There is no crop in WA more enigmatic than the humble narrow-leafed lupin. Given its firm attachment to rotations in the northern acidic sandplains of the wheatbelt, you would think it was endemic to our State. Research suggests that WA was actually very late to the lupin party. It is an old world wild crop originating from the Western Mediterranean (picture the exotic locales of Morocco and the Iberian Peninsula) and has been harvested for over 6000 years. However, domestication of the crop has only occurred in the last century or so and that’s where WA has leapt to the fore, both in breeding out bitter alkaloids and refining its application in broadacre farming systems. Agronomically, lupin has two important things going for it: it’s not a grass, allowing for a different suite of chemistry to be applied, and it puts nitrogen back in the soil. Countering that is its relatively low yielding nature.
Lupin supply from last year’s big harvest was exceptional. Approximately 650kt hit CBH with anyone’s guess how many more tonnes were stored on-farm (anecdotal reports suggest a lot). Lupin is the easiest of all the grains to store and is a reasonable sheep feed which makes on-farm usage and domestic trade attractive to those with an empty silo or two.
The big issue is where does a crop as large as last year’s go? Assuming that the domestic trade is satisfied by the supply chain outside of CBH (in net terms), then over 600 hundred thousand tonnes had to find a home, via a seafaring vessel, to be all square at the end of the year – an unrealistic proposition for our chockers export pathways. It’s estimated that, come 1October, at least 250kt of lupins will still be in the CBH system, with many more living rent-free on-farm.
From a competitive advantage perspective, Lupinus angustifolius is 'stuck in the middle’. Lupin usage is firmly plonked in the feed segment of the global grain market but it’s an uncomfortable fit. As it is a high protein pulse, it primarily competes with other high protein sources such as soybean meal. Most users see protein as lupin’s primary strength and price it at a discount to soybean meal (their preferred protein source) but, as it is high in fibre, including a fibrous hull that may or may not be removed, and also a very handy energy source, it competes further with the likes of feed barley, corn and even hay.
Lupin’s jack-of-all-trades versatility means that it is the master of none. Large volume end-users have adopted processes and systems that optimise the three primary elements of protein, fibre and energy and pull commodity levers to get their desired nutritional outcome. They are not used to getting all three elements at high levels in the same package. As the global corn crop is circa 1.2 BILLION tonnes compared to the global narrow-leafed lupin crop that would be lucky to hit 1 million tonnes, few buyers have reshaped their processes to best utilise the properties of such a niche crop. The few that have, mostly in South Korea (complete with dehulling plant) and Western Europe, use lupin as a price sensitive compound feed ingredient or as supplementary feed for livestock such as dairy.
The uniqueness of lupin, and its subjugated feed grain pricing, has spurred the pursuit of human food markets for well over two decades. Competitive niches are at the heart of premium products (organic white Zinfadel anyone?) and nothing is quite as niche as a hard, gluten-free, high protein, high fibre, high energy bean that looks like a tiny quail egg. Unfortunately, Australian Sweet Lupin, as it has been branded for the food market, swims against a heavy current. It has the reputation of being allergenic and functionally ‘different’ (read difficult) to work with culinarily, whilst competing against mainstream products such as chickpea, lentil, soybean and of course the grand-mamma of them all, wheat flour. Lupin-for-food’s primary use to date is to knock another ingredient out of a recipe rather than being a hero in a product on its own. Quinoa managed to slide its way into becoming a salad base and chia the core ingredient of blended concoctions called ‘pods’ but, to date, lupin has not succeeded in going solo in any meaningful way. Accordingly, the food market remains dwarfed by the feed market despite the effort.
With another big crop about to hit the cutter bar (460kt according to GIWA), it’s not looking good for local prices. Feed crop values overseas are historically high and, ordinarily, that would lift the tide for lupin demand. But with established lupin markets well satiated by seasonal supply and the inability to develop and access new markets, due to WA’s total export capacity peaking well below total grain production tonnages, those most despised words for a grower, ‘negative-basis’, are the catch-all explanation for the resulting price differential. For those with memories of the good old days when prices exceeded $400pt, then that is the positive-basis ‘swing’ to the negative-basis ‘roundabout’. The east coast drought of 18-20 rocketed the value of every grain in Australia to somewhere near Venus, but those drought-stricken areas are now sodden fields of green and the drought market driver is so far in the rear vision mirror that it seems like a mirage.
Eighteen export marketers have been reported to have secured CBH shipping capacity for 22/23 - a new record since the early deregulation years - and new exporters normally bid for a shipping slot dreaming of riches exporting a safe hedge-able commodity like wheat or canola, not lupin. Traditional lupin exporters are likely to hold entitlement to tonnes bought at much higher prices and would need to ship these first. Supporting this view, current public bids for lupin are confined to the usual suspects and are so low as to discourage selling. If no grower is selling, then no buyer will allocate a scarce shipping slot. Accordingly, it is possible that there will be fewer hatches of lupin shipped than 21/22 after the wheat, canola and barley vessels are taken care of first.
The odds are looking fair that we could find an entire harvest worth of 21 and 22 old crop lupins languishing in CBH storages - just as the 23 crop bears down upon them. Grain values are driven by supply and demand, and with lupin stocks hitting ‘glut’ levels we are firmly in a lupin buyer’s market. If only old crop lupins matured like a good red Zinfandel and appreciated in value…
