The Teamsters Canada Rail Conference served its 72-hour strike notice on Aug. 19 to the Canadian National Railway (CN Rail) and Canadian Pacific Kansas City (CPKC). In response, CN said it will lockout workers until a new agreement or binding arbitration is reached. CPKC previously stated they would lockout the Teamsters. 

Greg Northey, vice president, corporate affairs for Pulse Canada, said both railways being shut down would be an “unprecedented” situation and called the potential impact “significant”. 

“For pulses, around 90 to 95 per cent are moved by rail,” he said. “In the event of both railways being disrupted … a huge amount of our exports will be sort of stuck. It’s particularly pressing right now because peas are the first crops off. It’s very problematic for those farmers and for those exporters who rely on rail and don’t have them available.” 

Farmers will likely choose to keep their crops in storage, according to Northey, adding that elevators are also an option but have limited storage capacity. However, a rail shutdown would see failures of contracts with buyers. 

“We’re going to see massive delays. We’re going to see massive costs. We’re going to see contract penalties,” Northey said. “There’s not much that can be done to move the volume of pulses that we need to move as a contingency. We’re really at the mercy of the two railways not functioning. There’s not much you can do to replace a railway.” 

Northey said prices in the short-term will drop in an attempt to prevent deliveries. The long-term effects will be hard to determine, but he added that competitors may move into certain markets and pulse growers will have to price accordingly. 

Pulse Canada, along with 22 other crop and agricultural industry groups across the country, joined forces on a campaign called Stop The Strike. They are asking the federal government to intervene and prevent the shutdown from happening before Aug. 22. The website also allows visitors to send a form email to federal cabinet ministers and their respective MPs. 

But even before the shutdown becomes official, the damage has already started. 

“CPKC has already stopped allowing new shipments on their rail lines as of (Aug. 20),” Northey said. “(This shutdown) is going to be way too damaging for us and the economy.” 

Adding to the untimeliness of a work stoppage is that Canadian pulse crops have done well this year. 

“It’s turning out to be a pretty good (crop). There is plenty of positivity for sure,” Northey said. “India is back in the market for peas, so there is a strong demand. What’s particularly frustrating is this is some of our best windows in terms of demand and prices, especially for peas. Some of that enthusiasm has been suppressed because of our issues with the railways.” 

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Greg Northey, vice-president of corporate affairs said crop production bounced back in spite of challenging growing conditions in some areas. Chickpeas and edible beans saw increased production in 2023-24 compared to the previous year, while lentil and dry pea production declined.

Despite a smaller crop, lentil demand remained strong last year, especially from India. Pulse Canada received welcome news on Dec. 21 when the Indian government announced it will extend its tariff-free period on lentil exports to the end of March 2025. As of the end of November 2023, Canada exported 355,800 tonnes of lentils to India from licensed facilities during the 2023-24 marketing year-to-date, compared to 142,900 tonnes one year earlier, according to the Canadian Grain Commission.

Last month, India also temporarily dropped all pea import restrictions until March 2024. The restrictions were in effect since 2018.

“(Those are) really positive signals from a large market,” Northey said. “It should bode well for planting intentions in 2024. So that was good news.”

In addition, 2023-24 Canadian bulk pea exports to China totaled 641,800 tonnes through November, compared to 519,600 at the same time in 2022-23.

“We have to work very hard to maintain that market,” Northey added. “From a market standpoint, our largest (buyers) were quite good and they bode well for 2024, as well.”

The federal government unveiling its new Indo-Pacific strategy to strengthen trade ties also stood out in 2023, as well as the ability for growers to make a profit from pulse crops despite lack of production in some places, according to Northey.

While canola and wheat will take up most of the seeded area in Western Canada, global demand for Canadian lentils and peas are raising prices and could convince growers to devote more acres to them.

“We would expect, at least the projections say right now, that our volume would be higher than this past summer based on what we’re seeing in intentions,” Northey said.

However, there are still obstacles ahead for Canadian pulses. One of them is Australia projecting 1.39 million tonnes for its 2023-24 lentil crop, slightly below the record-breaking 1.69 million in 2022-23.

Pulse Canada is focusing its efforts to Chinese feed buyers to increase pea exports, as well as getting lentils and lentil products into restaurants and food service providers in Europe. Research will also be conducted to present pulses as less carbon-intensive crops for climate-conscious growers.

