One of the newer players in the Saskatchewan pulse scene is undergoing a dramatic expansion, signalling the beginning of a much-anticipated reorganization of the sector.
Saskcan Pulse Trading Inc. bought the assets of Saskatchewan Wheat Pool’s seed cleaning plant in Rosetown, Sask., on June 24.
The company has also struck a separate deal to act as the marketing arm of the Regina pulse firm CrownAg International Inc.
The two arrangements solidify Saskcan as one of the up-and-coming movers and shakers in the special crops industry. However, the deals also send an important message to the province’s growers, said Chris Selness, a venture capitalist who helped put together the CrownAg transaction.
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“This is the start of the consolidation that needs to occur,” he said.
Selness, a partner in Crown Capital Partners, operates the firm’s agriculture funds, which have invested in Saskcan and CrownAg but passed on just about every other pulse plant in the province.
He said there are too many farmer-owned plants that don’t have the marketing savvy it takes to be successful in the business. Growers see these plants as ways to add value to their crops but fail to realize what is needed beyond that.
“They sink their money into it and they clean and bag their first 1,000 tonnes of product and then they realize they actually have to sell the stuff and get paid for it without being flamed.”
Garth Patterson, executive director of Saskatchewan Pulse Growers, said there is no doubt the industry is overbuilt and some of the weaker firms will disappear.
Saskatchewan Agriculture’s 2002 survey of special crop processors found 5.7 million tonnes of processing capacity in the province. However, growers only produced 2.4 million tonnes of special crops in 2003 and 1.8 million tonnes the year before that.
“When you look at production and you look at the capacity, they’re not close, so something has to happen. Whether it’s good or bad, (consolidation) is happening.”
Saskcan president Murad Al-Katib said buying the Rosetown plant and reaching the new marketing arrangement with CrownAg doubled the size of Saskcan’s operations overnight.
“It provides us with the final two pieces we need to really expand our green lentil program,” he said.
Saskcan burst on the pulse scene in 2001 with the construction of a large red lentil splitting plant in Regina.
Two years later the company, which is majority-owned by the Turkish firm Arbel Pulse, Grain, Industry and Trade S.A., underwent its first major expansion, leasing the assets of Grand Coulee Processing Company Inc.
With the latest deals, the firm will be marketing product from four plants, three in the Regina area and one in Rosetown.
Al-Katib said the Rosetown facility, which processes about 30,000 tonnes of lentils, peas and canaryseed a year, was a good fit because 35 percent of Saskcan’s lentils came from that region of the province.
“We couldn’t ignore having a local presence there,” he said.
The CrownAg plant will supply Saskcan with an additional 50,000 tonnes of lentils, chickpeas and marrowfat peas. It uses proprietary technology to sort pulses by colour and is capable of producing canning quality lentils that will be marketed under CrownAg’s brand name.
“We’ll continue to market that brand even though the company is changing complexion,” Al-Katib said.
CrownAg is 100 percent owned by two of Crown Capital’s venture funds, one of which also has a minority stake in Saskcan.
Ownership of CrownAg remains unchanged but a new company will market the facility’s product for the next two years, beginning this fall.
The relationship is a market reality that Selness said growers better get used to.
