Issuu on Google+


Content

Canadian Pulse Harvest Posts Record Numbers 12

Exclusive: U.S. Dry Bean Harvest Report 04 20 Smart Machines: The Past, Present and Future of Sorting Technology

24 Pulse Industry Reacts To Government Shutdown and Farm Bill Lapse

34 The Shipping News: An Interview with Powered by www.goIFT.com

Steven Pocklington

38 Belize’s Top Bean Exporter:

An Interview with Otto Friesen


Building for the Future: An Interview with Juan Carlos Abascal 16

Mexican Bean Market: What Traders Are Saying 28

Director Nicole Calzacorta

Contributors: Dario Bard, Charlie Higgins, Dr. Randall Fairman, Daphne Khin Swe Swe Aye, Jonathon Driedger, 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 0000-0008


REPORT

Exclusive: U.S. Dry Bean Harvest Report By Dario Bard With less acreage planted and a late harvest, industry experts are estimating below-average production this year. IFT reports on the latest from each region. At the U.S. Dry Bean Convention held in Chicago last July, representatives from each regional dealer association presented bean production estimates totaling 21 million cwt.

difficult for the industry to contract acreage this year. In 2012, 1.7 million acres of beans were planted compared to 1.2 million in 2013, according to dealer association calculations.

“Historically, that’s a small crop,” says Richard Duty, a bean trader with Trinidad Benham and a board member of the Rocky Mountain Bean Dealers Association.

With the harvest still in its final stages and the USDA’s October crop production report cancelled due to the U.S. government shutdown, it is difficult to get a handle on production numbers. It appears, though, that due to rain delays in the major bean growing states, final production is unlikely to exceed the 21 million cwt estimate. The USDA plans to release its numbers on November 8, but Duty is skeptical about their reliability.

In 2012, bean production came in at 30 million cwt, a harvest Duty characterizes as “abnormally large.” He suspects this year’s modest estimates may be due to the downward pressure on prices exerted by a plentiful supply; this made it more 04 IFTmag


Read the NASS USDA November Crop Production Report by clicking HERE.

“Normally, the post-harvest letter we send them would have gone out by now,” says Duty, “but this year, due to this drawn out harvest, we are holding off till November 15; we don’t think anyone will have all the information before then.”

“Given the shutdown and the late harvest, I wouldn’t have as much confidence in the USDA report this year,” he says, noting that the Rocky Mountain Dealers Association conducts its own canvas of processors at the end of every harvest to gather information on yields and overall production. In order to provide readers with a timely insider’s look at the 2013 U.S. bean harvest, IFT checks in with bean dealers to see where things stand.


THE NORTH CENTRAL REGION The North Central Region, comprised of the states of Minnesota, North Dakota and Wisconsin, accounts for more than 65% of the nation’s pinto bean production, and the majority of its navy, black and kidney beans. At the U.S. Dry Bean Convention held in Chicago this past July, Darryl Berg of the Walhalla Bean Company represented the North Central Bean Dealers Association and presented a production estimate of 8.6 million cwt. Asked recently how the harvest was going, Berg says, “For the most part, it’s a little above the estimate I gave in Chicago. Across all classes, we are seeing average yields that are higher than we expected by 100 to 200 pounds per acre.” Much of the crop was planted late, but concerns about an October frost never materialized. For pintos and navies, however, Berg estimates that 5 to 15% of the crop is still in the fields. “The situation for dark red kidney beans is not good,” he notes. “There are quite a bit left out there.” The harvest has been hampered by almost continuous rains in October. As a result, Berg says quality is average at best. “The crop planted early was fine, but let’s face it, we are harvesting in October, so we got typical October beans; they are discolored from the moisture and sunlight.” Carryover numbers for the region were unavailable at the Convention, but since then the Upper Great Plains Transportation Institute has released stocks-on-hand numbers for all classes except kidney beans. The carryover situation is summarized in the table below, along with price information provided by Berg:

CARRYOVER & PRICES BY BEAN CLASS AS OF JULY 31

With respect to prices, Berg points out, “You have to keep the prices of other commodities in mind. Corn is below US$ 4 a bushel. Dry beans and corn are worlds apart, but you still have to look at your income per acre, and at this moment, in terms of revenue, the big dog on the block is dry beans, so you’re likely to see more willing sellers at these levels. It’s pretty good money right now compared to other commodities.” 06 IFTmag


