Pulse Growth Opportunities: An Update

Tuesday, August 27, 2024

‘It always seems like a bit of a catch-22.’

By Richard Kamchen

For decades now, the benefits of pulses have been touted by commodity groups and media.

We’re told pulses are good for farmers, consumers, and that demand potential is barely tapped.

One group, Alberta Pulse Growers, has long sought to achieve its vision of “pulses on every farm, on every plate.” But the sector remains a long way from reaching that goal.

Are pulses, in fact, a niche in Canadian agriculture? And can they ever be more than that?

Acreage and production

Commenting on the growth of pulse acres in Western Canada, Agriculture and Agri-Food Canada spokesperson Bronwyn Goodman points out that seeded area of pulses rose about two million acres in 20 years.

That’s true: Statistics Canada in spring 2024 forecast pulse acres to reach 7.7 million this year, up from about 5.5 million in 2004.

“This is mostly due to an increase in lentil seeded area in Western Canada, particularly in the provinces of Saskatchewan and Alberta,” Goodman says.

Almost 90 per cent of Canada’s lentils are grown in Saskatchewan, where seeded area rose from 1.8 million acres in 2004 to Statistics Canada’s spring estimate of almost 3.4 million in 2024. However, lentil acres during the decade between 2014 and 2024 were higher than StatCan’s new crop estimate seven times. And Saskatchewan’s lentil acreage peaked in 2016 at 5.1 million.

In Alberta, lentil seeded area rose dramatically in 20 years, from 18,000 acres in 2004 to StatCan’s predicted 451,000 in 2024. But the latter is actually a 3.7 per cent decrease from 2023. Further, the 2024 estimate has also been bested in 2016, 2017, and 2022.

“While acres can fluctuate year to year, pulses remain a key component in many farmers’ crop rotations,” says Pulse Canada’s Jeff English.

Pulse Canada is the national association representing growers, traders, and processors of Canadian pulse crops, namely, peas, lentils, beans, and chickpeas.

English points out that Canadian pulse production has roughly doubled in the last 20 years. StatCan shows 2003 production at 2.8 million tonnes vs. 4.8 million in 2023.

More recent figures are even less flattering.

Dry peas alone reached 4.8 million tonnes in 2016, a record year. That same year, lentil production also hit all-time highs at 3.2 million tonnes.

Meanwhile, production of beans (all dry, white and coloured) peaked in 2020 at 489,500 tonnes. The only other time output cracked 400,000 was in 2002.

Chickpea production topped out back in 2001 when it hit 455,000 tonnes. It has not hit those highs again, and eclipsed 300,000 only once since, back in 2018.

Export demand

Pulses that Canadian farmers produce in a given year are mostly shipped abroad.

Canada is the world’s largest exporter of pulses, with roughly 85 per cent of its production exported. But that comes with some challenges.

“There is more geopolitical risk for pulses than other crops, given our reliance on exports versus domestic demand,” explains Brian Voth, president of IntelliFARM.

English, however, sees new use market opportunities arising. He cites a report from U.K. market intelligence firm Mintel, which highlights greater interest from Indian consumers for dairy alternative products, which represents the packaged food category that accounts for the largest volume use of pea protein.

India, however, is a sore spot for Canada’s pulse sector.

Once representing over 40 per cent of Canadian yellow pea and red lentil exports in 2016, India stopped being a reliable go-to market following tariffs and other restrictions in 2017 and 2018. It would take almost six years before Canada shipped peas to India tariff-free.

Voth says that India dropping its tariff earlier this year was an unexpected boost to demand.

“But, as of right now, that does not go into new crop, so that is up in the air again,” he says.

Currently, Canada’s top markets for its peas are China, Bangladesh, and the U.S.

But Canada faces stiff competition from Australia, which has a huge logistical advantage into the Asian and Indian markets, Voth says.

Besides Australia, Canada also faces greater competition in global export markets from Russia and Kazakhstan, notes LeftField Commodity Research’s Jonathon Driedger.

“So, while global consumption may see steady increases, the extent to which Canada’s potential exports may also increase might not happen in a ‘straight line,’ and may vary in any given year depending on production in other exporting countries, and the extent to which key importers are able to source supplies more cheaply from other destinations,” Driedger says.

