Canadian officials are slowly dismantling feed pea barriers in Asia hoping to create a new market that could eventually rival Europe.
Working closely with Canadian embassy officials, Pulse Canada has convinced South Korea to drastically reduce its tariff on the feed ingredient.
Instead of a 30 percent tariff on all exports, Canadian feed pea shippers will now deliver up to 450,000 tonnes of product at a two percent tariff.
The quota was set at 160,000 tonnes in December 2003, but it was quickly increased in February.
Korea has 93 feed mills that produce 15.5 million tonnes of feed annually. Nearly 40 percent of that is hog feed, a segment perfectly suited to peas.
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But a Pulse Canada official said Canadian exporters shouldn’t be gleeful yet because there hasn’t been sufficient demand to generate a feed pea tender from the Korean Feed Association.
Greg Cherewyk, director of programs at Pulse Canada, said the South Korean government moved so fast on Canada’s request for a tariff reduction that it caught the lobby group a bit off-guard.
“I don’t think the awareness has been built up enough to get the demand going yet.”
The group wants to step up feeding trials and other educational programs that demonstrate how effective peas are as a protein ingredient in hog rations in order to spark demand.
The clock is ticking because Korean officials have indicated the new quota may be fleeting.
“They do want to see some product coming through or else they will close that quota down or shrink it.”
Pulse Canada wants to see a minimum of one large pea shipment this year to keep the quota in place.
South Korea won’t be a lucrative market because its feed mills are “bargain hunters,” but keeping the quota has other implications. It makes it easier for Pulse Canada to pitch its antibarrier message to other Asian countries.
“It hits home when we talk about their neighbours,” said Cherewyk.
China was the first country in the region to reduce pea tariffs, dropping them to 13 percent from 17 percent effective Jan. 1, 2003, which put peas on par with other competitive feed ingredients like soybean meal. Pulse Canada will conduct 12 feeding trials in that country in 2004.
The next targets are Taiwan, Thailand and Japan. The latter imports about 24 million tonnes of feed crops every year.
Cherewyk said negotiations with Japan have hit a snag because the government wants to protect its pea producers, who grow an edible product for the snack market. Agriculture officials are hinting that any tariff reduction would have to be negotiated at the World Trade Organization level, which could take years.
“We’ve got the total support of their feed industry. Now it’s a matter of changing some minds at the ministry of agriculture level and that’s proving to be a little more difficult than we had hoped.”
If Pulse Canada and Ottawa are successful in reducing feed pea tariffs across the board in Asia, it could open up a huge new feed pea market.
Cherewyk said Japanese buyers’ biggest concern would be a lack of supply, because they could conceivably buy more Canadian feed peas than the current lead export market, Europe, does.
“Those are things we like to hear.”
