Pulse sector news chance for renewal – WP editorial

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Published: July 4, 2002

RECENT shakeups in the pulse industry have given farmers and the

industry reason for caution.

In the past four months three major players in the business have been

forced to close for economic reasons – Agritrans, Cancom and Naber

Seeds.

Some have blamed problems, at least partially, on overbuilding in the

sector. They say too many small players created instability in the

industry and sullied Canada’s reputation as a reliable supplier. Others

disagree, saying there is plenty of business to go around in average

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crop years, but not when the crops fall below average.

Whatever the post-mortem report, the closures raise interesting debates

about healthy competition versus efficiencies through rationalization,

and how to protect farmers who deliver to pulse crops buyers.

The latest case, involving Naber Seeds, also raises questions about the

value of the Canadian Grain Commission bond. Naber went under owing

farmers more than the value of its bond. Although some of that debt is

covered under other bankruptcy laws, or is for crops not covered by the

bond, many who thought they were covered will never be paid what is

owed them.

Perhaps it is time pulse growers revisited an old idea. In 1998, some

pulse growers were calling for a self-funded insurance plan but it

didn’t proceed because of inadequate interest. It may find a more

receptive audience today.

The closures should also prompt farmers to reconsider another risk

management tool. The pea contract flounders almost unused on the

Winnipeg Commodity Exchange. When well supported by an industry,

futures contracts provide a good hedge against unexpected price

fluctuations, adding stability to the marketplace.

The last four months have left farmers with fewer choices when it comes

to marketing their crops. Many will have to travel farther to deliver,

or will deliver from necessity to the lone grain company in their area.

This after being told for years that they must diversify into crops

like pulses to avoid the risks of over-reliance on cereals. Many

farmers have also invested in locally owned pulse crops facilities. As

centralization looms, it seems another blow to farmer initiative and

independence.

But rationalization is not all bad. It has potential to weed out less

reliable companies. If the companies left standing, including some

smaller ones, provide what farmers need, it could prove better for all.

If the surviving pulse crops companies offer efficient service and act

as more than middlemen between buyers and farmers, there is promise for

building a more vibrant pulse industry. These survivors must have first

rate market intelligence with international contacts and offices

abroad. They must not only sell, but promote Canadian pulses worldwide.

Then the industry will be able to move into the mainstream.

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