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Unlocking The Changing World Ethiopia’s Potential: of Feed Peas Interview With 04 Remo Pedon 10 26 Acreage Discrepancies Revealed at U.S. Dry Bean Convention

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2013 China Kidney Bean Outlook: July/August 14

Burma (Myanmar) Monthly Pulse Report: June 2013 22

Director Nicole Calzacorta

Contributors: Dario Bard, Charlie Higgins, Dr. Randall Fairman, Daphne Khin Swe Swe Aye, and Ron Maguire

Copy Editors Dario Bard, Charlie Higgins Editorial Team Dario Bard, Charlie Higgins, Nicole Calzacorta Editorial Standards Chairman Dario Bard

Editorial Design Diego Fabbri Arp贸n Advertising Sales Contact Nicole Calzacorta at nicole@goift.com 漏IFT Solutions, Inc. 2013 All Rights Reserved / ISSN 0000-0005


INTERVIEW

The Changing World of

Feed Peas

By Dario Bard Are feed peas the new constant in the ever-changing world of animal feed? Hear the latest from industry experts.

The world of animal feed has traditionally been dominated by two ingredients: corn (as the primary source of starch for energy) and soybeans (as the main source of protein). But as corn and soy prices have risen, peas have become an increasingly popular alternative.

“I used to work for a hog company,” says Denis Tremorin, Sustainability Director for Pulse Canada. “I was there for four years and we weren’t using many peas. In the two years before I left in 2010, they were using more peas because as the price of soy meal, corn and wheat was up, the price differential made sense.”

“What makes peas attractive as feed,” explains Rex Newkirk, Director of Research and Business Development at the Canadian International Grains Institute, “is their mix of starch and protein. When corn and soybean prices are high, like today, peas can be used to offset parts of both of those ingredients. Other products, on the other hand, allow you to offset only one of the two.”

In addition to the hog industry, peas are being used to a more limited extent to feed other livestock, including chickens, cattle and sheep, and are even being used by the aquaculture industry to feed several types of fish, such as catfish and tilapia.

In Europe, peas have traditionally been used as a major ingredient in hog feed. The nutrient profile of peas matches the nutritional requirements of pigs, which, in addition, have a digestive system that is particularly adept at deriving energy from peas. In North America, however, this is a relatively new development. 04 IFTmag

“Fifteen years ago, there wasn’t much awareness of peas in Canada,” says Newkirk. “Pulse Canada and the Saskatchewan Pulse Growers and organizations like that did a lot of work to show the industry the benefits of peas. Then farmers started using them and found they make nice pellets, have good nutritional properties and the animals like eating them, and so it became sort of a staple, a go-to depending on price.”


“Peas are unique in that they can produce energy and protein in a temperate climate,” says Dr. Vern Anderson of the Carrington Research Extension Center in North Dakota. He notes that peas can be grown to the edge of the Arctic Circle and are an unparalleled feed crop in lands above 50˚ north latitude. “Where corn and soybeans can’t be grown, peas takeover as the legume of choice. Peas are being grown as a protein source for dairy cattle in the middle of Alaska, for instance, where it would cost US$ 1200 per ton to import protein oil-seed meals from the continental U.S.” It is no wonder then that Canada is a top pea producing nation. “Since the 1990s, the pea industry has grown quite a bit,” says Tremorin. “We used to grow only about 500,000 MT of peas a year and now we are growing about 3 million.” Tremorin estimates that on average 300,000 MT of Canada’s pea production goes to animal feed each year.

“Canadians probably have the strongest feed pea market because peas there are used in swine and poultry rations where the nutrient density and value can be captured,” observes Anderson. “In the U.S. and other parts of the world, there’s competition with many other grains and processing by-products like wheat middlings and distillers grains.”

“The amount of peas that go into the feed market varies quite a bit,” says Tremorin. “If the quality of a harvest is low, then what was originally intended for human consumption ends up as feed.


HUMAN CONSUMPTION AND FEED MARKETS Soon after the North American feed industry discovered the value of peas as a feed ingredient, a marked increase in human demand caused pea prices to spike. “There used to be no human consumption pressure on pea stock and now there’s a lot,” says Tremorin, “and so there is less leftover for feed. As with everything else, when the price is right, the domestic feed market is going to buy peas, but now they are competing with international buyers that are using it for human consumption, and the human consumption market tends to outbid the feed markets.”