THE ROCKY MOUNTAIN REGION Todd Curtiss of the Yellowstone Bean Company represented the Rocky Mountain Bean Dealers Association in Chicago and presented a production estimate of 5.8 million cwt. The Rocky Mountain Region encompasses the states of Arizona, Colorado, Kansas, Montana, Nebraska, New Mexico, Texas, Utah and Wyoming. This region is the country’s biggest Great Northern bean producing area, with more than 85% of Great Northerns grown in this region, mostly in Nebraska. The harvest is still ongoing, according to Duty. “I would ballpark harvest progress at 90% in western Nebraska,” he says. “In some areas, we are getting good yields and quality, but we are not seeing that across the board.” Duty characterizes the overall yield and quality picture as “not great.” “Weather is really impacting the Great Northern market,” says Duty. “There is a lot of pressure on the white bean complex because there’s a worldwide shortage, and so we are seeing the market react to these developments. I’m not hearing of anyone making offers in the market at this point.” Duty expects that, one way or another, the harvest will come to its conclusion by mid-November. “In years like this, as it gets later and later, some fields will have just suffered too much and will get plowed under and insurance will be taken up on them. I think we’ll see that happening at the end of this harvest, as the quality deteriorates to the point that nobody wants it.” Bean quality depends on a nice dry down, explains Duty. “Each time it gets wet again after it dries down, it’s going to do things like discolor or sprout or any number of other things that are deleterious.” The carryover situation in the Rocky Mountain Region is tight for Great Northerns. In the face of the worldwide white bean shortage, Duty reports seeing some buyers switch over to lima beans.

“It’s unusual to switch from a kidney-type bean like an alubia or a Great Northern to a broad bean, but that’s what we are seeing. Because of the white bean shortage, there is spillover into limas simply because they are large and white. The bigger picture right now is that anything that is white is precious. So navy beans are strong and so are Ethiopian pea beans.” Duty sees a similar situation developing for dark red kidney beans, although to a lesser extent. “There’s a shortage there, too. The word out of China is that they’ve cut way back, so, like with whites, we are seeing some spillover into other classes with reds, but to a lesser extent.”


MICHIGAN Michigan is a major producer of black, navy and small red beans. “Harvest is about over and it’s been excellent,” reports Michigan Bean Commission Executive Director Joe Cramer. All told, 180,000 acres of beans were harvested, including 75,000 acres of black beans, 55,000 acres of navies and 14,000 acres of small reds. Yields averaged between 19 and 20 bags per acre and Cramer estimates total production at 3.4 million cwt. In terms of carryover, Cramer describes it as minimal. “We are all but cleared out in every class except small reds.”

IDAHO In Chicago, the Western Bean Dealers Association, covering the State of Idaho, was represented by Craig Kelley of Rangen Commodities. Idaho is renowned for its chickpea and pinto production. In July, Kelley presented a production estimate of nearly 1.6 million cwt for Idaho. As in other regions, the harvest has yet to conclude. “We are at 99%; we should have it wrapped up by the end of October,” says Kelley. He expects some acres will be lost due to rains and cold temperatures. “We are seeing average and above-average yields,” he says, adding that he expects the above-average yields to make up for the lost acreage. Overall, he expects final production to come in slightly under the 1.6 million cwt estimate he presented in Chicago. The carryover situation is at zero for most bean classes, with a minimal amount for pintos. Kelley says prices have remained relatively steady.

Visit the Idaho Bean Commission IFT Sponsor Profile.

08 IFTmag


CALIFORNIA Nelson Parreira of Beans R4U, Inc., represented the California Bean Shippers at the Convention and presented a production estimate of nearly 1.2 million cwt. California grows mostly black-eye peas, chickpeas and baby and large lima beans. According to Parreira, overall production should be slightly under the estimate presented in Chicago. He reports harvest progress at between 50% and 70%, depending on the area, and expects most of it to be finished by mid-November. “Yields are down a little bit from last year,” he says. “It’s a little drier, so they are having more cleanouts than usual. But it’s still early, so it’s hard to tell. Hardly any of this stuff has been cleaned, maybe just 20%, so it’s still too early to get a good handle on yields.” There are good quantities of black-eye peas in stock, but the carryover situation for large lima beans is practically nil, and although there are a few baby limas in stock, Parreira reports that they have all been sold. In terms of prices, Parreira says that black-eye pea prices remain stable from the year before, and that large and baby lima prices are up due to demand.