“Canada remains a leader, but we need to really up our game as far as growing demand (is concerned). Making sure that Canadian product is seen as world-class and then we get it to people,” Northey added. “We need to rebuild efforts on what we do now because the competition is getting fiercer.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man. 

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The report from Statistics Canada (StatCan) released Friday contains the first survey-based production estimates of the 2022-23 marketing year, while previous ones used satellite imagery.

Most crops saw increases in production compared to the drought-stricken 2021-22 marketing year, but many production estimates were adjusted downward compared to those from the previous report released in September.

Lentil production increased to 2.3 million tonnes, compared to 1.61 million in 2021-22. However, the estimate from September’s report was 2.78 million and the trade expected 2.7 million.

“I saw estimates as high as 2.8 million tonnes,” Mac Ross, director of market access and trade policy for Pulse Canada, said. “I think they pegged a smaller number by having a smaller yield.”

While Canadian lentil exports are off to a strong start, according to Ross, the lower production estimate may become a concern for exporters.

“If production is going to be around 2.3 million tonnes, it likely will limit our export program to two million tonnes,” he added. “When we look into next year and maybe see acreage drop again, I think it becomes troublesome if the rest of the world has a production hiccup.”

Despite the increase in production, Ross said carryout stocks are likely to remain low.

“Last year was an anomaly with the drought in Western Canada. (For) lentils, we could see lower stocks again because we’ve had a strong start to exports this year,” he said.

Dry pea production was totalled at 3.42 million tonnes in 2022-23, compared to 2.26 million the previous year. This month’s estimate was five per cent below the September estimate, but was close to trade expectations of 3.5 million.

“Harvest area was up by a few acres, but (the average) yield shrank by a couple of bushels (per acre),” said Ross. “Current movement usually slows down this time of year… China, (which) was taking a lot of Canadian peas due to price dynamics, isn’t as hot on their purchases as in past years. It remains to be seen, but maybe there won’t be as tight a supply on peas this year as there could be on lentils.”

He added that economic unrest, as well as pulse supplies from other countries, may affect Canadian pulse exports very soon.

“There are some economic issues in Sri Lanka and some foreign currency reserve issues in Pakistan that may impair demand. We’re also watching closely the Australian crop harvests as it’s been a wet year there. We’ll have to see the extent of that damage, but likely the strong demand for lentils will continue,” Ross said.

“We’re also seeing India’s rabi (crop harvest). There may be an increase in acres there, so we’ll be watching come March when their lentil tariff is set to be re-evaluated… We’re also in the process of negotiating a free trade agreement with India.”

Chickpea production rose by nearly 68 per cent from the year before, to 128,000 tonnes in 2022-23, but the total is still below the 214,400 tonnes produced in 2020.

Unlike the other pulses, dry bean production is slated for a decline in 2022-23. Its production total is estimated at 313,000 tonnes, less than the 385,900 tonnes grown in 2021-22. Wet spring weather in Manitoba during planting was one of the major factors related to the production cut. In 2020-21, dry bean production in Canada was totalled at 489,500 tonnes.

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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“I haven’t heard any concerns regarding quality. In a lot of cases, I’ve been hearing that the quality has been quite strong for the major crops like lentils and peas,” he said.

“Last year, we had a production shortfall due to the uncharacteristic extreme drought conditions that we experienced across Western Canada. So there will definitely be a large bounce-back in production in major pulses. We’re seeing production increases around 60 to 70 per cent for (lentils and peas). A good rebound year for a production standpoint,” Ross added.

He also said that there is strong demand for both lentils and peas, as the prices for most varieties have risen over the past month.

“Canadian lentil exports have started on a pretty solid note and we’re seeing strong demand from some of our traditional markets that’s driving some of that,” Ross explained, adding that demand for Canadian green peas, especially in China and India, could be boosted due to a small crop in the United States.

“We have increased production here versus last year (with) strong quality and strong demand from traditional markets. It seems to be a matter of executing to fulfill that demand and to get our product to market,” he added.

Earlier this year, Pulse Canada, along with other commodity organizations, took part in the Canada’s Ready campaign to emphasize the importance of not just this year’s harvest for the Canadian and global food supplies, but also improvements to the country’s grain transportation infrastructure.

“I think we’re always concerned due to our experiences in the past with transportation and the challenges we have within this country and those have been exacerbated during the pandemic,” Ross said. “From a rail perspective, it’s been a mixed bag so far from a performance standpoint. We’ve seen rail lines drop below some of the thresholds we’d like to see on order fulfillment and we’re seeing a bit of weakness in their capacity to move the crop and (they’re) maybe not meeting some of the goals they published in their grain plans.

