Construction plans devised during the growth and prosperity stage of
the pulse industry are coming to fruition in the doom and gloom era,
but that doesn’t faze two fledgling processors.
The sector is bracing for a second consecutive season of low volumes
and poor quality crops.
Statistics Canada forecasts a pea and lentil crop that is 31 percent
smaller than last year’s. And there are quality concerns with green
peas and lentils.
A bad crop in 2001 has already led to company closures in the pulse
Read Also
Ag In Motion 2025 site hub of activity
day before Ag in Motion preview.
processing and export businesses. Some left the industry by choice,
others through financial ruin.
It appears to be a tough time to christen a new pulse facility, but two
of the largest recent entrants into the industry remain optimistic.
Blue Hills Processing Ltd. plans to start accepting product by
mid-November and begin processing by the end of December or early
January. Construction on its $5 million facility began in July. The 75
farmers and local investors who own the Avonlea, Sask., plant are eager
to receive their first shipment of crop.
Company president Anthony Kulbacki has paid close attention to the
demise of established pulse firms like Cancom Grain Co. Inc. and Naber
Seed and Grain Co. Ltd., which were forced out of business earlier this
year. But he doesn’t see those failures as a bad omen for Blue Hills.
“There is always going to be room in this business for well-managed and
conservative businesses. I think maybe that both those companies were
overextended and were a little bit mixed up just what their business
plan was,” said Kulbacki.
Blue Hills plans to clean, bag, size and load peas, lentils and
chickpeas for Canadian line companies and other exporters. It will not
make its money selling product directly to end users.
“Our business plan is pretty straightforward. We’re focused on being a
toll processor for blue chip exporters and foreign buyers,” said
Kulbacki.
“We picked our spot and know our role in the whole supply chain.”
Blue Hills said it has commitments for enough cleaned product to run at
full throttle from the start. The company has capacity to clean 140,000
tonnes of pulses a year.
Kulbacki doesn’t expect problems finding the raw material for those
orders because 792,000 tonnes of pulses were grown within a 120
kilometre radius of the plant in 2001.
“Even if that’s down by half, I think there’s still a lot of product
out there that needs to be moved.”
Crop procurement is going to be more of a problem this year for Saskcan
Pulse Trading Inc., a new lentil splitting plant built with Turkish
money.
It’s an especially bad year for this Regina-based plant to be opening
its doors because a dry summer followed by a wet fall has devastated
the province’s lentil crop.
Company president Murad Al-Katib said it’s a tough way to start. The
poor quality crop will have a “significant impact” on the business
because the plan was to process No. 2 or better lentils.
“The business plan was built on buying quality product commercially and
from the grower,” said Al-Katib.
But the plan also called for this to be a slow “ramp-up” year for the
company, where only a fraction of the plant’s 85,000-tonne splitting
capacity would be used.
“We didn’t build this plant for one year. We built this plant to be
here on a long-term basis,” said Al-Katib.
The $5.2 million facility started receiving grain in September and will
be fully operational by Halloween. Saskcan Pulse has shipped dozens of
whole lentil samples to overseas buyers, who are so far unimpressed
with the quality of this year’s crop.
Saskcan Pulse ships whole and split lentils. There will likely be a
market for poor quality whole green lentils but the reds will have to
go out split, which is going to be costly and time consuming with poor
crop quality.
Low grade lentils are harder to work with, but the plant can take some
off-grade and discoloured product and process it into marketable split
lentils.
“At least it’s good that we’re here and we can help (farmers) to move
that product in a difficult year,” said Al-Katib.
He said the company has had to change its market focus and pay more
attention to quality than it wanted to, but with adequate capital and
the right partners in place, the business will survive this trial with
ease.
“We take it in stride,” said Al-Katib.
“You find your market spots, you operate and you cross your fingers for
next year. That’s about all you can do.”