WASHINGTON At the Convention, Tom Grebb of the Central Bean Company represented the Washington Bean Dealers Association, and presented a production estimate of 686,166 cwt for the state’s irrigated fields. Harvest progress is at 95% and yields are a bit above average, reports Grebb. “Washington has had great weather,” he says, “and the quality looks really good on most production.” Grebb’s estimates do not include production from Washington’s share of the Palouse region. For information on the harvest there, IFT turned to Phil Hinrichs, president of Hinrichs Trading Company, who reports that, despite some rain delays, the harvest concluded with yields and overall production at normal levels. “This year was a big test for our growers due to an inconsistent time of harvest,” says Hinrichs. “But the long falls that we have here continue to make it an outstanding chickpea growing region.” Chickpea quality was above average, with good size, color and uniformity. “Overall expectation for this crop,” sums up Hinrichs, “is that we’ll be able to present a number one graded product to the world and continue to lead the world in terms of quality. We go into the export market with a large-size


bean. The world can supply small chickpeas, but when it comes to 10 mm and 11 mm beans, our only competition is Mexico. In Mexico, they hold up their market price because supply is less than demand.” In the U.S., Hinrichs says chickpea prices are in the US$ 0.45 to US$ 0.50 range, slightly above the all bean average. White and red beans, he observes, have gone almost to US$ 0.90. The carryover amount was not substantial, reports Hinrichs, noting that the demand for chickpeas is high at present. “Selling is above average and shipping is moving right along. Domestic demand has grown by 25% and could grow even more. It’s early. We’ve been selling this crop for only 45 days and the domestic trade is in high demand. Exports are, in my opinion, a little slower than normal. Why that is, we are not too sure because world demand is up.” Asked about the meteoric increase in domestic demand, Hinrichs replies, “It looks to me like this trend has a pretty good arm up. I believe it will affect exports in the future because I think we hit our acreage limit.” Hinrichs is also seeing the demand for organic foods trending upward. “Organic chickpea demand is up 100% compared to last year. It’s a small niche market, so it doesn’t take much to double it. Can this trend continue for the next four or five years? The organic trend is up in the U.S. across all bean classes. With organic chickpeas, I see it being in tight hands, and whoever owns it will have a very expensive bean.”

Click below to watch IFT’s Video Interview Series filmed prior to 2013 Harvest in Pullman, WA U.S.A.

IFT visited the Palouse growing region in July to gain market insight and early 2013 harvest predictions. Watch the full video interview with CEO Phil Hinrichs, Hinrichs Trading Company. 10 IFTmag


Eat more pulses, help fight hunger, save the world

CICILS IPTIC DMCC – Jewellery & Gemplex Bldg 2 – 8th Floor PO Box 340503, Dubai – UAE, Office: +971-04-3633612 info@cicilsiptic.org, www.cicilsiptic.org


12 IFTmag


UPDATE

Canadian Pulse Harvest Posts Record Numbers By Jonathon Driedger, IFT Guest Writer

Senior Market Analyst at FarmLink Marketing Solutions

Following favorable predictions from Stat Can, results from this year’s Canadian pulse harvest has confirmed expectations. Western Canada has just finished harvesting a record-large crop. The latest official estimate from Statistics Canada in early October was already pointing in this direction, and the majority of traders are using even bigger numbers in their own analysis. Reports from the country consistently indicate outstanding yields in nearly every region. The Prairie region is vast, and it’s common for at least some areas to run into problems that hurt production. However, this year those issues were few and far between, and primarily confined to relatively small local pockets. In the meantime, individual reports of the biggest yields in history are widespread.


PEAS Peas are the largest pulse crop grown, with Statistics Canada reporting a total harvest of 3.78 million tonnes, but this is currently on the low end of trade estimates and likely to see an upward revision in future reports. In addition, quality for both yellow and green peas has been good as well.

After dipping in the midst of harvest, prices paid to farmers had started to move moderately higher at the time of writing. Whether this trend continues will be a function of export demand, particularly from Asia, as well as the logistical capacity to move such a large harvest in an efficient manner, something that has already seen challenges in the early part of the season.

