.I

W.Osr 553 541 480

W.Beans 512

Sp. Beans (feed) 485 463 559

Sp Peas (feed) 495 423 583

Linseed 438 349 487

Harvest 2002

W.Osr 553 441 479

W.Beans 490

Sp. Beans (feed) 453 441 536

Sp Peas (feed) 473 401 560

Linseed 311 221 358

PULSE PROSPECTS

&#8226 Gross margin forecasts mixed.

&#8226 Premium market opportunities, not available on oilseeds.

&#8226 Chance to spread fixed costs.

&#8226 Consider rotational factors.