“On the other side of things, we’ve seen at times in certain weeks, (Canadian National Railway) for example above 80 per cent in order fulfillment…It’s up to the railways to execute and be able to move that.”

Ross also mentioned that shipping container prices are falling, but issues remain over availability.

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On Feb. 12, India removed an 11 per cent tariff on Canadian lentils, just seven months after reducing the same tariff from 33 per cent. On July 23, the Indian government announced that the suspension, which was set to expire on Sept. 30, was extended to March 31, 2023. Many observers believe this was done to counter rising food prices.

“It’s certainly welcome news. India’s an important market for Canadian lentils and certainly, as a big exporter of lentils, we have a vested interest in seeing markets like in India and around the world recognize the quality and consistency of our product,” Pulse Canada’s vice-president, marketing and communications, Jeff English said.

Canada exported $510.4 million worth of lentils to India in 2021, which accounted for 77 per cent of India’s lentil imports, according to Agriculture and Agri-Food Canada (AAFC).

The federal government has also since resumed negotiations with India on a Comprehensive Economic Partnership Agreement (CEPA) and according to English, Canada’s pulse industry was a main topic in talks.

“We were encouraged to see the priorities of the Canadian pulse industry featured prominently in trade talks and we’ve been engaging with and found a willing partner in (the federal) government in trying to see that deal through to fruition,” English said.

Canada’s lentil crop this year looks closer to “normal” than that of 2021, which was devastated by drought, he noted. AAFC estimated last month that Canada will produce 2.46 million tonnes, more than 50 per cent more than in 2021-22.

“One focus for pulse growers is getting the crop in the bin. It’s not quite there yet but harvest is quickly approaching,” he said.

Another focus, he said, is “access to timely and needed rail service. In a year where we still have quite poor rail performance in terms of getting our product to port and off to export markets, what we’re focused on as we head into harvest… is to make sure that our railways know what’s coming because we’re expecting a larger crop than last year.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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“The worry in the fall is if we have a crop that bounces back to normal size that we’re going to be facing really acute problems,” he stated.

During the COVID-19 pandemic, not only have shipping costs for exporting by container skyrocketed, but the containers themselves have become harder to come by, Northey said.

Mark Hemmes, president of Quorum Corp., which tracks grain movement in Canada, said the federal government’s Shipping Conferences Exemption Act is at the root of the container issues in the country. He equated the shipping conferences to cartels.

“It goes without saying that the whole container issue is being a problem for everybody. Although prices have come down considerably, but nothing close to where they were pre-pandemic,” Hemmes commented.

The situation for Canada is likely to become worse, making its exports much less palatable to foreign customers, due to legislation passed by the United States. Northey said the U.S. recently approved the Ocean Shipping Reform Act, which is to allow regulators to investigate complaints regarding the lack of service and being refused service, along with issues pertaining to detention and demurrage costs.

“[The shipping lines] are making a lot of money providing very unreliable and quite poor service,” Northey charged.

In light of the legislative moves by the U.S. Congress and President Joe Biden, Northey suspects it won’t have any major positive effect on Canada.

“We will be at a significant competitive disadvantage just in getting service,” he warned.

That’s a massive obstacle for the Canadian pulse industry, as 40 per cent of all pulse exports are moved by container, Northey said. For lentils alone, he noted its 50 to 60 per cent.

“The bulk handling system is more geared towards wheat, canola and filling bulk vessels. Our customers for these pulse products do not desire a full bulk vessel,” Northey said.

Although the federal government formed a task force to look into the issues surrounding containers, there has yet to be anything said about effectively resolving those problems, according to Northey. However, he said the Competition Bureau of Canada has made some effort in investigating the situation.

“Any acknowledgement of this issue by the government is important as it can help drive shipping lines to provide a bit better service,” he stated.

Northey said the Coalition to Fix the Container Crunch has been pressing the Trudeau government to create and enact legislation very similar to that in the U.S. The coalition is comprised of 11 farm and business groups, including Pulse Canada.

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India’s government on Feb. 12 suspended all tariffs on most lentil imports, which will reduce costs for its two largest exporters, Canada and Australia, to ship the crop to the country.

The tariff removal is not permanent, as India can re-evaluate the policy after Sept. 30. Lentils from the U.S. still have a 22 per cent levy due to an ongoing trade dispute.