“Over the last five years or more, our focus as an industry in terms of developing feed markets internationally has fallen off a bit because edible prices have been very strong and quality has been relatively good, so not much has been going into feed internationally,” explains Greg Cherewyk, Pulse Canada’s Executive Director. “We used to export quite a bit of feed peas to Spain, but we don’t as much anymore, and that was one of our biggest export markets for that product.”

Canadian peas are now being exported for human consumption to places like India, China and Bangladesh. Other big pea producing nations, such as Russia and Ukraine, are also exporting peas to India, but Tremorin says it is likely they are exporting peas into European feed markets, as well. Europe has a tradition of using peas for feed; they produce their own, but they also import feed peas from other nations. Within Europe, France is the big producer, shipping its peas throughout the continent, especially to Belgium, the Netherlands and Spain, as well as the Indian subcontinent. “In the Scandinavian countries peas are used primarily as forage,” says Anderson. “In Sweden, Norway and Finland, peas are grown together with oats and barley and then harvested as forage for ruminant dairy animals, mostly.” Kazakhstan is an emerging pea producer. “They need to grow more peas to provide protein and energy to their growing livestock industry,” says Anderson. In North America, efforts are underway to incorporate peas and other pulses into people’s diets in order to provide the population healthy amounts of energy and protein.

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“Some food processors are starting to fractionate peas into starch, protein and fiber,” notes Anderson, “and that adds even more value as they develop strong markets for those components.” “We are going to see North America’s appetite for pulses increase as new pulse products go mainstream,” predicts Newkirk. “Peas are a popular feed ingredient in Canada because we have a lot of production and there is availability at source, and I think that is what is peaking interest in the last couple of years here,” says Tremorin. “The feed industry has realized there are opportunities here because the market is big. We’ve been growing 3 million tonnes of peas for a number of years now. So there is room for it to fit back into rations, but it’s always going to be a numbers game with the other crops in terms of prices.”

“The feed industry is unique in that it’s very opportunistic. It is able to use whatever ingredients are thrown at it,” says Newkirk. “There are many high-quality feed ingredients and what gets used in animal rations depends on price and availability. Things can be switched quite readily, so if corn prices are high, feed wheat becomes an option. And if peas are at a good price, they’ll switch to peas. There is a lot of flexibility when it comes to animal feed ingredients and that’s an important part of the grain trade as a whole; you have this ability to absorb materials.”

With prices rising to the level of corn and soybeans, do the numbers spell game over for feed peas?

“The food and feed industries don’t really compete against each other; they complement each other,” explains Newkirk. “When there is a lot of production, say in India, and they don’t need as many, then the livestock industry becomes a really good outlet for those peas. And what happens is the price drops a little bit, the feed industry knows it’s a good product, and when the price is right viz a viz soybeans and corn, they jump on it. It varies from year to year quite a bit, but the two markets do work well together.”

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NEW FRONTIERS: SPECIALTY BEEF In the U.S., like in Canada, human-use pressure has pushed the price of peas up, limiting their use in animal feed. But the use of peas for feed has developed a loyal following. “There are some producers willing to pay the price for peas whatever they might be, as long as they are not exorbitantly expensive,” says Anderson. “People that have tried peas in their animal rations find that the animals love them and seek out rations that have peas in them once they get the taste of them, so there’s an attraction there.” “Feed ingredients are species dependent,” notes Newkirk. Peas are the preferred feed for hogs, but they haven’t been regarded as particularly beneficial to ruminants. That is, until researchers turned out some interesting results. A decade ago, the Carrington Research Extension Center was approached by a cattleman who claimed the beef derived from his cattle was juicer and tenderer because he fed his animals peas; he encouraged researchers to look into it. Studies at North Dakota State University and later the University of Nebraska-Lincoln bore this out.

“In my 34 years of research, we never found anything that we fed that made any significant difference to beef until we started working with peas,” says Anderson. “There is some pretty solid evidence that peas make the meat juicer and tenderer in animals that are not genetically pre-disposed to be as good as they can be.”

