Rising China pea demand could revolutionize pulse market

Pulse markets are experiencing short-term pain but the outlook is for long-term gain, says the leader of an industry association.

Gord Bacon, chief executive officer of Pulse Canada, recently returned from a trade mission to China where there is no end in sight to the rising demand for peas.

The trade delegation toured one fractionation facility undergoing a massive expansion that will dramatically boost demand for Canadian yellow peas.

“It’s not just a blueprint, it’s two city blocks of plant already built,” he said.

The plant is already consuming 400,000 tonnes of Canadian peas annually and will require an additional 300,000 tonnes starting next year.

That one expansion would increase total exports to China by 30 percent based on 2016 sales of one million tonnes. However, it isn’t the only one in the works.

“They’re all looking at expanding, and as soon as they get one plant built they’re starting on the next one,” said Gerrid Gust, vice-chair of Saskatchewan Pulse Growers, who was also on the trip.

“These new plants are as modern as anything you can imagine. The fact that the Chinese are worried about labour costs shocked me.”

He said yellow peas are working their way into all sorts of products in China because they are the cheapest pulse in the world.

It was an uplifting trip coming on the heels of an earlier trade mission to India just weeks after the Indian government slapped a 50 percent duty on pea imports, resulting in an immediate $2 per bushel decline in Canadian yellow pea prices. Prices have since rebounded somewhat.

“We’ve learned with India that market diversification is absolutely where it’s at,” said Gust.

Bacon said the new demand from China won’t arrive in time to mop up the excess supply from the 2017 crop caused by the temporary loss of the Indian market.

However, it could factor into prices for the 2018-19 crop, which is something farmers will need to consider come spring planting.

“In the intermediate term, the outlook for pulses is still very strong,” he said.

Peas were initially used in China as a starch substitute for mung beans in making glassy vermicelli noodles.

“The protein was flushed down the drain and now of course it’s protein that is driving everything in China,” said Bacon.

Pea protein is shipped back to North America for use in pet and human food.

According to one of the Chinese companies that met with the delegation, the biggest customer of imported Canadian peas is the feed market followed by the protein and starch market.

Peas are also used in snacks, incorporated into meat products, included in bean paste and used to feed racing and meat pigeons.

Bacon said there is a big opportunity to expand pulse use in China to meet government priorities such as the Healthy China 2030 plan and the National Nutrition Plan 2017-30.

The delegation visited a major international biscuit company, one of the biggest meat processors in China, a couple of starch noodle plants, a sprouting facility and the fractionation plant undergoing an expansion.

Pea flour is being used in a variety of products in China, ranging from meat products to biscuits.

Each product has different specifications. For instance, the meat industry is looking for absorbent flour while biscuit makers want low absorption rates.

“It starts to raise the questions about what it is we need to look for through the entire supply chain,” said Bacon.

He also wonders if pea protein is undervalued.

“If protein is selling for $3,000 per tonne, is a pulse protein flour that is eight percent higher than a base grade worth more money?”

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