‘There’s a global insecurity affecting the entire supply chain’/
Arbaza’s Pietro Schisler looks ahead to 2023

Arbaza Alimentos started its operations in 1984, as a result of the entrepreneurial ambitions of the Balestreri family. They began as small pulse farmers in a small Brazilian town, and steadily grew their business to become one of the largest black bean importers in the world and the largest pulse player in South America.

In recent years, Arbaza has professionalised its operations and diversified its product portfolio, ensuring that it meets its customer expectations and helps maintain Brazil’s status as an agri-business leader. 

Today, the business focuses mainly on supplying its enormous domestic market and also on exporting agricultural products to distant corners around the world. Arbaza continues to keep a close eye on the market and maintains constant, direct and clear channels of communication with their clients in order to nurture relationships and strengthen lasting partnerships despite recent global challenges.

The GPC reached out to Pietro Schisler, senior global account manager, to get his fresh perspective on the outlook for 2022 – 23 and his take on what current trends may mean for the future of Brazil’s dry bean sector.

As we discussed last year, the IPCC’s report on climate change highlighted the impact of drought and extreme weather events on agriculture across the world. What has been the impact of this in Brazil in the last year, and how has this affected you?  Are you experiencing issues with fertilizers? 

Brazil has six different biomes split into two hemispheres (look close enough you will notice we do have land above the Equator too!) and we grow pulses in all of them. This usually means that whatever bad luck the heavens send us in regards to weather has or will be offset by another good weather spell somewhere else.

The cost of production, however, has undoubtedly increased as a result of higher gas prices and higher fertilizer prices to our farmers. Gas is the major cost driver, as to cover all of the distances requires an incredible amount of money spent on logistics, and that is distributed throughout the whole chain.

Fertilizer prices have been a constant complaint we have heard from across the field, and we have had to incorporate the price of it into our selling price – as well run as we are, at the end of the day, we aren’t dodging all the same old problems that every industry is having to deal with.

How was this year’s harvest in Brazil? What are the numbers of beans produced, and what are export volumes looking like?

In 2021 Brazil has exported around 223K tons of pulses to multiple markets. Out of those, Arbaza’s share totaled 31.5% or 72K tons.

In 2022, we have been keeping the same share of the market, however, with much less volume, as this year’s total exports from Brazil have been much less than last year. For instance, a rough number of current total exports of Brazil YTD is of 82K tons – that is only measuring January to September 2022. In comparison, last year, by October 2021, Brazil had exported 158K tons. Nearly double the amounts compared to this  year.

I credit this to the current economy we are living in, with high volume of stocks on other countries, restrictions on some products to some markets (i.e. mung to India) and Covid restrictions still lingering, which is impacting on the overall trust of the consumer when deciding what to purchase, and therefore turning market trends around.

Looking ahead and given current trends, how do you see the future of Brazil’s dry bean sector developing in the coming years? Last year you mentioned that Brazil is in a position to expand the amount of pulses exports from 180,000 MT in 2021 to 500,000 MT by the end of this decade. Has the shipping situation sufficiently improved to help achieve this goal?

2022 has reduced exports due to lower demand and thus also lowering the price of the product. The reduction in price has a direct influence on the farmers’ decision whether to seed pulses or not. Farmers in Brazil, like many other places around the world, have a range of options, and since the pulses we work with are reducing prices to the farmer, we expect, unfortunately, that less farmers will be willing to sow pulses for next crop year, and will be exploring alternative income options.

Have the difficulties you were facing with shipping, exports and logistics improved since the height of the pandemic? 

Yes. Arbaza and all importers and exporters around the world have been noticing an improvement with regards to freight costs and availability. The cost would vary depending on the route – which is also very elastic. The situation has been slowly and noticeably improving, however. 

We are hopeful that 2023 will continue to provide us lower freight costs, which will be beneficial to the whole sector.

How is the war in Ukraine affecting trade for Brazil?

With regards to impacting our sector, the war between Russia and the Ukraine has mostly affected the appetite that importers may have towards risk and buying product. It is showing us who are the risk averse importers, and which ones are willing to take a little risk. This knowledge is useful for us as we adapt and grow our business. 

What is the current situation with plant-based foods in Brazil? Have you noticed any recent changes in perception and people’s relationship with these foods? 

After last year’s conversation with GPC, I dug a little deeper to find out more about this sector in terms of overall perception as a consumer and as an investor. 

As an investor, at first I was a little sceptical, thinking Brazilian technology could never compete with the likes of North American brands. This has since changed. Brazilian brands have been developing their own plant-based foods. Most industrial conglomerates by now have already come up with their own option of product and are all filling shelves. Future Farm, a Brazilian food unicorn, is even selling at Whole Foods in the US!

As a consumer, I’m not fully convinced the price tag will allow us to completely switch products yet, but I’m confident that the new generation of flexitarians will create a stable base of consumers in Brazil, enough to sustain the trend. 

As for the field, I have not yet seen this new trend affecting crop decisions nor disrupting the pulses industry. It’s volume may need to increase still. Though with current trends and investments, the future is bright!

As a farmer based in Brazil, what is your perception about current successes and challenges that are facing farmers in the Chinese and other Asian markets?

Between China and Brazil, there are still many restrictions in place regarding Phytosanitary requirements. 

As for other Asian markets, south Asia has been the main destination of Brazilian pulses and is continuing to be – however…  India has surprised us all with the sudden mung restrictions setting the tone for the year! There is no going around it, we couldn’t sell the mung to India so we all had to work our ways to find other markets. This will definitely affect availability of mung beans coming in 2023 as well. 

Overall, there is a global insecurity hovering over the industry, which is being provoked by quota restrictions, the threat of a looming recession, the ongoing conflict between Russia and Ukraine… And this is creating a significant cascade effect that is challenging and affecting every decision throughout the supply chain. 

What are Arbaza’s plans for the immediate future? 

To continue to provide our partners with the best service, quality and peace of mind we possibly can! 

Will you be attending the Americas Pulses Congress in Cancun later this year? What are the benefits of attending and participating in such conventions?

Absolutely! North America is a market that we are not currently present in but we will not pass up an opportunity to be present at any GPC event as we always reap so many rewards from it. From meeting new and old friends, to learning the latest trends of the industry, we are very much looking forward to it!