Producers of purebred bulls used for breeding report that including peas at 10% to 15% in animal feed improves the muscle development of their animals. This has led to the development of a specialty market for pea-fed beef. Anderson says the number of cattle ranchers involved is small, but they have established a loyal customer base and successfully created a niche market. “There is this almost cult-like following that demands and seeks out peafed beef in the Northern Plains region. This has attracted the attention of folks in Virginia, Iowa, Wyoming and other parts. There is interest from people calling to inquire about starting their own pea-fed beef enterprise as a market differentiator.” Does this mean peas are becoming an established animal feed ingredient? A new constant in the ever-changing world of animal feed? With the volatile price fluctuations of grains and other feed ingredients, it is difficult to be sure. But, to hear Anderson tell it, one thing is certain: “Peas make for great feed and animals love them.”

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INTERVIEW

Unlocking Ethiopia’s Potential:

Interview with

Remo Pedon By Charlie Higgins Remo Pedon of Acos tells the story of how he founded a bean processing plant in rural Ethiopia and the difference it has made. “A great example of private investment in developing countries.” These were the words Bill Gates used to describe the Acos bean processing plant in Nazreth, Ethiopia during his visit there in March 2012. Through the hard work and vision of Remo Pedon, the Italian commodity trading company’s Managing Director, the Nazreth project has become a model for unlocking the potential of agriculture in Africa. Since its construction in 2005, the facility has transformed the local bean industry by introducing European standards for cleaning and processing, as well as training materials to produce higher yields. Working with Catholic Relief Services (CRS), Acos has succeeded in creating a value chain that puts more money in the pockets of smallholders and encourages greater efficiency and quality. As part of the initial phase of the project, the company founded a local primary school which enrolls students from Nazreth and other nearby communities. We spoke to Remo Pedon recently about the inspirations for and development of the project, one which has brought a great deal of hope and pride to the people in this small Ethiopian community.


IFT: How did you get your start in the world of food commodity trading? What makes the Pedon/Acos story unique among global trading enterprises? Remo Pedon: My brothers and I started back in 1984 with a small pulses’ packaging line in Italy to serve the fast growing retailers and supermarkets. Our first break came from adding the bar code to our beans’ packs, and we have not looked back since. Pedon, which was the original company, has been the market leader in pulses retailing in Italy for the last decades. Commodity trading came in the early 2000s with the birth of Acos (Agricultural Commodity Supplies). Initially we intended to scout for goods to fulfill our own requirements. We eventually opened our first factories in China, then Ethiopia and Argentina. Now we sell our products all around the world. I would say that our unique selling point is quality. We serve high-end canning industries all over the world. We have opened new markets from origins such as Ethiopia. I believe the Acos name stands for service and reliability. We stand by our product, and this is a key point for our company. IFT: What inspired you to become involved with the Nazreth project? What prior experiences did you bring to the table? Remo Pedon: We believe in social sustainability for all our projects, but Ethiopia is a unique environment. As a group we believe Africa is the food basket to the world, and with a predicted population of 8 billion by 2025, we all need to invest in Africa for the long term. My first time in Ethiopa was in 2002, and when I arrived I saw that Ethiopian mothers would come to work with their babies and sit on the floor all day hand picking beans. I knew I had to do something about it. I believe that depriving children of their childhood means taking away part of their future, and our vision is that a happy and educated workforce is a benefit to our company. We are still at heart a family business with solid Christian values. My father, who founded Pedon, was always active in the community as a benefactor. He first started to help the people in our region after the Second World War, giving food and credit to those in need. It’s just something that’s in the family blood.

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IFT: What in your view is Ethiopia’s great agricultural potential? How do beans play into this? Remo Pedon: In Ethiopia only a small fraction of land is actually used for production because of the lack of infrastructure. Because of its physical position—it is on a plateau—it’s a country that can have several continuous crops, so it could become an important source of food for the whole world. Traditionally we look for countries that don’t have internal consumption of beans. We are not interested in feeding a domestic market; we export them to different destinations and to new markets. The Ethiopian navy pea bean is now a strong competitor to the American variety, the traditional market leader. Ethiopia has come to the foreground as a new variety. It is a little smaller because of the dryness of the country and a little creamier in color. It also holds under cooking better because it’s a slightly harder bean. IFT: What are the main pulses processed at the Nazreth plant and what is the approximate volume? Are there plans to expand into new markets or increase volume? Remo Pedon: Our main product from Ethiopia remains the navy pea bean. It was traditionally a cash crop for smallholders, and it is now a traded commodity on the Ethiopia Commodities Exchange (ECX). We will process 35,000 MT during next season and we expect to reach 50,000 MT capacity by 2015. Ethiopian small reds are also a strong product and are being very well received in the market. Acos has concentrated on opening new markets with leading canners in Europe, USA, Saudi Arabia, Israel and South Africa. We have been the leading Ethiopian exporters for the last four years running. Traditionally, Ethiopian exporters tended to serve the loose product market in countries like Pakistan, India or North Africa.


