Our Pulses are Racing!

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By Peter G Hall
Vice-President and Chief Economist Export Development Canada

There’s a lot to keep our pulses racing these days. Brexit, the US election, and recent violence stateside and overseas, have given rise to a new round of uncertainty. So much for our down-tools, kick-back-and-relax plans this summer – or those more leisurely pursuits that get our pulses running higher. Is all this negative stuff making for a different experience during the hot months?

Actually, there’s a key group that never gets to down-tools in the summer months the way the rest do. Summer is the time when farmers really get going (although many of them never really get to kick back at any time of the year!) While their pulses are typically racing right through the growing season, at the moment there’s something that has added a little something to their heart rates – for a very good set of reasons.

Food in general is a good business to be in these days. Key developments in agricultural technology have in the post-industrialization period have boosted efficiency in the sector exponentially. The resulting expansion of the world’s food supply has generally suppressed agricultural prices, pushing the industry to consolidate and seek the gains from economies of scale. But the tide is turning for this high output-low margin industry. Globalization has increased world wealth, most notably in the expanding ranks of the emerging market middle class. These nouveaux riches have an appetite for meat that’s hard to meet, and it’s putting exponential pressure on world supplies. Increasingly, demand is the issue, and those on the production side of the agriculture business are seeing it.

I saw it up close a week ago, in Toronto of all places. Delegates at the annual Pulse and Special Crops Convention were all smiles, and with good reason: their stuff is a hot-seller worldwide, and there seems to be no let-up in their near-future prospects. Try this on for size: exports in this space are rising by a staggering 15 per cent annually over the past 10 years, and growth is actually still accelerating! Most of the growth is coming from the sub-category of pulses, otherwise known as several varieties of peas and beans. They don’t really know the slow-growth world that others lament; their struggle is to keep pace with ever-ballooning world demand.

Who’s buying this stuff? India is the top market. It has been for at least 15 years, but has more recently pulled away from the pack, accounting for just over one-third of Canada’s global sales of pulses and special crops. Annual growth over the past 10 years has averaged an eye-popping 25 per cent. The fact is, there are other destinations where Canadian exports are growing even faster. Second-ranked Turkey is rising by 31 per cent annually, and very close behind are the UAE and Bangladesh, also in the top-10 for overall export sales. Emerging markets are definitely out in front in the growth rankings; on average, Canadian exports to non-OECD nations are rising at an annual clip of 18 per cent, while on the same basis, OECD sales are up ‘just’ 9 per cent.

To put this in better perspective, Canada’s sales of pulses and special crops to emerging markets are running at double the pace of the already-aggressive 9 per cent growth in total exports to those markets. It is also a far cry from average 10-year growth of exports to the developed world, which, thanks to the Great Recession, is a paltry 1 per cent.

Will this sub-industry’s great record continue? It’s hard to see why not. First, there is little apparent let-up in the growth of the emerging market middle class, which is adding tens of millions to their ranks every year. Second, their need for protein can’t likely be met with meat alone, and pulses are a great protein substitute. Third, consumers are increasingly switching to non- meat sources of protein. Fourth, there have been two regional food shortages in the past decade, highlighting the current delicate balance between demand and supply. Finally, there is still scope for market share gains for Canadian product. The list goes on but there is plenty of evidence of growth potential for this industry for some time to come.

The bottom line? Canada’s pulses are racing across the planet at a furious pace, completely bucking the slow-growth experience in so many other industries and markets. Pulses are increasing the pulses of those in the industry, and onlookers who know they could be experiencing the same wild ride of growth. There’s still time to get on – the ride is long from over!

[Source: EDC]

JULY 2017

Vol. 11 - No. 12










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