Pulse weekly outlook: 2018 a challenging year

CNS Canada — It’s been a year of challenges for the Canadian pulse industry, as it struggled to survive after its largest customer all but vanished overnight — but the industry has started to grow in new ways.

“It was challenging for farmers who saw a real shift in pulse prices, challenging for processors and farmers alike who saw the drop in export volumes. And I think this is the year that can be characterized as having one of the biggest changes in the pulse industry for the last 15 years,” said Gordon Bacon, CEO of Pulse Canada.

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The year started with uncertainty as India, Canada’s largest pulse customer, had just started to place import tariffs on pulse crops into the country. Prices continued to drop for Canadian pulses as buyers searched for new markets. As summer hit acreage fell and therefore so did production.

Statistics Canada’s final report for the year showed 3.581 million tonnes of peas produced, down from 4.112 million tonnes the previous year. Lentils dropped to 2.092 million tonnes from 2.559 million.

While exporters haven’t been able to find a big new market for lentils, they’ve been able to do so for peas, for which China has emerged as the destination.

“By the time the final stats are in I think they’re going to far surpass (China’s) previous high, maybe even close to double that. And likely imports for peas in the calendar year, 2018, (will be more) than India ever has in the past,” said Carl Potts, executive director for Saskatchewan Pulse Growers.

Despite the pulse tariffs, Bacon said there has still been a small amount of business done with India this year — and there has been news of late that India may start importing pulses again, due to domestic production problems.

“Export business to India may pick up because of (production) concerns, which we’ve always said,” Bacon said. “When they have a crop problem they’ll be back in the market, but for how much and what quantity? Well, that’s hard to know for sure.”

While the Indian market for Canadian pulses may have shrunk, domestically in North America the pulse market has grown. According to Bacon, interest for plant-based protein for human and animal consumption in North America has increased. The Canadian federal government even picked a plant protein supercluster, Protein Industries Canada, to received $153 million in funding for development of the industry.

“The growth in the investment in the processing plants is telling you that the industry feels that is a long-term trend. You don’t spend hundreds of millions of dollars without being confident that this is a long-term market demand that’s there,” Bacon said.

Moving forward, Bacon thinks the Canadian pulse industry will need to start adjusting the varieties of pulses it grows in order to meet end-use demand.

As an example, Bacon points to the barley industry, where producers grow specific varieties of barley depending on whether it will be used for malt for beer production or for animal feed.

Overall, both Bacon and Potts both think North America is just at the start of these developments and there is a lot of room for growth in the domestic pulse industry still.

Heading into 2019, however, they both expect to see another drop in pulse acres unless prices increase for farmers. Potts expects producers may shift lentil acres to peas, due to better pea prices.

“It’ll be interesting to see where pea prices end up as we get a little bit closer to planting time,” he said, “but the overall pressure, I think, will continue to be there unless we have a market like India open up again.”

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow her at @ashleymr1993 on Twitter.

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Ashley Robinson writes for MarketsFarm specializing in grain and commodity market reporting.

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