Analyzing the competition | By examining the potential of Black Sea exports, Pulse Canada prepares for competition
MONTREAL — Pulse Canada is sizing up the competition.
The commodity association has hired Mercantile Consulting Venture Inc. to assess what level of competition to expect from Russia, Ukraine and Kazakhstan in some of Canada’s major pulse markets.
The Black Sea region has become a top exporter of wheat and barley in the post-Soviet Union era. The concern is it may also become a major player in pulses.
Black Sea exporters have easy access to key pulse markets in southern Europe and North Africa and fairly direct access to India and China through the Suez Canal.
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Marlene Boersch, managing partner of Mercantile Consulting Venture Inc., will study current pulse production and export marketing potential for the region as well projecting future production and exports over the next 10 years.
Her primary focus will be peas, but she will also look at lentils, chickpeas and beans.
The study will also assess production, handling and freight costs in the region and compare them to Canada’s costs.
Russia’s pea exports have been volatile. but the country is capable of shipping 140,000 tonnes a year, which is significant. It is increasingly becoming a chickpea exporter.
Ukraine has exported up to 450,000 tonnes of peas and 45,000 tonnes of lentils in the past and is capable of growing a lot more pulses.
Kazakhstan is starting to ship peas and chickpea, although small amounts of both crops.
What’s concerning is that there is vast potential for the Black Sea region to rapidly ramp up crop production and exports. It accounts for 25 to 30 percent of world wheat and 37 percent of world barley exports.
“We know they can do it. They’re just building up export capacity because they haven’t been exporting for very long,” said Boersch in an interview following her presentation at the Canadian Special Crops Association’s annual conference.
She will also analyze how many winter crops are grown in the region because they could provide stiff competition to spring seeded pulses.
Boersch said Canada has been steadily losing export market share in wheat and feed grains over the past couple of decades. The exception is canola and pulses.
Canadian crop yields tend to lag behind the world average, but an even bigger competitive challenge is the escalating cost of getting Canadian crops to market.
Transportation and handling costs associated with moving grain from the farm to the West Coast have increased 27.5 percent since 2000.
“To me that’s incredibly concerning because each dollar added to those handling and shipping charges to the end destination makes you less competitive,” said Boersch.
Costs have soared in spite of massive grain elevator rationalization that has reduced the number of pick-up and drop-off points on the Prairies to less than 10 percent of what there were in 1977.
“Our cost to get to destination markets is one of the highest in the world,” she said.
Boersch has to deliver her report to Pulse Canada by Nov. 30.
She expects to present the findings at Crop Production Week in Sask-atoon in January.