LENTILS The lentil harvest has also been very good. Statistics Canada reported a total crop of 1.7 million tonnes, which would be the second largest in history. However, there is debate in the trade as to whether this crop could see upward revisions in future reports as well, as yields in red lentils, in particular, were very strong. Some are speculating a final tally of as much as 2 million tonnes, which would challenge the record set in 2010, although that is likely too aggressive. Quality for red, large green and small green lentils has been quite good which should help facilitate trade and movement during the coming year. Values to the farmer have been holding relatively steady, although buyer activity has been fairly quiet, something that is normal for this time of year as they work through supplies that had been committed prior to harvest. With harvest completed and the supply side of the Supply / Demand balance set, the market will be closely watching end user interest and overall demand to get sense of the general price direction through the remainder of the year.

Visit the FarmLink Marketing Solutions IFT Sponsor Profile.

14 IFTmag


BECOME A

SPONSOR https://www.goift.com/sponsors/


Building for the Future:

An Interview with Juan Carlos Abascal By Charlie Higgins The unlikely story of how Grupo Abascal grew from a neighborhood dry goods store to become one of Mexico’s top grains dealers. Every business, whether it’s a roadside vendor or multinational corporation, must start somewhere. In the case of Grupo Abascal, that somewhere was a tiny village in northern Spain, where in 1927 a young Jose Abascal decided to emigrate to America in search of better opportunities. “It’s an incredible story,” recalls his grandson Juan Carlos Abascal. “My grandfather came from a poor town in Spain during a time of economic turmoil. One day he left a note to his parents saying ‘I’m off to America to seek my fortune. Wait to hear from me.’ He was only 17. That day he boarded a ship with nothing more than a suitcase.” Grupo Abascal is today considered a major player in Mexico’s wholesale food industry, comprising seven companies in and around Mexico City. Its main products are pulses such as beans, lentils, fabas, garbanzos and peas as well as spices like cinnamon, pepper, cacao and hibiscus.

16 IFTmag


INTERVIEW

“If you look around the Central de Abastos you see all sorts of debris and neglect. One thing that always surprises guests that we bring to our warehouse is how clean and organized it is compared to what you see outside.�


During IFT’s recent visit to the Central de Abastos in Mexico City, Juan Carlos gave us a full tour of his family’s impressive operation and talked about his expectations for this year’s harvest. He also shared with us the story of Grupo Abascal, which demonstrates the tenacity required to achieve success in this industry and the importance of family ties across generations.

There he found tons of immigrants and Mexicans selling textiles, dry goods, grains and seeds. He opened a store there even though he didn’t know anyone and started doing very well. After a while he returned to Spain and told his friends and family, ‘Hey I have this established business in Mexico.’ He then brought his younger brother back with him, they became partners and together they started bringing over more people from Spain, other family members and such. He set up a deal with his brother where

IFT: Your grandfather left Spain at 17 with nothing but

he would live two years in Spain, his brother would live two

a suitcase. What did he do when he got to America?

years in Mexico, and then they would switch.

Juan Carlos Abascal: Actually they stole his suitcase aboard

IFT: So there was a great deal of trust between them?

the ship! The first place he arrived was Cuba and he said ‘Wow, what a place!’ At that time Cuba was the country with

Juan Carlos Abascal: Exactly. There are many stories and

the highest GDP in Latin America, the country with the most

anecdotes. For whatever reason his brother never married

riches and greatest abundance. But he said, ‘Well, this place

and when he died, my grandfather took over the business

is beautiful but it’s not for me. I’m poor and I have to seek out

and continued working with his children. So from 1927 to

better opportunities.’ He didn’t know which part of America

2013 that has more or less been our family’s history. We’re

he was headed to until one day he arrived in Mexico. That

constantly looking for new trends, every year. For example,

was September 15, which is curious because September 15

four years ago flax seed became very popular, so we started

is Mexico’s Independence Day. All the people were gathered

bringing that in. Now chia is the new trend, so we’re

in the main plaza in Mexico City chanting Que mueran los

importing that. Our business has always been about that,

gachupines! (Die Spaniards die!). My grandfather soon found

bringing in new products to meet the local demand. Beans,

himself in the middle of the celebration. He enjoyed himself,

alubia, peas, chickpea, lentils, soy beans—these products

but he never said a word for fear that they would recognize

have always been in our portfolio. Now we’re selling a lot of

his accent. He just raised his arms and rode the wave of

chia, hibiscus, cinnamon, pepper and cloves. We have a fully

people. The next day he hopped on a truck headed for

diversified portfolio.