Mac Ross, director of market access and trade policy for Pulse Canada, said the suspension of tariffs was unexpected and in line with India’s recurring lack of transparency in its trade decisions.

“We’ve seen (tariffs) move up and down for Canada over the past two years between 11 and 33 per cent. As far as rationale is concerned, even though Indian lentil prices are well above their minimum support price, the announcement was a bit of a surprise as there haven’t been any meaningful gains in lentil prices for a couple of months,” Ross said. “It’s likely that it’s meant to address food price inflation concerns.”

Lentils saw record prices in India last year, selling wholesale at 80 rupees per kilogram (61 Canadian cents per pound) and 100 rupees/kg (73 cents/lb.) at retail. Last September, in an attempt to counter rising prices, India allowed lentil imports from Russia for the first time. They were previously prohibited due to phytosanitory issues.

No tariffs is good news for Canadian lentil suppliers, especially after domestic production of the crop is forecast to decline 44 per cent to 1.606 million tonnes with carryout stocks down to 75,000 tonnes in 2021-22, according to Statistics Canada.

However, India’s agricultural ministry estimates this month’s lentil harvest to be 1.58 million tonnes, a near bumper crop. India’s lentil imports are expected to drop to 500,000 tonnes, compared to 724,000 in 2021-22.

“It’s always positive to see a tariff reduction. But the broader issues that we see are around the lack of predictability and the lack of transparency in India’s policy decisions,” said Ross. “Canadian farmers and exporters need predictability.”

While Canada’s pulse export program was smaller in 2021-22 due to reduced production from last year’s drought, international demand remains strong, he added. And while prices for Canadian pulses are higher compared to last year, Ross thinks there may be the same amount of Canadian pulse acres this year.

“I don’t think analysts are predicting a really big bump in pea and lentil acres,” he said. “But I think we’re hoping for conditions that allow us to at least have a good crop again and refill stocks.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man. Includes files from Sean Pratt of the Western Producer.

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Bill C-29, introduced Tuesday in the House of Commons, cleared third reading in the Commons Wednesday and received three readings in the Senate and royal assent Friday.

The port’s longshore workers, represented by the Syndicat des debardeurs du port de Montreal (CUPE Local 375), undertook a part-time strike starting April 13, and expanded that to a full-time stoppage effective April 26.

The workers’ previous collective agreement expired at the end of December 2018; the union has described the main sticking point in talks as worker scheduling as it relates to “work/life balance.”

A strike doesn’t affect bulk grain traffic, which is protected under the federal Labour Code, it does affect export movement of containerized crops, such as pulses and special crops, as well as imports of goods such as fertilizer.

Federal Labour Minister Filomena Tassi, in introducing C-29 on Tuesday, billed it as the government’s “least desired course of action.”

The bill, she said at the time, would also set up a “neutral mediation-arbitration process to resolve the issues in dispute between the parties and conclude a new collective agreement,” she said, emphasizing the government “is not taking sides.”

Tassi had also said C-29 does not prevent the union and Maritime Employers Association (MEA), which represents port terminal companies, from “concluding an agreement on their own terms at any point in this process.”

Pulse Canada, which among other crops sector groups had pressed Ottawa to ward off a work stoppage, said Friday the pulse industry “welcomes the end of the strike” at the port and thanked MPs and senators who voted for C-29’s passage.

However, Pulse Canada president Greg Cherewyk said the group “encourages both parties to reach a permanent agreement as quickly as possible in order to provide certainty to containerized shipping in Canada.”

Cherewyk described the port work stoppage as “the latest example of the vulnerability of Canada’s supply chains” and said Pulse Canada seeks “a national conversation on supply chain resiliency” including shippers, government and other stakeholders.

CUPE on Friday ripped C-29 as “unconstitutional, as it infringes fundamental rights protected by the Charter” and said it would challenge the bill in court.

In a release, the union said the MEA “walked away from the bargaining table April 27, once it was clear the Trudeau government would give them their wish of legislating their employees back to work.”

CUPE national president Mark Hancock said Prime Minister Justin Trudeau “just sent a loud and clear message to every employer in the country: don’t bother bargaining in good faith with your workers, because if things get tough, we’ll be there to bail you out.”

CUPE national secretary-treasurer Charles Fleury, in the same release, credited the federal New Democrats and party leader Jagmeet Singh “for successfully amending this bill to take away some of its worst elements.”