Bill Gates and Remo Pedon at Acos in Nazreth, Ethiopia (March 2012).

IFT: What kind of positive changes has the Nazreth facility brought to the local community? Remo Pedon: Actually there have been many positive changes. Smallholders have seen their selling price for navy pea raw material grow sevenfold since 2005. The network of suppliers around our Acos Ethiopia operation now provides employment to 15,000 people in the community. Also, after 10 years everybody now has a mobile phone, so that has completely changed their situation and their lives. Taxis, which were once just carts and donkeys, have been replaced by motorized scooter cars. We’ve seen a lot of progress and modernization. IFT: What are some of the cultural differences that have presented challenges during your work in Ethiopia? Remo Pedon: Ethiopia is a land of contrasts, a beautiful land of great agricultural potential, but a closed society. For example they have their own calendar; they are currently living in 2005. They also use a different time system from the rest of the world. For example 6 o’clock in the morning for them is like midnight for us. It’s a completely closed system but they use it. Some people ask me if this is just a tradition, but it’s not. Young people, 20 years old, use this system, so it’s not just for the older people; it’s for everybody. Everything related to beans is based on the price of a bag. So they’re always thinking of the price for one field bag, which is 100 kg. We [in the industry] normally talk about tons, but this can lead to big mistakes. International trading fluctuations are not known in Ethiopia and therefore tend not to impact the Ethiopian market. Despite these different structures and traditions, there can be a way of working with it and adapting to serve the international market, though it’s not always easy.

IFT: What are some of factors that have allowed Acos to flourish in Ethiopia? Remo Pedon: Constant product supply is a key factor. Also the banking system is very forward thinking and helpful. In Europe it is very difficult to obtain credit because of the banking situation. In Ethiopia if you have a very good business plan, as well as a good budget and you export, the bank will give you the amount of money that you need. This is important because in other parts of the world, not only Europe but for example South America, it’s very difficult to access credit from the bank. Here they support our project. IFT: How would you describe the impact of the Ethiopian Commodities Exchange (ECX)? Has it inspired similar efforts in other developing countries in Africa? Remo Pedon: I would say it has been very beneficial. Acos was a founding member and I believe it has steadied the market a lot. It is a good example of what Ethiopians can achieve when they set their minds and political will to it. Within a mere three years they have built a $1.2 billion market. Dr. Eleni Gabre-Madhin, who founded the exchange, has now left ECX to repeat its success in Kenya.


FEATURE

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China Kidney Bean Outlook:

July/August By Dario Bard

Many factors are driving China kidney bean production this year and a high volume is expected.


HISTORY Over the course of China’s history, there have been extreme food shortages that have resulted in starvation and suffering for many people throughout the land. During the 20th century, China has implemented a number of programs to help limit the rate of food consumption and increase food production. Over the past several decades, China has made excellent progress in food production to the point where it is a net exporter of food products. This is particularly remarkable considering that China has about 7% of the world’s arable land and more than 20% of the world’s population. If all the arable land in the world produced food at the same rate as China and all of the people in the world consumed food at the same rate as the Chinese do, our planet could support a staggering 15 billion people! Chinese efficiency in food production is due in part to the ability of the Chinese people to grow food products on marginal lands unsuitable for traditional field crops. These lands require a greater investment in manual labor and are limited as to what can be grown on them. Some of these marginal lands are being used to cultivate dried beans. These lands are characterized by a short growing season, limited access to irrigation, adverse weather patterns and soil composition that is unfit for corn and soybean cultivation. Instead, they are used to grow mung beans, adzuki beans and kidney beans, and are quite productive for these crops. Figure 1 shows the total production for these three bean types, grown primarily on marginal lands in Northeast China, over the past five years. The overall trend is on the rise as additional marginal lands are developed.

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ANALYSIS This article focuses on the overall legume export picture. As can be seen in the following charts, China’s legume export picture is dominated by kidney beans. Broad beans are for the most part grown and consumed domestically and are not expected to have a major impact on the 2013 export picture.