Vera Cruz where he asked for a job in a dry goods store. It was a place where people bought grains, seeds, spices and

IFT: Tell me a bit more about your bean business. What

preserves. They also served coffee, tequila and things like

products do you trade mostly?

that. Juan Carlos Abascal: Within our bean and grain IFT: So it was a small business?

portfolio, our main product is black beans. We deal jamapa black beans; bola caretaro; black beans from

Juan Carlos Abascal: Exactly. And he continued to work

Zacatecas, Durango, San Luis and Chiapas; some pinto beans,

there over the next fours years. And at the end of those four

such as Peruano and mayacoba. We also sell small, medium

years he approached the owner of Aborrateria Aguila, as it

and large alubia beans. In general we always try to buy

was called, and he said, ‘I’m sorry but I can no longer work

national products, as that is our main focus. When the

for you.’ And the owner said, ‘No, please don’t leave. You’re

harvest is poor we look to the U.S., to Michigan mostly, to make

someone I really trust.’ But my grandfather said, ‘Well actually

up for that deficit. Our small alubias come from Michigan,

I’m here to tell you that I’ve been saving up all of my earnings

while the larger varieties are national. We also purchase

from working for you these last four years and now I’d like to

chickpeas from the north of Mexico. We import faba bean

buy the store.’ So like that, he bought it. He was so tenacious,

and peas from Canada. From central Mexico to the south,

you know, even sleeping in the store when it was necessary.

bean consumption is mostly comprised of black beans,

So he bought the store in 1930 and three years later it

whereas in the north they consume mostly pintos. So we

burned down. At the time it seemed like the worst possible

deal some pintos because there is some demand here but

thing that could have happened, but a few years later he

our main focus is black beans.

realized it was actually a blessing in disguise because it forced him to move to Mexico City, which was the economic center of the country and remains so today.

18 IFTmag


IFT: How is this year’s harvest looking? What are the current market conditions? Juan Carlos Abascal: Truth be told, the last two harvests

earn the last peso there’s always going to be more business

in 2011 and 2012 were very chaotic in Mexico due to lack

for everyone. In the end, we’re not following the political

of rain and poor resource management. This year is looking

issue very closely. We’re more focused on what farmers are

really good though. We hear it’s been raining in the main

saying — how planting is going, what kind of rainfall are you

bean producing states. In Zacatecas there seems to be

seeing, what yields are you expecting, etc.— and that’s what

some excess rainfall which could postpone plant maturation

we’ll base our decisions on.

but I don’t think it will be a major issue. In terms of pricing, I don’t think we should get ahead of ourselves. The last two years were a slap in the face in many ways, so you’ve got to wait for the right moment and wait to see how things turn out before you buy. If prices are high, purchasing will be a lot slower, but it’s all a question of timing, waiting for the right moment and the right price. I think we’ll be buying beans from the United States again this year. American beans are really good quality, not to take away from the excellent quality we have here in Mexico. But the actual [import] volume will be totally relative. If you look at our warehouse right now, we have very few American beans left and even fewer national beans, so we’re really waiting to see the hard numbers for the incoming harvest over the next couple of weeks. If yields are as high as the various state authorities have indicated, it’s going to be a very good year. The prices will have to come down and this benefits all Mexicans. IFT: There has been some concern that Mexico might close off imports from the United States this year. Do you think this is possible? Juan Carlos Abascal: I don’t think so. In recent years it’s been necessary to import beans so we’ve looked elsewhere to places like the United States. This year the situation is different because the Mexican harvest is going to be very good and this should place a little pressure on the Americans to adjust their prices. But [the production volume] it’s still not enough. Any way you look at it we depend on beans from the United States. We’ve had some problems recently at the border because in the U.S. they’re telling us the beans they’ve sent are clean, but at the border they’re saying the opposite. So there’s a conflict of interests there, but this idea that they close off the border to one specific producer is a stretch. Regardless we’d still be importing lots of other grains and seeds of which Mexico could see a deficit. We actually like the idea, something that forces the Americans to sit down and say ‘Ok let’s look at this’ and maybe they adjust their prices a bit. My grandfather has an old saying ‘Always let the other guy earn the last peso.’ What he meant is that if you let the other person

Learn more about Grupo Abascal by visiting their company websites: www.casaabascal.com www.lapasiega.mx www.fruterry.com.mx


FEATURE

Smart Machines:

