The United States Department of Agriculture estimates American pulse producers will receive $156 million US in loan deficiency payments by the time the 2002 farm bill expires in 2007.
U.S. pea acreage is expected to more than triple and lentil acreage to double during that time. That will have a damping effect on prices, driving down pea values 18 percent and lentils four percent between 2003 and 2007, according to the department.
If pulses hadn’t been included in the farm bill, the USDA thinks pea and lentil plantings would have remained static at 232,000 acres and 200,000 acres respectively.
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But with farmers receiving a guaranteed price for those crops, peas should reach 794,000 acres by 2007 and lentils to 398,000 acres.
Gordon Bacon, chief executive officer of Pulse Canada, thinks the scenario could get worse. The USDA’s forecast was done in 2002, but a short crop has driven up prices since then.
“The strong prices that growers saw following the 2002 harvest may very well have caught the interest of U.S. farmers,” he said.
“It could in fact result in a quicker adoption of these crops in U.S. rotations than was forecast by that USDA estimate.”
When converted to Canadian dollars, the 2002-03 support levels work out to $5.62 per bushel for peas and 17.65 cents per pound for lentils. U.S. growers are guaranteed those rates even if the market price is lower.
Bacon said the pea and lentil support levels are “significantly higher” than the 10-year average world prices for those two crops.
The loan deficiency program also includes small chickpea payments of 11.18 cents per lb., but that rate is below market values.
Food aid programs will also insulate U.S. pulse growers from global marketing realities. During the 2001-02 crop year, the USDA purchased 63 percent of total U.S. lentil production for food aid.
That was unusually high, but the government’s food aid purchases regularly account for 25 to 33 percent of the lentil crop.
“The percentage of U.S. production that’s purchased by U.S. aid programs is astounding, really,” Bacon said.
Those sales into the domestic market artificially drive up American pulse prices, because growers would be getting much less for their crop if they were selling into more typical markets such as Southeast Asia, he said.
Bacon plans to share his concerns about U.S. support programs with other pulse exporting nations at the International Pulse Trade and Industry Confederation convention in Australia this April.
“We’re bringing this issue to the attention of the executive of this organization,” he said.