Our analysis will focus on three important factors that may significantly impact the production and export of kidney beans in 2013.

1 2 3

The worldwide situation is pushing kidney bean prices higher at planting time. Mung beans are in a historically bad situation at planting time in 2013. Weather patterns in 2013 have pushed farmers to plant beans rather than corn and soy.


CONSIDERATION #1: The worldwide situation is pushing kidney bean prices higher. Worldwide kidney bean prices have risen sharply over the past year due to low worldwide production. The diagram that follows shows monthly average kidney bean prices at the port of Dalian.

Most Chinese bean farmers manage less than 10 acres of land and base their planting decisions on the following factors: 1 Market bean prices at planting time. 2 Experience with growing different crops on their lands. 3 Information from trusted sources. 4 Future outlook presented by the bean processor in their area. High kidney bean prices are sure to have an impact on all four factors, leading farmers to plant more kidney beans on marginal lands. The chart that follows shows the impact of farmers choosing to grow kidney beans rather than mung beans because of high prices for the former in 2013.

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CONSIDERATION #2: China mung beans are in a historically bad situation. The Chinese press is reporting large amounts of leftover stock; less than 100% of the 2011 crop has been sold. Processors are selling the 2012 stock at a loss, having originally purchased the stock with the expectation that demand would increase to the levels seen in 2011. Consumption has been low in 2013 and prices have fallen further. During planting time this year, many farmers and processors expressed the intent to reduce planting by as much as 50%.

As previously mentioned, mung beans, adzuki beans and kidney beans may be grown in the marginal lands in the Northeast. Should farmers opt not to plant mung beans this year, there could be a significant spike in kidney bean production.


CONSIDERATION #3: Weather patterns are driving planting choices. During the past decade, the government has worked hard to increase production of certain key crops to help make sure the Chinese population is fed. These food security policies have provided farmers guaranteed prices for corn, soybeans and other key crops. Some of the areas where corn and soybeans are grown have seasons that are just barely long enough to yield a fully mature crop at the end of the year. This year, some of these lands have experienced adverse weather patterns and farmers have been forced to abandon their plans to grow corn and soy in Northeast China. This is not expected to impact corn and soy markets to any large extent, however, because there are adequate strategic reserves of both of these crops. Since the kidney bean growing season is shorter than that for corn and soy, many of the affected farmers are switching to this pulse crop. The chart that follows shows the impact of increased bean production at the 5%, 12% and 25% levels.

CONCLUSIONS Many factors are driving China kidney bean production this year and a high volume is expected. It is important to consider these factors collectively rather than individually in order to see the full picture. Based on the analysis presented here and on conversations with growers, processors and exporters, we estimate China’s 2013 kidney bean production at 1.25 million tons. This represents a 30% increase over 2012. The chart that follows puts this estimate in historical context. 20 IFTmag


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REPORT

Burma (Myanmar) Monthly Pulse Report: June 2013 By Daphne Khin Swe Swe Aye

REPORT HIGHLIGHTS Burma (Myanmar) exported 82,257 metric tons (MT) of pulses in June, a decrease of 47 percent from the same period in 2012. Of this total, 70 percent (57,406 mt) was exported to India. 185 metric tons of pulses were exported to U.S.A.

GENERAL INFORMATION Burma’s pulses in June 2013 totaled 82,257 metric tons (MT), a decrease of 47 percent from the same period of last year. Matpe Beans (black gram) accounted for 55 percent of the total followed by Toor Whole and Mung Beans with 28 percent and 6 percent respectively. India accounted for 70 percent of total exports while Pakistan accounted for 7 percent. 185 metric tons of pulses were exported to U.S.A. 22 IFTmag


TABLE 1.

Pulse exports by types and destination may 2013 (mt)


MARKET SITUATION Domestic prices for pulses were depressed in June due to weak demand from India and favorable weather conditions in India for the pulse crop. On top of that traders also stated that it was also due to weakening of the Indian Rupee against the U.S Dollar and the advance payment of 2% sales tax. However, traders speculated that export prices will recover in the next few months. Exports to India were less than last year with an average of 50,000-60,000 mt per month. Demand for the major export crop Matpe was weak this year affecting the Matpe growing farmers. 24 IFTmag


TABLE 2. Monthly export of beans and pulses (mt)

Daphne Khin Swe Swe Aye Agricultural Market Specialist

*goIFT Contributor based in Burma (Myanmar)


REPORT

Acreage Discrepancies Revealed at

U.S. Dry Bean Convention By Dario Bard

The USDA’s latest planted area figures are 16% greater than what dealers reported at the U.S. Dry Bean Convention. The biggest discrepancies lie with garbanzos, pintos, blacks and navies.

