Another group of producers in southern Saskatchewan is poised to begin
construction of a new pulse processing plant this spring, prompting
some people to ask how many is too many?
Those already concerned about congestion in the pulse industry point to
the recent bankruptcy of Winnipeg pulse crop broker, Agritrans
Logistics Ltd., as evidence the system is approaching a breaking point.
“I would suggest at this point we’re probably way over capacity,” said
Greg Simpson of Simpson Seeds Inc., a Moose Jaw, Sask., pulse processor.
Read Also
Land crash warning rejected
A technical analyst believes that Saskatchewan land values could be due for a correction, but land owners and FCC say supply/demand fundamentals drive land prices – not mathematical models
“We’re saturated with processing facilities now. We probably would need
five years or more before we’d see an increase of demand sufficient to
support all of these facilities.”
Blue Hills Processors of Avonlea, Sask., is the latest new processing
facility slated to be built on the Prairies.
The $5 million initiative involves converting a former Saskatchewan
Wheat Pool elevator and building a plant that will have the ability to
clean and process 140,000 tonnes of lentils, chickpeas and peas
annually. Construction is to begin this spring.
That announcement came as a Winnipeg pulse crop brokerage and logistics
management firm filed for bankruptcy March 21.
A statement of affairs document provided by Industry Canada shows
Agritrans Logistics has $1.47 million in secured and unsecured debt and
only $442,215 in assets to pay it off.
Simpson worries this bankruptcy may be a harbinger of things to come,
especially if farmers have another bad year growing pulses.
He can think of seven new pulse plants that have started up in southern
Saskatchewan in the past year or two, and he figures there are another
dozen in the central and northern parts of the province.
Last year was a tough one to get into the processing business. Farmers
harvested a crop that was 30 percent smaller than what they took off
the fields in 2000.
“It’s a rough start for a lot of these facilities. Especially when they
go in with such a tremendous amount of capital injection in the
up-front part of the process,” said Simpson.
“I would suggest that it (wouldn’t) be sufficient to barely keep your
employees paid, let alone put return in your pocket.”
Simpson isn’t the only one wondering whether the processing sector has
overbuilt.
“I have mused the same thing here with the guys in the office,” said
Garry Mihalicz, owner of C.G.F. Brokerage Ltd., a Saskatoon pulse crop
broker.
His company has been getting calls from more processing plants looking
for product this year because they need the work.
“If we have another year like last year, where we have a (30) percent
reduction in production then, yeah, there is going to be a few of them
feeling the pinch.”
Mihalicz and other analysts are expecting farmers to plant more peas,
about the same amount of lentils and as little as half the chickpea
acres they did last year. Many processing facilities count on those
chickpeas to generate income, said Shaunavon, Sask., seed grower Gerald
Girodat.
“They were the ones that I would think most processors wanted to be a
big percentage of their annual output.”
He thinks the days of pulse plant construction might be winding down.
“You hate to see it sort of come to an end. I mean, it’s good for
communities that can get processing plants, but they’ve got to have
product to process.”