The Past, Present and Future of Sorting Technology Representatives from two leading technology companies discuss how sorting machinery has changed the business of pulses. By Charlie Higgins Perhaps unbeknownst to many industry members, 1931 marked a major breakthrough in the world of pulses and specialty crops. It was the year ESM (Electric Sorting Machine Company) launched the world’s first color sorting machine, fulfilling a task that previously had to be done by hand. Though a far cry from today’s sophisticated machines — with their on board computers and touchscreen interfaces — ESM’s invention was that crucial first step toward automating the inspection process. “The machine picked up each bean with a vacuum and presented them to a photomultiplier tube to determine the amount of light reflected from the bean. It was actually quite accurate, but very slow — 50-100 lbs/hr. We can now sort pulses at rates in excess of 40,000 pounds per hour,” says Pat Pike of Satake USA, Inc., which acquired ESM in 1992. Pike started out in the sorting business back in 1978 and has seen the technology improve tenfold. Back then, only companies that absolutely had to have eyed product were buying sorting equipment due to the considerable investment in equipment and space. He says one of the most notable developments over the years is increased capacity.

20 IFTmag


Photo compliments of Oliver Manufacturing. Gravity Separator Exhibit located at their office in La Junta, Colorado USA.


“Gravity feed sorters, which are the type predominantly used in the pulse industry, present the product to the viewer by metering them down chutes or ‘channels.’ Capacity is a function of the number of channels — the more channels, the greater capacity,” he explains. “When I began, the machines used for pulses were mainly two-to-six-channel machines, compared to today’s machines, which have up to 80 channels and handle extremely high capacities in a very small footprint. Today’s machines are a lot faster and utilize CCD and full color cameras to provide much better resolution and defect recognition. They are also much more user friendly.” Jon Moreland, Director of Sales and Marketing at Oliver Manufacturing Co., Inc., says the structure of the sorting technology market has also evolved over the years. Specifically, he says the market has become much more consolidated.

“Prior to the last ten years, where we have seen an upswing in commodities markets and farm income, margins were squeezed to the point that consolidation was the only answer to gain some economies of scale in any market or endeavor,” he says. “Something like biofuels interest comes along, creating some dramatic jumps in underlying commodity values, and all of a sudden you not only have the need but now also the means for this evolution of consolidation. Farm sizes increase, seed companies consolidate, outside industries see the viability of investment in agricultural sectors, and all this growth needs some form of organizational rule. Our industries, seeking solutions, turn to the same place all others have: technology and the implementation of it into existing practices or processes.”

WEIGHING COSTS AND BENEFITS Growers and processors are constantly looking for ways to improve efficiency and quality, areas where sorting equipment can play a crucial role. These days machines can be extremely pricey and there are dozens of options. The question often remains: what equipment to buy and when to buy it? Moreland provides some insight:

22 IFTmag

“It would take a really good sales person to convince you that the front end costs of high-end sorting technology has not taken a significant jump in the last five or ten years. But the fact is technology is creating enough value to eclipse the front end costs by allowing for less downtime, creating better, more quantifiable processing feedback, filling in gaps left by an aging population of skilled facilities staff, and generally making processes more measurable and efficient.” “Whether the sticker shock is created from harvest equipment or processing equipment, once the initial trauma subsides and longer term evaluation of costs and returns is considered, I think the justification for investment becomes clear, especially when you consider the longer life span of most of this type of equipment,” Moreland adds. Pat Pike says sorting equipment also helps reduce some of the uncertainty that arises with these crops, which can appear very different depending on the harvest year. “Processors realize that every crop year is different and that they never know when they will really need sorters to get the crop to market. By having the equipment on hand, there is much less to worry about as the crop is harvested. Food safety and quality are extremelyimportantintoday’smarket,andopticalsorters help to insure that the highest quality and safest product possible is put in the bag,” Pike says.

“You really can’t afford to install the type of equipment that worked yesterday. If you do and that becomes the wrong decision, you have to readjust 25% of the way into your planned facility life. The costs of downtime, re-engineering, tear down and reinstall, refurbishment, and re-training far outstrip any front-end money saved,” Moreland explains.

