Pulse Australia is forecasting a kangaroo-sized jump in production this year, an estimate that has one Canadian market analyst scratching her head.
In a report released May 11, Australia’s industry association predicted 2.26 million tonnes of pulse production, up from 709,830 tonnes in what was an “extraordinarily dry” 2006 campaign.
If the forecast pans out, Australian exporters will provide stiff competition in some of Canada’s key pulse markets when their crop comes off in December. But one analyst said it may be premature to start worrying about this particular challenge.
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“I’m very skeptical about that kind of production,” said Marlene Boersch, managing partner of Mercantile Consulting Venture Inc., a Winnipeg firm.
She said the agency’s 504,000 tonne pea estimate seems optimistic, especially considering it includes 100,000 tonnes from western Australia, where Boersch’s contacts tell her it continues to be extremely dry.
It represents a 179,000 tonne increase over the seven year pea production average despite a five percent reduction in seeded acreage from last year.
“To get that kind of production, in excess of 500,000 tonnes, is a stretch,” said Boersch.
If the forecast is borne out, Australia will have more than 300,000 tonnes of peas for export, which will largely head to the Indian subcontinent.
It would be a welcome injection of product for India, but Boersch doubts that it would turn around what is unusually strong demand stemming out of that region.
Another factor working in Canada’s favour is its marketing clout relative to Australia. According to data compiled by the Food and Agriculture Organization of the United Nations, Canada accounted for 2.3 million of the 3.9 million tonnes of worldwide pea exports in 2005, compared to 122,000 tonnes from Australia.
“We have a lot of market power,” said Boersch.
Pulse Australia forecasted lentil production at 223,450 tonnes, which is about 80,000 tonnes larger than the seven year production average.
“Again, I am highly skeptical that they could do that,” said Boersch, noting this year’s 16 percent decrease in seeded acreage from last year.
Much of the agency’s optimism revolves on seasonal forecasts calling for larger than average rainfall in eastern Australia and average precipitation in the west, the benefits of coming out of an El Nino weather event.
Boersch said those are just forecasts. The reality is that it was dry in the east when the crop was seeded and it is still dry in the west. So there is a lot of ground to make up.
If farmers manage to produce 223,450 tonnes of red lentils, there will be 200,000 tonnes available for export, which could disrupt Canadian lentil shipments into Asia and the Middle East.
The other Australian pulse crop that directly competes with Canadian product is desi chickpeas. The forecast calls for 308,250 tonnes of desis, up 40 percent from last year’s output. Desis were one of the few crops that survived the intense heat of 2006.
Boersch said the crop will compete head-to-head with Canadian product in India. But with India going through its biggest food deficit in years and Australia’s crop unavailable until Christmas, the window of opportunity is still wide open for Canadian chickpea exporters.
She said it is unclear why a group representing an export-dependent industry would publish such an aggressive pulse forecast.
“It doesn’t track with the reports we’re seeing from Australia on some of the other crops,” said Boersch.
Regardless of the report’s validity, it shouldn’t rank high on the list of concerns facing Canada’s pulse industry.
“A much bigger worry is can we realize some of these markets given the transportation problems we have,” said Boersch.
