Canada will face a growing tide of competition from U.S. pulses in overseas markets and at home in the coming crop year, says a U.S. special crops analyst.
U.S. pulse crop exports grew 117 percent during the first 10 months of 2005-06 and show no sign of abating in the coming crop year, says Gary Lucier, an economist with the United States Department of Agriculture.
He predicts a 42 percent increase in pea and lentil production south of the border. An official production estimate is scheduled for release on July 15.
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“We have fairly attractive loan rates for both peas and lentils. Because of that, growers are not looking so much at the market price,” said Lucier.
Almost all of the increased production will be destined for export because the domestic food and feed industries are underdeveloped.
“There’s nowhere else for it to go at this time,” he said.
Last year, Spain was the big buyer of American pulses, accounting for 19 percent of U.S. pea and lentil exports for the first 10 months of the marketing year.
That was a market largely created by Spain’s drought last year. He expects India to be the hot destination for U.S. pulses in 2006-07.
“That means we’ll be at loggerheads with the Canadians on that one,” said the analyst.
Another source of tension is the volume of U.S. pulses flowing into southern Saskatchewan processing plants.
Canada was the second largest export destination for U.S. pulses in 2005-06, accounting for 12 percent of outbound shipments from July 1 to the end of April.
“A lot of that has to do with a lack of processing facilities in the United States,” said Lucier.
Growers in North Dakota and Montana have few buyers for their pulse crops, so they are forced to look north of the border. Lucier doesn’t expect that processing shortfall to be addressed anytime soon, so there won’t be any slowdown in American exports to Canada.
Pulse growers in southern Saskatchewan contend the subsidized American product drives down prices in their local markets.
Their complaints prompted a month-long inquiry last fall by Saskatchewan Pulse Growers into the possibility of launching an anti-dumping countervailing duty on the subsidized American product.
The grower group decided to drop the idea because it wouldn’t address the overproduction happening in the U.S. and could hurt the Canadian processing sector.
“No one is happy with the peas coming up here, but what’s even worse is if we have processing plants close here and then relocate in the States,” said SPG executive director Garth Patterson.
He said the answer lies in curtailing U.S. subsidies through World Trade Organization talks.
“We just have to have hope that the Canadian government can have influence at the WTO and can rectify this issue,” said Patterson.
Until that happens Canada will be forced to compete with subsidized U.S. pulses, which can present problems in price-sensitive markets like India and Pakistan.
Fortunately, India appears to be in desperate need of the commodity. The government has dropped a 10 percent import duty on pulses until March 31, 2007, and has banned exports of pulses until Dec. 28, 2006.
“It’s not like we’ll be competing with the Americans into a tight market,” said Patterson.
Adding to the building tension between U.S. and Canadian pulse farmers is the fact that the Americans are increasingly growing and exporting yellow peas, which comprise an estimated three-quarters of Saskatchewan’s 2006 pea acreage.
U.S. green and yellow pea export volumes were almost identical for the first 10 months of 2005-06.
“That’s fairly new for us because greens used to dominate,” said Lucier.