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According to the August 12 USDA Crop Report, 1.43 million acres of dry beans were planted in the U.S. this campaign, down from 1.74 million acres in 2012. But others say this year’s drop in bean acreage is even greater. At the U.S. Dry Bean Convention held in Chicago a few weeks ago, six bean dealer associations presented their estimates and arrived at a planted area figure of just over 1.2 million acres. As can be seen from the chart below, a large part of the discrepancy between these two estimates lies with four bean classes: garbanzos, pintos, blacks and navies


DEALERS VS. USDA ESTIMATES BY BEAN CLASS


THE NORTH CENTRAL REGION Darryl Berg of the Walhalla Bean Company represented the North Central Bean Dealers Association, which covers the states of Minnesota, North Dakota and Wisconsin, an area that accounts for more than a third of total U.S. dry bean production. The main bean classes produced in this region are pinto, navy, black and kidney beans.

“Our acreage is down for all pulses,” says Berg. “I don’t think the USDA numbers account for preventive planting acreage. There were some intended plantings that didn’t get seeded because of the rains we received. We added that in and that’s why we have such a significant drop. It’s just our best guess because we know there is acreage that got pp-ed. I got new crop contracts, for example, and some of my guys didn’t even get an acre in the ground.”

And of the crop that did get planted, says Berg, 50% was planted late. “That means half the crop is at higher risk of frost come fall because it was seeded after June 10th; historically, we are usually about ten days earlier than that.” Although Berg says the region received “good heat” in the months of June and July, August has kicked off with temperatures around 60˚ F. Frost typically hits around September 21st.

“If we do have some type of freeze in September, we are going to have some damage. The question is how severe and how much. If we get into October frost-free, which has happened in the past, maybe we’ll be spared the consequences. But with 50% of the crop seeded after June 10th, we are pushing the envelope.”

Berg reports that some fields are so wet they are still being weeded in August. “In terms of production,” he says, “we expect to be down 35% on pintos and close to 55% on blacks.” Based on the five year average, Berg is estimating yields of 1,500 pounds per acre for pintos. That’s the number to watch, he says, because, “This crop is at risk and if we go a couple of bags one way or the other, you multiply that by the acreage and we’re talking about a half million bags of pinto production.” The yields are more likely to be lower than higher, he says, because the late plantings make a repeat of last year’s bumper crop difficult. “Last year was perfect and we pulled 17 bags per acre. We had the perfect spring and fall, and no disease. This year, we have disease issues showing up, plus we’re late, so hitting 15 bags is going to be tough, even without the frost.” In terms of overall supply, Berg says it’s going to be tight. Carryover numbers for the region won’t become available until September.

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The possibility of a bean shortage has growers dreaming of sky-high prices. “I heard talk of prices going to US$ 50 a bag. When I hear that, I tell growers to think back to two years ago. We had a similar situation with big acreage drops and limited supplies. Plus, Mexico had the worst drought in 50 years and took 2 million bags. Prices shot up to US$ 48 at the grower level. We basically got so high we priced ourselves out of the market. Chicken was cheaper. Restaurant chains in California were serving half a scoop of beans instead of the full scoop. So at some point, we will price ourselves out to a certain degree, and that happened two years ago.”

Berg believes prices should stay around US$ 40 per bag. “Dealers are paying that much for a hundred pounds of pintos now. We’ve gone that high only three times in the past 30 some years. Growers gained US$ 7 per bag just in the month of May. Prices are already up.”

DATA PRESENTED BY DARRYL BERG AT U.S. DRY BEAN CONVENTION


THE ROCKY MOUNTAIN REGION Todd Curtiss of the Yellowstone Bean Company represented the Rocky Mountain Bean Dealers Association, which covers the states of Arizona, Colorado, Kansas, Montana, Nebraska, New Mexico, Texas, Utah and Wyoming. The Rocky Mountain Region is the U.S.’s largest pinto and Great Northern bean producing area. “In terms of overall acres, we are actually up slightly for the whole region. Most of it is in Great Northerns. Pintos are up slightly, too, but this is mostly due to seed acres, not commercial acres.” According to Curtiss, the crop looks good, with above average yields expected in some areas.