The NDP, in a separate release Thursday, said Trudeau and Tassi “are going to dispose of an inconvenient labour dispute and undermine fundamental Canadian labour rights along the way.” –– Glacier FarmMedia Network

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Bacon was Pulse Canada’s first hire and has been its CEO since its inception.

“It sounds like a story, but on my first day on the job, I went out and bought a chair and a filing cabinet,” he joked.

His primary task was to set Pulse Canada on its course of direction.

“It felt like weeks looking at an 11-page document for this new organization that said things like, ‘we will develop markets in China,’ but no details about how it’s supposed to be done,” Bacon explained about those early days in September 1997.

Under Bacon’s guidance, Pulse Canada fostered a massive expansion in the farming of pulse crops throughout the country. However, he stressed a variety of pulse crops was already being grown in Canada long before the national organization was formed.

“The supply chains were often to marketers in Europe and Turkey, who would sell them to their network,” Bacon said, noting the challenge for Pulse Canada was to change that “old world order of the pulse market.” That just didn’t mean growing more peas, beans, lentils, chickpeas and fababeans; it also meant encouraging companies in Canada to process pulses for the global market.

“As the Canadian pulse industry grew, we became the world’s leading supplier of peas and lentils,” he said.

During the mid-1990s, Canadian farmers were producing around 400,000 tonnes of lentils per year. By 2005, that topped one million tonnes and hit nearly 3.2 million tonnes in 2016, according to Statistics Canada.

Dry pea production rose from about 1.8 million tonnes in 1997 to 4.8 million tonnes by 2016. And despite some setbacks over the last five years, Statistics Canada reported that nearly 4.6 million tonnes were harvested in 2020.

Besides remarkable increases in production, Bacon said the Canadian pulse industry is very dynamic and forward-looking.

“It’s very much oriented to where (it) can be as opposed to focusing on the present,” he said.

Prior to Bacon’s lengthy tenure at Pulse Canada, the native of Ogema, Sask. earned degrees in agronomy and agriculture at the University of Saskatchewan. He worked for Alberta Agriculture before joining Agriculture and Agri-Food Canada’s research station at Swift Current, Sask. From there, he provided policy analysis for federal cabinet minister Charlie Mayer, then joined the Canadian Wheat Board.

Bacon initially announced his intention to retire about two years ago. Since then he has worked with the organization’s president, Greg Cherewyk, to take over as CEO come April 1.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Why it matters: Canadian pulse crop exporters rely on shipping containers to get their products to international customers. A lack of them could delay affect sales and pulse crop prices to farmers.

The American-based Specialty Soya and Grains Alliance said Oct. 23 its “members were shocked to learn this week that shipments of agricultural products by containers are being discontinued by a major shipping line, effective immediately and for the foreseeable future.”

The alliance called the German international shipping and transportation company Hapag-Lloyd’s decision to suspend overseas container shipments from North America a “bombshell,” adding it would hurt members, especially in the upper Midwest.

The alliance said the decision is driven by “hard economics during a time of unprecedented demand for higher-value North American consumer imports by containers from Asia at premium prices… even if it means forgoing hauling critical food and agriculture products back to manufacturers overseas.”

Pulse Canada is aware of Hapag-Lloyd’s decision, Jeff English, vice president of marketing and communications, said via email Wednesday.

“Pulse Canada is working with our members and industry partners to actively monitor the impact of this decision,” he wrote, adding that it was a temporary measure.

“We understand this was a business decision made due to capacity issues.”

Canada’s pulse sector relies heavily on service providers such as steamships lines and railways to get products to markets around the world, he wrote.

“Decisions like these have a real impact on our international competitiveness,” English wrote. “From our perspective, this further underscores the need for a timely and serious conversation about investing in and improving the resilience and effectiveness of Canada’s transportation infrastructure and trade corridors and gateways.”

According to one industry official, COVID-19 delayed Asian shipments to North America earlier this year and they’re trying to make up for it now to fulfill increased Christmas demand. That should mean more containers will be available for pulse crop exporters in the new year.

Even container stuffers at Canada’s West Coast ports are affected, according to the official. Normally that’s not the case because of the quick turnaround between unloading incoming containers and filling them with pulses to ship back to Asia.

Although pulse and special crops account for most of the Canadian grain exported in containers, others such as identity-preserved crops also rely on containers.

Last crop year about 11 per cent of Western Canadian grain was exported via containers, compared to just 2.5 per cent in 1999-2000.

— Allan Dawson reports for the Manitoba Co-operator from Miami, Man.

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