By John DePutter & Dave Milne – May 22, 2018
“Cargill, the global grains trader, sees the future of protein in the humble pea.”
– Reuters, May 18, 2018
What it means:
For Canadian growers, the emergence of the pea protein market means less reliance on overseas buyers and a more predictable domestic market.
By now, farmers have heard all about the new pea processing capacity coming online in Western Canada, including the Roquette plant in Portage la Prairie in MB and Verdient Foods in Vanscoy, SK. Those two plants alone are expected to eventually account for up to 285,000 tonnes of new pea demand.
Other projects are on the horizon in Saskatchewan, and potentially in Alberta as well, with ag giants such as Cargill and Richardson showing plenty of interest.
Plant protein a big and growing business
Just how much domestic pea processing capacity is ultimately set to grow remains uncertain, but it’s clear this is no flash in the pan. According to a report late last year from the Canada West Foundation, the global plant-based protein market is already estimated at more than US$8 billion and is expected to reach US$14.8 billion by 2023. Indeed, between 2017 and 2023, human consumption of plant-based protein is expected to nearly double.
And as the Canada West Foundation report aptly points out, Canada is well-placed not only to enter the plant ingredient processing sector – but to dominate it.
Of course, all of this comes at a time when Prairie pea and other pulse markets (mainly lentils) are experiencing a rough patch. After years of strong global demand that fueled returns and production growth, heavy supplies and the resulting slowdown in demand – particularly from India – has now pressured Prairie prices sharply lower.
Pea receipts down with exports
It marks a big change from just two years ago, when a bustling domestic export program and a nearly 15% increase in prices pushed 2016 Canadian dry pea receipts up a whopping 68% from a year earlier to $1.4 billion. In contrast, pea returns through the first three quarters of 2017 were down more than 8% to just below $920 million.
Now, with India a reluctant buyer, Agriculture Canada is projecting that 2017-18 Canadian dry pea exports will end up around 2.5 million tonnes – down more than one-third or 1.4 million tonnes from 2016-17.
It remains unlikely that domestic processing demand will ever be able to completely replace exports, but at the very least it should be able to make the inevitable price valleys at little less deep, and the next peak perhaps a bit steeper.
As the Canada West Foundation report noted: “Agricultural exports are already a western strength. Diversifying from this strength makes sense.”
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