“Those are likely to be evened out, though, by areas that are short on water,” Curtiss explains. “We had a mild winter last year. Bean fields in the Rocky Mountain Region are irrigated and rely on snowpack and reservoir levels for their water supply. It was dry in spring right up until planting. And then, like the rest of the country, we got too much precipitation and bean planting was set back about a week to ten days. We caught up a bit throughout the year; I’d say on average we are about a week behind. In some places, maybe just five days.”

Despite the rain delays in some areas, other areas like western Nebraska and Wyoming may not have sufficient water throughout the growing season. Additionally, in early August some areas were hit by hail, including parts of Wyoming and Nebraska.

“We are getting hail with a bit more frequency than normal,” says Curtiss. “It looked like we were going to have a pretty decent crop, a little above average, but then early August hail set us back and we got some possible water issues. I think now we are looking at an average year.”

The market, however, is driven by North Dakota and bean shortages there will keep prices high. “They are fairly strong now and I expect they’ll remain that way for another year,” Curtiss says.

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DATA PRESENTED BY TODD CURTISS AT U.S. DRY BEAN CONVENTION


MICHIGAN Rob Chandonnet of Star of The West Milling Company represented the Michigan Bean Shippers, which cover a state that is an important black, navy and small red bean producer. Last year, 200,000 dry bean acres were planted in Michigan. The USDA estimates 180,000 acres for 2013. The Michigan Bean Shippers, however, used seed sales as a means to arrive at the estimate presented in Chicago: 170,300 acres. Chandonnet attributes the drop in acreage from last year to competition from higher value grain crops (made more attractive by the good yields they showed in 2012) and a lack of support to encourage dry bean planting. “The end-users thought the market would get softer, so they chose to wait and see how the market developed,” explains Chandonnet. Recent rains have helped much of Michigan’s dry bean crop. “We’ve seen improvement in crop conditions over previous weeks,” says Chandonnet. The latest USDA report rates crop conditions as 51% good and 12% excellent (as of August 11). “The maturity of the crop is lagging a little bit,” says Chandonnet, explaining that rains delayed planting into the second and third week of June. “We’ve also been experiencing cool weather, but as of right now, if Mother Nature is on our side, the crop has good potential.” Michigan’s carryover is nearly at zero because much of the potential carryover was used in response to the poor crops in Central and South America; Argentina’s bean crop, for instance, was devastated by drought earlier this year.

“Looking at supply and demand as well as production numbers, it seems that the majority of all bean classes will be tight,” says Chandonnet. “There’s greater global demand because of what happened in Argentina. We are seeing it with great northerns and alubias. So basically there’s very good potential for exports. It depends on what the market will bear. Everybody in the market right now has been very defensive. The majority of the old crop has been marketed and sold. In regards to new crop, I believe the majority of growers have already forward contracted what they are comfortable with; now they are waiting to see what Mother Nature gives them in regards to yields.”

Chandonnet reports black bean prices at US$ 54 to US$ 56, but he is unsure how heavily traded they are at that price. Michigan black beans are shipped domestically and also exported to Mexico. “It’s very difficult to get a handle on navy bean prices, but they are probably in the high 40s to 50s.” Europe and domestic users are the main markets for Michigan navies. 32 IFTmag


DATA PRESENTED BY ROB CHANDONNET AT U.S. DRY BEAN CONVENTION


IDAHO Craig Kelley of Rangen Commodities represented the Western Bean Dealers Association, which covers the State of Idaho, known for its garbanzo and pinto production. “We actually planted early, so everything looks really good as far as crop conditions,” says Kelley. “It’s just that we didn’t get enough of it planted.” Planted bean acres are down 27% overall this year. Due to competing crops, expected pinto production is down 50%. “Corn and malt barley were offered at a better price at the time of planting,” explains Kelley. “Small reds and pinks were a little bit more attractive on price; I think that’s why there is a small increase there. Almost everything else is down.” Part of the acreage loss is also attributable to the severe drought conditions present in Idaho, where fields are irrigated. In Chicago, Kelley presented pinto yields of 20.5 bags per acre. “In Idaho, we can yield higher than that. Pintos can do up to 30, sometimes 40 sacks per acre. Our climate warrants a higher yield, but we are being conservative this year because it’s so dry.”

