Some Alberta producers could become former pulse growers next year if the markets don’t turn around soon.
“It’s the third year in a row that they’ve been at the bottom of the net income,” said Josh Fankhauser, who farms near Claresholm.
“The math just doesn’t work.”
Yellow peas have been part of Fankhauser’s rotation for more than 25 years, and his acres have crept up as the markets have developed. Having 20 per cent of his acres in pulses is not uncommon on his operation, and in some years, that number has topped out at 30 per cent.
Next year, he’ll be lucky if he puts five per cent of his land into pulses.
“There will be some pulses in the rotation, but it will be very little,” said Fankhauser, who also grows lentils. “We’ve had three dry years, and they don’t seem to handle the drought years as good as some of my other alternatives. And when we get lots of rain, they don’t like that either. They don’t perform well in tough conditions.
“When it was $10 peas, you could work with that, but with the current prices, it doesn’t even pay the bills anymore.”
Pulse markets (and acres in Alberta) hit record highs about two years ago, but those numbers have fallen off over the past year because of tariffs imposed by India (50 per cent on peas and 33 on lentils). The country had been taking well over half of Canada’s exports of both crops, but threw up tariffs when its own production rebounded, something that continued this summer.
“Those tariffs have very much shut down the market for us,” said Madeleine Goodwin, marketing and communications manager at Pulse Canada. “Right now, imports from Canada for peas are down by 90 per cent, and it’s the same for lentils.”
The loss of that trading partner, combined with increased pulse production in the Black Sea region, has really put a lid on prices for the foreseeable future, said Fankhauser.
“We’re competing with countries that have lower production costs,” he said. “A yellow pea isn’t like a wheat, where you can differentiate on protein or quality. Anybody can grow a No. 2 pea.”
And at these prices, any agronomic advantages pulses have — breaking the disease cycle, fixing their own nitrogen — don’t always offset the cost to grow them.
“Peas aren’t worth anything, and they’re not a low-cost crop to grow either,” said Fankhauser.
“Whether you put peas in the ground or wheat in the ground, they cost about the same, but they yield differently.
“It’s not hard to find another crop to slot in.”
Decreased pulse acres
More producers will likely make that choice as they develop next year’s cropping plans, said Bruce Burnett, director of MarketsFarm at Glacier FarmMedia (which is the parent company of this publication).
“We’re probably looking at decreases in area in that 10 to 15 per cent range for pulses in general,” said Burnett. “Farmers like having pulses in their rotations, so I don’t feel that we’ll see a dramatic swing out of production. They’re just going to move levels back to what we’ve more traditionally had on the pulse side.”
Pulse acres in Alberta topped out at nearly 2.5 million seeded acres in 2016, but dropped to 2.3 million last year, and fell again to two million this year. That downward slide will likely continue next year, especially in lentil acres, said Burnett.
“It will depend whether we have a trade war still going on as we plant next year’s crop,” he said.
“Without India as a major importer, it’s very difficult to see a recovery. It’s going to be tough to replace that market.”
One potential market for lentils is Turkey, but the current economic crisis there will dampen demand in the coming months. And with high stocks waiting to find a home, lentil prices will likely continue to be pressured in the current marketing year.
Burnett is a little more hopeful for Canadian peas, though. Australia and some European pulse exporters have taken a yield hit because of drought conditions there, so Canada could see an uptick in pea exports, particularly to China.
“The demand may shift into Canada,” he said. “It’s not all gloom and doom for pulses.”
Pulse Canada’s ‘25 by 2025’ marketing strategy aims to reduce Canada’s reliance on India over the next five to seven years, said Goodwin.
“By the year 2025, we want at least 25 per cent of our pulses going into new markets or new uses, which translates into about two million tonnes of pulses,” she said.
The strategy, launched last year, also aims to grow the processed human food market for pulses to 700,000 tonnes, the animal food market to 500,000 tonnes, and the whole and split pulse market for retail and food-service providers to 800,000 tonnes. This market growth will occur primarily in North America, China, and Western Europe.
“There’s a huge volume opportunity there,” said Goodwin.
But in the meantime, farmers such as Fankhauser have to figure out how to make money with the crops he grows.
“I can ramp acres back up to 20 or 30 per cent of the farm if the market sends me the right signals, but until that changes, it’s going to be tricky,” said Fankhauser, adding pulses would need to gross more than wheat for him to grow the same amount of pulse acres next year.
“I’m skeptical that the market is going to turn around in a big hurry. Economics have to drive things. You can only grow so much on speculation and hope.”