Short-term demand for Canadian pulses has spiked in the midst of the pandemic as consumers stocked up their pantries.
“I’ve seen it called the ‘plan for the worst’ trend, and this sector is pretty well positioned for that kind of buying pattern,” said Greg Cherewyk, president of Pulse Canada.
“Generally speaking, when you account for the demand of shelf-stable food products and for what’s been happening globally, the industry has fared pretty well.”
Even before the pandemic, global demand for pulses was rising, thanks in part to the plant protein food trend. Prior to the disruptions caused by COVID-19, Canadian pea and lentil exports were running well ahead of last year’s pace (by 500,000 and 300,000 tonnes respectively), said Cherewyk.
“Demand is not the challenge in our current environment,” he said. “Logistics and supply chains are the challenge right now.”
Almost 30 per cent of Canadian pulse exports move by container and there are a lot fewer of those these days because COVID-19 first closed Chinese factories and then hit consumer demand in North America.
Since the beginning of January, there have been roughly 40 ‘blank sailings,’ with those container ships being “outright cancelled,” said Cherewyk.
“That’s hundreds of thousands of containers that didn’t arrive in Vancouver, and when you consider the capacity of those containers, it’s millions of tonnes of capacity that wasn’t available to our industry here in North America,” he said.
And that’s not likely to change in the medium term, either.
“As we move into what’s predicted to be a pretty deep recession, we’re going to have the same challenge,” he said. “We’re going to have fewer vessels carrying fewer containers arriving in North America.
“Our industry depends on those containers for the back haul, and they just simply won’t be there in the numbers we’ve come to expect.”
‘Sky’s the limit’
“That’s probably our greatest near-term challenge in this COVID-19 environment,” said Mike Jubinville, senior markets analyst with MarketsFarm.
“The products that Canadian producers are growing are in demand. It’s a matter of getting through the logistical challenges to get our products from their source to the end-user.”
Canadian pulses are “very competitively priced” and the sector has done a good job in finding new buyers after India, our biggest customer, imposed high tariffs, he said.
“The sky’s the limit for demand there, in my opinion,” said Jubinville. “It’s just a matter of having reliable supply chains established that cannot get disrupted by geopolitical issues.”
That’s something that the pulse industry is looking at, but it’s also an issue that needs careful consideration, said Cherewyk.
“Short term, there are challenges, so in the longer term, how does the industry adjust and accommodate?” said Cherewyk.
“Will we see some buyers move to bulk purchases? Will we see some add more inventory at destination to build up buffers? There are a lot more questions at this stage in the game than there are answers.”
But again, the good news is that “the demand is there,” he said.
“So it’s a matter of how we service it consistently and maintain our reputation as a supplier that can be predictable in an environment where people have grown accustomed to a lack of certainty.”
“The long-term outlook for pulses looks very good to me. I suspect that pulses are going to be a major component of a Prairie farmer’s crop rotation in the years and decades ahead. I fervently believe we’re on that path. It’s just a matter of navigating the logistical challenges that lie ahead.”