LOOKING TO THE FUTURE Both Pike and Moreland are confident about the future of pulse sorting, which is seeing growing demand in pulse markets around the world. In fact, Pike expects all products to be 100% optically inspected in the future. To anticipate this rapid growth, he says Satake places great emphasis on providing reliable post-sale support. “It is extremely important to have an after-the-sale support system that can handle


the increasing number of machines being placed in the industry, to have the necessary infrastructure to provide the parts and services to keep them running for many years,” he says. “Satake has a customer support group and a well-staffed field service group that have developed a reputation for outstanding after-the-sale support. So as we market the machine’s technology and capabilities, we also market the after-sale support, which is just as important to the end user.” Initially concentrated in North America, sorting technology companies have expanded well beyond the prairies of Canada and the United States into other regions where pulses are grown. Moreland says Oliver Manufacturing has chosen to concentrate on South America, reaching out not only to the Brazilian market, but also to Argentina, Chile, Peru and Uruguay.

“That focus was really driven by several obvious factors, like the fact that this is where our customers are spending their money. But in the end, what we wanted to accomplish as a business was to take the traditional cyclical nature of North American agricultural markets out of the equation,” he says. “We were tired of having slow winter months and saw South America as an obvious solution.”

Moreland sees a lot of potential outside of the Americas, particularly in developing countries where the technology is a few years behind. He says exponential demand from growing populations in Asia — China in particular — is likely to drive this development. “The biggest sleeping giant from my perspective is Africa. Agriculturally speaking, it clearly is the least developed continent, and if you take South Africa out of the equation, even more so. Currently, countrieslikeChinaarethemostaggressiveaboutmaking agricultural inroads in Africa. Walk around any major African airport and take note of the group of Chinese investors coming and going. China will certainly need the natural resources in the future, and Africa as a continent needs the infrastructure investment, so it may be a perfect match,” he says.

BECOME A

SPONSOR https://www.goift.com/sponsors/


Pulse Industry Reacts To Government Shutdown and Farm Bill Lapse By Dario Bard Industry members discuss how the expiration of the 2008 farm bill and the U.S. government shutdown have affected their business. This month the U.S. agricultural sector was thrown into a state of uncertainty. The expiration of the 2008 farm bill extension and a two-week federal government shutdown spread anxiety throughout the industry, leaving the ground rules for the next planting season undefined and making it difficult for farmers to plan ahead. “Right now, it’s like being in limbo and moving forward at the same time,” says Northarvest Bean Growers Association Executive Vice President Tim Courneya. “Sure, the shutdown is over, but only for a couple of months. How can you make any plans? And it’s more than looking down the road at spring planting; it’s also about all the research that we’ve lost. That’s one thing that was affected with the debt ceiling issue. There were things going on that needed to get done in that two-week period, like seeding a variety in another area so you can advance and look at another generation. So when the government shuts down, you lose that window of time.” Additionally, with the cancellation of government reports, such as crop production reports and world supply and demand estimates, markets have slowed. The U.S. dry bean industry, however, was mostly spared in this regard. 24 IFTmag


UPDATE

“The shutdown had less of an impact on us because we have fewer reports and rely on them less than, say, major grain and livestock traders,� explains Richard Duty of Trinidad Benham.


American Pulse Association CEO Tim McGreevy remains hopeful about the farm bill. “Right now, we are in the odd situation of not having a farm bill. The effects of that won’t really kick in till the end of the year, and hopefully we’ll have a farm bill by that time. At least the House and Senate have appointed conferees. The President supports getting a farm bill passed, and we hope the House and Senate will, too.” The farm bill conference committee will meet this week to begin the process of reconciling the House and Senate versions. If Congress is unable to enact a new farm bill or fails to re-extend the 2008 bill by the end of the year, the agricultural sector will default back to 1949 law. This would result in the loss of crop insurance and conservation programs and potential price increases at supermarkets due to higher support prices on certain major crops. These support prices would be based on parity pricing with an inflation factor since 1949. The Senate version of the farm bill includes the formation of the Pulse Health Initiative, which those we interviewed said would benefit the pulses industry. “It’s new for us to have an initiative like this for pulses,” says Courneya. “The process dates back four years ago, when the dry bean, peas and lentils folks got together and worked with Congressional members to develop a platform of what they would like to see in the new farm program. It was an effective effort.

Click below to watch IFT’s Video Interview Series filmed prior to 2013 Harvest in Moscow, ID U.S.A.

