At the Regional Pulse Workshop held Feb. 6 at Kinetic Park in Swift Current, Chuck Penner of Leftfield Commodity Research said he believes pulse producers can expect very positive things over the next 10 years, with steady increases in global population and legume consumption driving a need for increased production, innovative market development and ongoing research.
“Food Magazine said just the other day that legumes and whole grains are on trend, so they’re starting to become more prominent in consumers’ minds. That’s a very positive thing.”
Penner’s optimism is based on a doubling of pulse production in Canada over the last 10 years, as well as his evaluation of known trends and factors and the new market opportunities for pulse ingredients like starches and proteins that are developing in food processing lines.
“When we think about looking ahead 10 years, it’s important to look back 10 years. We’ve seen pulse production double in western Canada. If you think back just 10 years ago, to say we’d be producing five million tonnes of pulses? There were a few optimists in the crowd but most of would have said ‘nah’. So it’s important to realize that the future can be quite a bit different than what the present is.”
He noted that pulse exports have quadrupled over the same period.
“I don’t think necessarily that we can just draw a straight line and say that we’re going to quadruple again in 10 years,” Penner said, but he does foresee an increased need to develop new markets for pulse starches and proteins as well as research that focuses on plant breeding to develop higher-yielding varieties.
Known trends
“In 2010, [global] population was right around seven billion people and the important thing in this is the distribution. South Asia represents about a third (34 per cent). East Asia (China) is a little under one quarter of the population (23 per cent), and the other one I want to focus on is Africa. Africa, of the seven billion, represents about 15 per cent of the population.”
Population projections for 2050 show a global population of 9.2 billion, up by 25 per cent, but with the distribution having changed dramatically: Africa is projected to account for 22 per cent of global population, an increase of almost 70 per cent in 40 years.
“If you fast forward to the projections that are out there, we see that the population adds another third … but Africa is almost one quarter of the world’s population, or will be according to these trends, and these trends are pretty well established.”
He suggested that long-term marketing initiatives should consider areas like Africa that are not currently seen as having potential.
“The interesting thing about Africa is that in the last 10 years, 6 out of the 10 fastest growing economies in the world were in Africa. They’re starting from very low per capita income, but they are the ones, on a percentage basis, that are growing the fastest, outpacing most other countries as a matter of fact.”
Consumption of calories is another significant trend Penner evaluates when plotting outlooks, because developing countries are moving towards higher consumptions of animal products like meat and dairy as population incomes increase, creating a need for more innovation in developing new types of markets.
“Urbanization is also a very well established trend, so in all these countries more and more people are moving to the cities and what that means is they’re not growing their own food; they’re buying their food, and they’re buying packaged, quick to prepare food.
“So whole pulses aren’t necessarily the best kind of thing in those situations. It’s more in terms of pulse ingredients, pulses included in other foods that are convenient, and to capture those kinds of markets is what we need to work at. There are ways that can be addressed as higher value products.”
Likely trends
Rising income levels create both over-nutrition issues and under-nutrition issues, areas in which pulses can play a strategic role.
“Pulses can be positioned in different ways as a positive in both of those situations. For people who are undernourished, it provides good quality protein, good quality calories, more nutrition. For over-nutrition, it deals with things like the glycemic index, the problem with diabetes. We see that happening here as well too.
“In terms of food aid, pulses work there very well too, because these organizations are trying to not just provide quick calories, in terms of grains, but now looking at can we provide better calories in terms of pulses.”
In India, where consumption of pulses is increasing, Penner observed, “I don’t think they’re going to be able to keep up to that rising consumption, so for 2012-13 I’m showing some pretty big imports of pulses into India and I think that trend is going to continue and remain a very strong market for us.”
He noted that Turkey’s pulse acreage has been declining over time, making it an important export market.
“They’re an important consumer, but also an important trading hub into that whole Middle East/North Africa area. Essentially their acres of pulses are declining because farmers are switching to growing wheat, durum, cotton, other crops, and they’ve actually complained that they can’t compete on the red lentil side with Canadian red lentils. It’s not profitable at that level.
“What it means is that any productivity gains that have been made through plant breeding here have actually allowed for a lower cost of production per unit, and what that means is it’s allowed us to get into that market and Turkey has become an important export market.”
He feels that China will also need to import more pulses as they turn their focus to corn, wheat and rice.
“Somebody from China recently said in a couple of years they will be importing a million tonnes of peas, and almost exclusively from Canada.”
These increases in exports haven’t happened without a concerted effort by industry and grower organizations, Penner noted, but there is still market share to be captured and research to be done in terms of increasing plant productivity.
“Both peas and lentils, about 40 to 50 per cent that are consumed are exported, and Canada is the largest player in that. What it also shows is some opportunities for things like chick peas, fava beans, dry beans. A very small portion of that is traded right now. So is there room for us to grab some market share there? I think there is, but there’s going to be a whole lot of work involved in a number of different areas in terms of plant breeding to get the right varieties and market development as well.”
There’s a danger in looking at any country as a single entity, Penner believes. “One size does not fit all. For example China: we think about it as a homogenous kind of group, but there are huge differences in ethnicity, income levels and food preferences depending where you go in the country.
“We need multiple market strategies. Where we look at trade and exports by type, this is where we see that more dominance of yellow peas and lentils. It’s supported by market development. I don’t think that those gains, especially for peas and lentils, are a coincidence.”
Possible developments
“Our yellow peas are trending higher. Some really nice solid growth in terms of exports. We depend very heavily on India and China for those, so that’s a bit risky when you depend on two countries for the bulk of your exports.
Green pea demand has been relatively static, Penner said, but the upside is that the market is more diverse across several countries, and there are new market opportunities for pea products. One area where peas are being used more frequently is in food ingredients, including pet foods.
“Pepperidge Farm wants to start using more Canadian crops and they want to start using more pulse fractions in their food ingredients, and it’s all related to healthy image, the health attributes that come from pulses.
“The nice thing is once they’re in those food processing lines they tend to stay in there. That demand tends to be quite stable. It tends to be higher value. It’s a really nice kind of outlook.”
Lentil markets will likely continue to favour reds.
“Our red lentil exports have been trending higher. It has been quite heavily concentrated on India and Turkey. This year so far, we’re probably getting close to half of what we did all of last year and signs are the demand is picking up again.”
Green lentils present more of a marketing challenge. “Most of the uses are pretty static. The one place where we could do more would be India, where split greens as a substitute for their Pigeon peas, that would be the opportunity, otherwise it’s going to be hard to find new places for big volumes of green lentils.
“Southeast Asia, they really don’t consume many whole pulses, but I think what we can really do there and what we’ve been doing in China with starches and proteins being used in those ways, and work them in there. The US is already doing some market development there and I think we can do that there too, and the population and income growth there is fantastic, so it’s a good kind of opportunity.”
Overall, Penner sees the opportunities for most volume growth in red lentils, yellow peas, desi chick peas, and dry beans.
“The most sustainable opportunities are in this food ingredient business, whether it’s here or somewhere else. So the portions or fractions or components of the pulses: the proteins, the starches. We’re going to have to see a lot more of that to really grow markets beyond where we’re at.”