Domestic demand

Compared to its exports, Canada’s domestic pulse market is relatively small. Ag Canada estimates domestic demand for all pulses combined at 1.1 million tonnes in 2024-25, up from the department’s estimated 938,000 tonnes for 2023-24.

However, the pulse industry aims to drive domestic growth in both value-added processing and feed, according to English.

For value-added processing, English points to categories that would benefit from the inclusion of pulse flours, proteins or other fractions, such as cereal-based foods.

Although there’s much media coverage about plant-based meats, English admits there are still relatively small volumes of pulse ingredients used in such applications.

Ag Canada’s Goodman also sounds bullish: “While there are challenges, the market is expected to continue to grow given the benefits of incorporating pulses into diets through direct consumption and their use as ingredients.”

She points out that with every new processing plant commissioned, thousands of tonnes of pulses will be required to produce these food ingredients.

Animal feed is another Pulse Canada target, and a life cycle analysis it commissioned found that incorporating peas into pork rations reduced the carbon impact of the feed by 28 per cent, and the overall emissions of the pork by 18 per cent, English says.

“We believe this can translate into significant domestic growth potential for companies that are looking for solutions to meet their environmental goals,” he says.

Challenges

In 2017, Pulse Canada announced its goal to generate new demand for pulses and pulse ingredients for a quarter of total production by 2025. But by 2023, it pushed back its target date to 2030.

“I believe domestic demand will grow, although perhaps not as aggressively as some of the ‘hype’ suggested it might a few years ago,” Driedger says.

Goodman says there are many reasons to be optimistic about growth pulse demand.

“As the world’s population continues to grow, pulses remain an affordable source of protein and are a staple in diets around the world,” she says.

But there are no guarantees.

“Demand remains subject to many different market forces and factors, including price competitiveness and substitutability with other commodities in major market segments; in particular, for feed uses,” Goodman says.

She cites increased potential in hog rations and aquaculture uses, but notes this would require further research and marketing to bolster additional inclusion in existing feed rations.

There’s also more room for human consumption of pulses, but not without marketing efforts.

“Raising awareness of the health and nutritional benefits of pulses remains critical to encourage consumers, the food industry and other major market segments, including hotel, restaurant and institutions, to consume more pulses,” Goodman says. “On the positive side, pulses have many desirable health and nutritional benefits, which provide advantageous marketing attributes vs. existing food ingredients, and will help grow demand.”

But Neil Townsend, market analyst with GrainFox, doubts consumers are ready to buy more right now.

Grocery shoppers in Canada and the U.S. are typically more likely to experiment with a more expensive product if it offers nutritional benefits, but not when their food budgets are stretched thin.

“With entire food budgets going up, people have to pick and choose. So, more niche items end up being the things that get cut out of the grocery cart,” Townsend says.

Farmers’ keenness limited

Farmers aren’t showing signs of a desire to jump in with both feet either.

English repeats the agronomic benefits pulses offer that farmers have heard for many years: That they require little to no nitrogen fertilizer to grow, thus lowering input costs, while benefiting yields in future seasons. English adds that crops like wheat and barley produce higher yields and have higher protein when grown after pulses.

But disease and weed pressures have been anything but positive for farmers who are growing pulses.

Goodman lists a number of factors that could help encourage farmers to put more pulses in the ground, including:

• Targeted investments that will help develop pulse varieties that are resistant to disease and resilient to environmental stress, and address major biotic and abiotic threats.
• Crop protection products and other practices that allow pulses to better compete with key disease threats, such as Aphanomyces and Fusarium, anthracnose, Ascochyta, and other bacterial blights.
• Herbicide programs to help compete with weed pressures, given pulses lack the major herbicide tolerance traits available to other field crops.

Another factor limiting farmers’ interest is market access, as trade barriers restrict their ability to market their crops.

And until demand dynamics change, production likely won’t either, says Voth.

“It always seems like a bit of a Catch-22, where we need to see demand increases to change production volumes, but production volumes can’t change without demand increases,” Voth says. BF