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Friday, April 1, 2016
Indian appetites are changing the U.S. crop mix
Farming on the Northern Plains is a never-ending battle to keep the soil alive and in place. Long, dry winters kill precious organisms; the ever-present wind blows dirt across the prairie. Certain crops can help, especially pulses. Legumes such as dried peas, lentils, kidney beans, and chickpeas fight erosion and replenish life-giving nitrogen, reducing the need for chemical fertilizers. That made Beau Anderson an early convert to pulses on his wheat and barley farm outside Williston, N.D., where he added them to his crop rotation more than a decade ago.
There wasn’t much money in it then. Pulses are high in protein and low in fat, but Americans don’t eat a lot of them. Expanding demand for corn ethanol and surging U.S. soybean exports to China helped keep pulses in the background. “When we first started growing lentils, our strategy was to break even on them,” Anderson says. For him and many other farmers, that calculus has changed. The biofuels industry and the Chinese economy are stagnant, which is weighing on demand and prices forU.S. corn and soy.
And India, an emerging buyer with a huge appetite for pulses, is beginning to assert itself on the world food market. “The next couple decades could belong to India,” says Erik Norland, an economist with the Chicago Mercantile Exchange. “It will have a real impact on what farmers choose to grow and on what the world eats.” India’s annual food imports have risen 61 percent since 2010, to $22.6 billion, and there’s more room to grow. Its population is expanding at a rate of 1.2 percent per year, compared with 0.7 percent for the U.S. Indians eat 17 percent fewer calories per day than the world average, a deficit that Norland projects will shrink as the nation becomes more prosperous and imported food becomes more abundant and affordable. Led by India, global demand for U.S.-grown pulses reached $702 million last year, more than double that of a decade ago. Pulses won’t overtake traditional American cash crops anytime soon, if ever: In 2015, U.S. farmers dedicated 88 million acres to corn production and less than 2 million acres to peas and lentils. That’s partly because legumes require higher maintenance when it comes to controlling insects and weeds, so massive acreage becomes labor-intensive. Still, with corn and soy at less than half their peak prices, the economics of growing pulses is becoming more attractive. “The more demand we have, the more consistent the market becomes, the easier it is to convince farmers to grow them,” Anderson says.With its cool and relatively dry climate, North Dakota is America’s top producer of legumes. The state, which became the No. 2 U.S. oil producer during the shale boom, has seen its fortunes fall dramatically in the energy bust, making pulses a tiny piece of good news for its struggling economy. In neighboring Montana, pulse acreage has almost tripled over the past decade, as farmers seek crops that cost less to grow and are easier on soil than the staples that carried U.S. farm profits to a record $121 billion in 2013. “Over 57 percent of our pulses went to India in 2014,” says Chris Westergard, a wheat farmer in Dagmar, Mont., who devotes about a third of his 5,000 acres to peas and lentils. “I always knew they were a big buyer, but I didn’t realize they’d become that important.” It’s difficult to overstate how dramatic a change India’s ascendancy represents for global agriculture. China has fed a farm boom since the turn of the century, when it began relying heavily on soybean imports to feed livestock for its emerging middle class. Today, almost two-thirds of the oilseed shipped worldwide goes to China, which is also buying more corn globally.Even though China’s import growth has kept pace with India’s, the average Chinese now eats as many calories as the global norm, so barring a U.S.-style obesity epidemic, appetites won’t expand much further. China’s population is no longer growing, either. Estimated at 1.38 billion in 2015, it will dip to 1.35 billion by 2050, the United Nations says.A glut in world crop production has helped drive global food costs to their lowest level since 2009. It’s also making it hard for American farmers, who rely on higher-yielding seeds from Monsanto and DuPont, to find a way out of a price plunge. U.S. farm income in 2016 could fall to its lowest level since 2002. “China is cloudy,” says Pat Westhoff, an agricultural economist at the University of Missouri. “It’s hard to see much that will significantly increase profits going forward.”On paper, India resembles the China of a couple of decades ago, with a populace that is growing and becoming more prosperous, and an inability to grow enough food domestically to feed itself. Now at 1.31 billion, India’s population is set to surpass China’s in the early 2020s, reaching 1.71 billion by midcentury. India’s agricultural needs are different from China’s, though. The Chinese eat pork from pigs reared on corn and soybeans. India has by farthe most vegetarians of any country on earth: As many as 40 percent of its people avoid meat, compared with 5 percent in China and less than 2 percent in the U.S. That means U.S. farmers can’t count on a China-size bump in demand for livestock feed.The U.S. is still a relatively small player in the pulse world, and it has competition from other nations. Russia and East Africa have seen exports increase, and Canada’s shipments reached almost $4.2 billion in 2015.For U.S. pulses to go mainstream, Americans will have to start eating more of them. That’s been a bit of a tough sell: Among their less desirable attributes, dried legumes take a long time to cook and give a lot of people gas, says Marion Nestle, a professor of nutrition at New York University. “If there is a stable export market, farmers will grow pulses, but it will take a huge education campaign for the public and for chefs to start using them here.” Anderson, the North Dakota grower, says health-conscious Americans will eventually embrace the cheap and abundant source of protein. “Food companies are looking for more of them,” he says. “Build the right international relationships, and this could go through the roof.”