Pea and lentil prices have crashed, but Alberta farmers are still growing a lot of pulses.
“Everything that happened in India caused a shock, not only to Canada, but globally,” said Leanne Fischbuch, executive director of Alberta Pulse Growers.
The peak year for pulse production in Alberta was two years ago, and acreage has dropped off considerably — 300,000 fewer acres of lentils and peas than last year, according to StatsCan’s June 29 acreage estimate.
But acres haven’t fallen off a cliff. If StatsCan is right, it will still be Alberta’s third-biggest lentil acreage and fourth-biggest pea acreage in the past decade.
Those in the pulse industry in Alberta thought that the number of acres was going to fall even further. But as they talked to growers, they learned many of them weren’t taking pulses out of their rotations.
“Generally, our thoughts are if you’re a pulse grower who has had multiple years of participation within our sector, you understand the benefits of the crop and how it breaks disease cycles and how it spreads out your workload and harvest,” said Fischbuch.
StatsCan estimates Alberta producers planted 1.5 million acres of peas, and 434,000 acres of lentils. (The federal agency also says Alberta farmers planted 73,000 acres of chickpeas — the most since 20,000 acres went in the ground in 2012.)
“Our numbers are not there,” said Fischbuch. “Our numbers are not lining up with StatsCan.”
Nevertheless, even though “pulses are challenged,” many farmers wouldn’t want to take them right out of their rotation, said Adam Krieser, a grain merchant with Canpulse Foods in Saskatoon.
“More people in Alberta have learned they can grow pulses and they can grow them well. When things come down to tight margins and a yield game in anything, your break-even will depend on what you can put in.
“You kind of grow what you grow well when markets aren’t driving you one way or another.”
The reduction in Alberta pea acres — down from 1.8 million acres last year, according to StatsCan — wasn’t as significant as what industry officials expected.
How that translates at harvest is still, of course, unknown. There has been variability for moisture across the province, and there is still a chance of hail.
“When you have heat stress, the flowers tend to abort and not produce a pod,” said Fischbuch. “If you’re past the flowering stage and you’re still getting heat stress, there’s a chance that there’s not enough moisture being taken up to form the peas in the pod. You might get smaller-size peas or you might get less produced within the pod.”
But the big question is: Where are all the peas and lentils going to go?
Overall, it’s going to be a grind, said Canpulse Foods’ Krieser.
“This is a big struggle, a big challenge and things are going to be heavy for a bit as we wade through,” he said.
New-crop peas are selling for between $6 and $6.50 per bushel, down from $7 to $8 a year ago, said Carl Potts, executive director of Saskatchewan Pulse Growers. It will likely be a while before India starts buying again, he said, although some analysts say it could start buying red lentils later this year.
Mexico has stepped up its lentil purchases while more peas are heading to the U.S., Chuck Penner of LeftField Commodity Research told the Reuters news agency.
As well, more pulses are being used for food ingredients and that sector may buy more pulses that otherwise would have been sold for human consumption, Krieser said.
But the simple fact is “there are way more sellers than buyers right now.”
“Some of these stocks need to start whittling away, disappearing through usage, through finding every bit of export market you can,” said Krieser.
In South America, there may be some value buying in more predominantly green markets.
“The green markets could be under pressure due to a spike in acreage,” said Krieser. “There’s some backstop in acres to start and some carry-over acres as well.
“It’s really a lot of work to do business right now. Instead of 100 container orders, it’s more like people looking for 100-bag orders right now. It’s very small, very piecemeal and lots of people just tire kicking and no deals being consummated in the end, either.”
Carry-over stocks from the past year’s pulse crop are high, said Pulse Canada CEO Gordon Bacon, but there is the occasional bright spot.
“One of the things that has changed is that China has increased its yellow pea imports and is forecast to be even higher in the 2018-19 crop year,” he said.
There should be lower carry-out stock by the end of 2018-19, which is encouraging for yellow peas, he said. Traders will also be watching the Indian market to see how its domestic pulse production fares.
“While today I wouldn’t want to forecast that India is going to reduce its levy or quantitative restriction on yellow peas, it’s not out of the realm of possibility that that will change, or both or those will change over the next 12 months,” said Bacon.
The prospect of an all-out trade war between China and the U.S. is another wild card.
“We’re into one of those markets where government policies are having a greater influence than supply and demand,” said Bacon. “We’re into that period where it is very hard for trade to make predictions because you can’t predict what governments will do as easily as looking at supply and demand disappear and timing of how long it will take India to work through those stocks.”
But the longer-term prospects for pulses remain bright, said Fischbuch, pointing to a $400-million pea-processing plant currently under construction in Portage la Prairie, Man., by Roquette, the French food ingredient giant.
More of these processing plants are needed, she said.
“We really need to diversify our markets. That’s really what our industry needs to focus on moving forward,” she said.
— With files from CNS Canada and Reuters