While one marketing board fights for its life, another may be conceived.
With the backdrop of the Canadian Wheat Board duking it out with the federal government to maintain its single desk status, Saskatchewan lentil growers are being asked to consider establishing a marketing board of their own to turn a group of price-takers into price-makers.
Marlene Boersch, managing partner with Mercantile Consulting Venture Inc., tossed out the idea at Pulse Days 2007 along with a number of other possibilities as she unveiled her report Market Risk Management Tools for Green Lentils.
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The report was commissioned by Saskatchewan Pulse Growers to address the declining profitability of the green lentil sector. But the association is quick to note it hasn’t endorsed the marketing board idea or any other of Boersch’s suggestions.
“The presentation at Pulse Days marks the beginning of a consultation phase where our board and staff will seek feedback from producers, the trade and industry representatives,” said SPG executive director Garth Patterson.
Canada has a stranglehold on green lentils, owning 80 percent of the export market. But exporters are not seeking out the best possible prices for their product.
Boersch produced a chart showing that at the same time Chinese lentils were fetching $900 US per tonne in Italy, Canadian large green lentils were selling for $480 a tonne in that same destination. And while U.S. pardinia lentils were selling for $700 in Spain, large green lentils were getting $485.
“Canada is the dominant force in the market but lags in extracting a similar value from the market as other exporters,” she said.
Boersch blames the conundrum on processors and exporters having a volume-based rather than value-based mind set. The industry has revolved on creating turnover and collecting elevation and processing fees, rather than fostering an environment where people wait out the market for the best prices.
“A lot of data tells us there is money left on the table. I do think it comes really out of our aggressiveness to expand market share,” she said.
Patterson said the confusing price signals at the grower level have resulted in boom and bust cycles for the industry, causing economic harm to growers and forcing some processors and exporters into bankruptcy. Something has to be done to deal with that.
“Doing nothing is a solution and we know what we’ll get. We’ll get more of the same cycles,” he said.
In her 80-page report available at www.saskpulse.com, Boersch outlined a number of options aimed at moving green lentil marketing from a supply-push to a demand-pull type of system.
The suggestions range from easily implemented changes to highly interventionist transformations. She outlined three options for the crowd, but there are dozens of other possibilities.
- A lentil marketing club would gather strong market intelligence to help growers decide at what price to sell.
- A loan program would offer subsidies similar to what exists in the United States where a floor price for the crop is established and a loan program allows growers to borrow against their product to generate cash flow without having to sell into market lows.
- A producer green lentil co-op would act as a marketing board that sets a floor price to processors and exporters, based on an in-store port value backed off to various country positions.
Boersch said it is up to the members of Saskatchewan Pulse Growers to decide what to do with the information she has compiled, but she planted a seed before outlining the three options.
“An 80 percent share is a very unique situation and there’s got to be something we can do with that collectively.”
