Market Types & Uses
- recent trends have been toward a large seeded faba bean – varieties with seed weights in the range of 500 to 700 grams per 1000 seeds are the preferred types for the human edible market
- for livestock feed, faba bean is used as a protein supplement as the seed has a crude protein content of approximately 28 per cent
- poultry feeding trial results have been positive if supplemental methionine is added
- in swine rations, old varieties were limited in their use due to their high tannin content:
- maximum recommended inclusion levels in swine rations are 15 per cent in starter rations, 20 per cent in grower and finisher rations and 15 per cent in breeding sow rations
- canola meal is blended with faba bean, most rations would be well within recommendations
- newer, low tannin varieties will be much more useful because they can be fed at much higher levels
- faba bean can also be fed to calves, dairy cows, beef cattle and sheep tests with faba bean silage have shown it to be equal to a grass-legume mix when fed to lactating dairy cows and feedlot animals:
- silage trials done by Berkenkamp and Meeres (1986) at Lacombe showed dry matter production at 61.5 per cent of oats, but 30.7 per cent higher in protein
- faba bean and grass-legume silage, with and without grain, were equally consumed and utilized by dairy heifers and lactating cows (Ingalls et al 1979) – however, wintering beef calves and finishing steers gained more weight with faba bean silage than with corn, barley or grass-legume silage
- another consideration for faba bean is for human consumption; high quality faba bean is always in demand from Middle East and Asian markets as well as for the canning industry in North America
Production Economics & Marketing
Faba bean may be marketed as a livestock feed or as a human edible seed. A majority of western Canadian and Alberta production is marketed as feed. Generally, markets for this crop are limited, and before growing faba bean, growers are encouraged to contact various companies to see what marketing opportunities are available.
Marketing strategies for optimum returns:
- know the production costs
- know the markets you are targeting
- know the quality of faba bean you’ve grown
- understand different types of contracts
- study and use market information sources
Cost of Production
The following Table 50 shows production cost and break-even techniques that may help producers plan a marketing strategy. In this example, if the yield for faba bean was 50 bu./ac., the price required to cover all costs would be $187.20 divided by 50 bu./ac. = $3.74/bu. or 60 bu./ac. = $3.12/bu.
Faba bean, an annual legume, offers some rotational benefits to crop production that should be included in the economic analysis of faba bean production:
- decreased need for nitrogen inputs to the following crop
- increased yields of the following crop
- increased quality of the crop grown the year after faba bean (for example, protein premium on wheat)
- Before any seed is purchased, be sure there is a market for the crop: check both human edible and livestock feed market possibilities with buyers
- Check all the market information sources available to determine marketability for faba bean: there are numerous weekly market information newsletters, satellite information sources (DTN, Global Link), Internet web sites (STAT Publishing) and radio commentaries
- grow for local livestock feed use
- know what quality has been produced – take samples of the crop at harvest while it is being binned
- take the same number of cross-section samples of the grain as each lot is unloaded, to provide a representative sample for each bin
- store the composite sample for each bin in a clearly marked container, and submit a representative sub-sample to determine grade (also distribute to potential buyers)
- grading services are available from grain buying companies or by sending a sample to the Canadian Grain Commission
- do a feed analysis if the grain is going to a feed market
Faba bean can be sold through contracts. Contracting a portion of crop can reduce market risk. There are several types of contracts, with advantages and disadvantages:
- guarantees the delivery of some or all production to a buyer
- may or may not specify the price or total volume accepted
- some production contracts specify price for a certain volume, with over-deliveries accepted only by mutual agreement between buyer and seller and priced at the market on delivery
- a date of acceptance for delivery may be specified, and some contracts will implement a storage fee to be paid to the producer after a certain date
Deferred Delivery Contract
- also referred to as a DDC, this is an agreement to deliver a specified tonnage of a certain grade of product to the buyer by a certain date in return for a guaranteed price
- advantages to the producer of a fixed price and delivery opportunity can be considered a disadvantage later on if higher prices are offered by other buyers
- most deferred delivery contracts include escape clauses to cover the case of production failure due to adverse weather any contract that specifies a grade should also state how grades different from the one specified are handled – if other grades are accepted, the price and terms should be stated in the contract
- the contract should specify storage charges to be paid by the buyer to the seller, should the buyer delay delivery beyond that stated in the contract
Dealer or Producer Car Contract
- similar to other deferred delivery contracts except shipping is by producer-loaded railcar
- the difference between a dealer car and producer car is that the dealer car is allocated to a grain dealer, who in turn offers the railcar to a producer for loading, while the producer car is allocated directly to a producer for loading
- dealer car loaded product may have a lower price than a producer car since the profit for the dealer is part of the price – however, a dealer car often has a better price than sale of the same product through the elevator system
- some trade-offs exist between dealer/producers cars and elevator delivery:
- delivery to the elevator is usually more convenient, involves less administration and can often provide mixing/blending benefits to improve grade
- deliveries to an elevator can also result in immediate payment, while payment for railcar delivery is made after unload, which can be three or more weeks after the car is loaded
Read the contract before signing it. This may mean getting an unsigned copy from the buyer, taking it home and taking the time to study it. Remember, contract contents can be amended by mutual agreement, and a section in disagreement can be omitted or amended to suit both parties. Answering the following can help you get the best contract arrangement:
- Are all charges accounted for?
- Is the quoted price a net price at the delivery point, or will there be additional freight charges?
- Is a grade or specification stated? Are other grades deliverable and, if so, at what premium or discount?
- How is dockage assessed? Is freight to be paid on dockage? Will dockage be paid and at what price? How are grade and dockage disputes settled?
- Is a delivery date specified? What happens when one party defaults on delivery date? Will the buyer pay storage charges after a certain date? Will the buyer pay post-delivery interest charges after a certain date?
- What protection does the seller have in case of payment default by the buyer?
Two electronic markets are available in Alberta, and both are available through the Internet:
Allan Johnston Bid-Ask-Trade
A.J. BAT is a site where buyers and sellers can list what they want to buy and sell.
- lot size, terms of sale and price are listed
- there is no charge for buyers or sellers to post a bid or ask – it is between buyer and seller to work out the trucking and payment directly
- if there is a grading problem, then the Canadian Grain Commission is consulted
- a yearly subscription gives access to reports and listings
A.J.BATexport Trading Page is where producers, processors and buyers (both locally and internationally) post product for sale or product wanted.
- all prices are converted to a common point of export depending on the crop
- individual companies and processors then work back the price to their point of origin
AgDirect.com is an electronic marketplace for feed grains where customers can trade in specific regions across Western Canada.
- has approval of the Alberta, Saskatchewan and Manitoba Securities Commissions to operate as an Exchange
- allows trading in the spot, forward and basis markets
- the system was designed by grain traders for grain traders
- all potential users are closely screened
- AgraLink handles all payments and has an optional freight exchange service for trucking
- since there is a higher level of security and services, the fee is higher than with A.J. Bat