With pinto acreage down, prices are on the rise. “We are already seeing an increase in the out-market price for pintos due to the fact that we are down on acres here and North Dakota planted late. We could experience a lack of supply at harvest. Prices are going up every day on pinto and black beans.”

Additionally, carryover was only reported for pintos; as of mid-July, pinto carryover stood at 10,000 cwt and, Kelley says, this is rapidly dwindling. “Idaho has a good export market for pintos,” says Kelley, “but given the lack of supply, I expect the export market will be down significantly.” Lastly, Kelley notes that his figures include seed acreage, not just commercial acreage.

34 IFTmag


DATA PRESENTED BY CRAIG KELLEY AT U.S. DRY BEAN CONVENTION


CALIFORNIA Nelson Parreira of Beans R4U, Inc., represented the California Bean Shippers. California’s main pulse crops are blackeye peas, garbanzo beans and baby and large lima beans. In Chicago, Parreira reported a 20% drop in planted acreage across all bean varieties and attributed it to the lack of water for irrigated fields. “And in the fields that were planted, we may not see full production if water becomes unavailable,” he says. “Right now, we expect we’ll have enough, but we’ll know for sure in the next 30 days.” The water shortage is the result of a below normal snowpack, a lack of rains and water allocations for the endangered delta smelt. “The federal government gave people either 20% of what they were allocated or no water at all,” says Parreira. “Those that have wells are seeing them go dry, forcing them to dig deeper or to dig new wells.” The low water supplies, however, are not the only factor leading to 2013’s low bean plantings. “We are seeing a lot of trees being planted to grow walnuts, almonds and pistachios, so every year we lose a few acres there, as well.” Parreira expects a smaller crop due to lower production this year, and predicts that prices will rise. “When prices go up, those who import our beans will probably look to other markets, so our exports will likely be down.”

36 IFTmag


DATA PRESENTED BY NELSON PARREIRA AT U.S. DRY BEAN CONVENTION


WASHINGTON Tom Grebb of the Central Bean Company represented the Washington Bean Dealers Association, which covers the State of Washington, a region that enjoys high bean yields. “Overall we are down 7,000 acres compared to last year,” says Grebb. The biggest decreases compared to 2012 are for pintos and reds; on the other hand, acreage almost doubled for Great Northerns and nearly tripled for light red kidney beans (blacks also saw a slight acreage increase). Grebb attributes the overall acreage drop to higher prices from competing crops, especially corn and, to a lesser extent, alfalfa and timothy hay.

“Some states probably lose more in the growing season than we grow in Washington,” says Grebb about Washington’s modest totals, “but we usually have a high rate of production and good quality. We do a lot of seed up in this area because of our dry, arid climate. It is not conducive to bacterial diseases.”

Washington’s high yield numbers are the result of well-irrigated fields. “Our water comes from the Columbia River, out of the Grand Coulee Dam,” explains Grebb. “All the irrigation that relies on that river only uses 3% of the annual stream flow, so we don’t tax the water availability as much as some of the other states, like Idaho and Colorado. We have a very dependable water source at this point.” The biggest discrepancy between dealer and USDA acreage figures involves garbanzo plantings in Washington. Whereas the USDA reported 92,000 acres, the Washington Bean Dealers Association reported merely 2,451 acres. Grebb is quick to point out, however, that the Washington Bean Dealers Association only tallied the acreage on the irrigated lands they work with, and that the bulk of the state’s garbanzo production takes place in the non-irrigated Palouse region. A July 30 report from the U.S. Pea and Lentil Council lists Washington’s planted area for garbanzos at 91,047 acres. Washington’s biggest pulse exports are red beans to Australia, New Zealand and Japan. Although a short crop is expected across the board, Washington’s red bean situation may fare well. “Our red bean carryover is up more than I thought it would be,” notes Grebb.

38 IFTmag


DATA PRESENTED BY TOM GREBB AT U.S. DRY BEAN CONVENTION


U.S. TOTALS PRESENTED BY THE DEALER ASSOCIATIONS AT U.S. DRY BEAN CONVENTION


USDA ACREAGE FIGURES BY BEAN CLASS (FROM CROP REPORT RELEASED AUGUST 12)


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IFT Magazine August 2013  

Exclusive Interview: Remo Pedon Featured Topic: Emerging Markets

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