More Competition in Pulse Markets (Summer 2017 PCN) JUL 7 2017 | Producers | Pulse Crop News
Chuck Penner, Leftfield Commodity Research
It’s been said that “success breeds competition” and there’s no question that Canada’s pulse industry has been successful in the short-term and over the longer haul. Another old saying in the ag industry is “money is the best fertilizer” and pulse prices over the last couple of years have generally been quite favourable. So it shouldn’t be any surprise that farmers in other countries are taking notice and boosting pulse production.
The clearest example of this increased competition is Australia. Farmers there have been capitalizing on the positive price environment to raise pulse acreage. Seeded area of the four pulses in the chart rose 10% in 2016 and is up more than 50% over the past five years. The largest acreage gains have occurred in chickpeas (mostly desis) and faba beans but red lentil acreage has also expanded 46% over the last five years and dun peas are up 31%.
Of course, it doesn’t hurt that growing conditions in 2016/17 were extremely favourable, causing production to jump 70% or more, depending on the source. That excellent performance is extra encouragement for Australian farmers planting the 2017/18 pulse crop now.
Because of its location, Australia also has an advantage shipping into the key South Asian market. Nearly all of its desi chickpeas and dun peas go to India and surrounding countries. Red lentil exports are mostly focused on South Asia but are starting to move into Turkey too. A large percentage of faba beans are consumed domestically but Australia is also a leading exporter
Farmers in the US are also looking for profitable cropping alternatives and have raised their level of pulse acreage. Seeded area had gradually been increasing for a while but a big jump occurred in the last two years for the three pulses shown in the chart. In 2017, seeded area of peas is expected to slip but acreage of lentils (mostly medium greens) and kabuli chickpeas continue to climb.
While US pulse production competes in some of the same markets as Canada, a large portion of its crop also stays within its borders or is used in food aid programs. That means there has been less direct competition with Canadian pulses in export markets. It’s also worth noting the US isn’t just an exporter, it’s also a buyer of Canadian pulses, particularly chickpeas. A bigger crop in 2017 would mean less demand for Canada’s chickpeas, meaning Canadian exporters would need to look further afield for customers.
In addition to these two countries, pulse production is also ramping up in the Black Sea region. Last year’s pea crop in Russia and Ukraine hit 3.0 million tonnes, 41% more than last year on an 18% increase in acreage. Russia has also been pushing more chickpea production, growing 320,000 tonnes last year. And in Kazakhstan, reports earlier this year pointed toward emphasizing more lentil production in 2017, although the amounts aren’t known yet.
This increased competition is a challenge and on the surface, it sounds a little discouraging for Canadian pulse growers. But it’s not all bad news. For one thing, a larger production base also provides the opportunity to grow the entire global industry. There’s another old saying that “a rising tide lifts all boats” and so far, bigger crops in Canada and other countries seem to have spurred more demand, keeping prices from crashing. Increased global consumption is a good news story, and there’s capacity to expand markets even further.
This doesn’t mean the Canadian pulse industry can be complacent. These developments in other countries reinforce the importance of staying ahead of the competition through plant breeding, agronomic research and market development that improve productivity and profitability for Canadian farmers as well as find new outlets for the crop. Joint efforts in these areas between farmers, researchers, processors and exporters need to continue and expand.