IFT interview with US Dry Pea & Lentil Council CEO Tim McGreevy . 26 IFTmag


It’s in there now and it looks good and reads well for pulses. If it does pass, we’ll be in good shape down the road.” The Pulse Health Initiative, explains McGreevy, would provide support in three areas of importance to the pulse industry. “One of the first needs that we have is to address a significant lack of health and nutrition research on these crops. Some of the money under this initiative would go to study the real nutritional benefits of consuming these crops in relation to obesity and associated diseases, such as heart disease, diabetes and some cancers.” The second area of research would look at how pulse flours and fractions function as food ingredients with the hopes of adding value to pulses and introducing them into a wider array of food items. The third area looks to enhance pulse sustainability, such as the nitrogen-fixing ability of pulses, as well as yields. “We have fallen well behind the major crops in terms of yield gains over the past 50 years,” notes McGreevy. “As the world population continues to expand, these crops are a key source of protein in the developing world and they are also a very inexpensive form of dietary fiber in the developed world that has problems with weight management. So we have to increase the yields of these low cost sources of protein and dietary fiber not only in this country but around the world, and the Pulse Health Initiative will help address that.” “In the House version,” adds Courneya, “there is language that would make pulses part of an existing competitive grant program. So the two versions complement each other. If the language from both makes it into the final bill, researchers will be able to apply for those grants included in the House bill to carry out the research in the Senate bill.” There is also hope that the new farm bill will include the Pulse School Pilot Program, an effort to introduce pulses in school meals, McGreevy said. “The goal of the pilot program is to identify those foods in a school setting that kids will consume because we know it will have an impact on their overall health if we can increase consumption of these crops in the school lunch system. At US$ 10 million over five years, it is a very small program that would allow us to go into major school districts and really focus on the development of new products that use pulses and that kids will enjoy.”


FEATURE

Mexican Bean Market:

What Traders Are Saying By Charlie Higgins

In an exclusive report, IFT talks to traders at the Central de Abastos in Mexico City to get the inside scoop on pre-harvest market conditions. Over the past month, the Mexican bean market has been a hot subject of debate in the local media, with rumors of import closure and price fixing surfacing everywhere from Zacatecas to Mexico City. After a slew of drought years that crippled production, all indicators are pointing to an abundant incoming crop, so there is a lot at stake. In a market where reliable data is notoriously difficult to come by, hearing the firsthand perspectives of local traders, importers and distributors can provide great insight. Last week IFT paid a visit to Mexico City’s Central de Abastos to do just that. Here’s what we found.

CROP EXPECTATIONS With the harvest still a few weeks away, state-by-state predictions have begun to pop up, but the traders we spoke to said they were still on “standby” and will wait for more concrete numbers to come in before making any big moves. All of them expected this year’s crop to be a very good one, especially compared to the last two which were characterized by high prices and inconsistent figures, according to one trader. 28 IFTmag


“There has been a lot of uncertainty in the Mexican grain market because the data from the state governments has not been in line with what the bean associations like the U.S. Dry Bean Council have been saying. The brokers and traders would come knocking on your door telling you one number and you’d have the state telling you another number,” said Juan Carlos Abascal of Grupo Abascal, which distributes mostly black and pinto beans.

“The droughts of the last two years hit hard. With this scenario you have to be smart and wait for the right time to buy. Beans are products that sell by volume, not on margin. The margin is practically nil a lot of the time, after you remove production costs,” Abascal added.

None of the traders we spoke to thought this year’s bean production would break any records, despite unusually heavy rains. Rather they saw it as a return to normal after two years of drought. Despite the humanitarian devastation caused by tropical storms Ingrid and Manuel last month, the ample precipitation came at a particularly opportune time for bean producers. One set of predictions forwarded to Abascal showed an incoming crop of 350,000 mt in Zacatecas, 150,000 mt in Durango and 90,000 mt in Chihuahua. “I wouldn’t say the [market conditions] this year are extraordinary,” said Jose Pancracio Guemes of Comercial Abarrotera Gumen, a grain distributor and importer. “Sure, the rains were extraordinary because you had a hurricane here, a storm there and the rain just kept falling. But what we see year after year, if we take a look back, is that the fields produce in cycles. So I don’t think it’s an extraordinary year. It’s just that the last two years were so bad.”

ZACATECAS BEAN ACREAGE 2013

30 IFTmag


PRICES If the recent demonstrations in front of SAGARPA’s Mexico City headquarters are any indication, producers have been putting a lot of pressure on the Mexican government to fix the price of beans at 15 pesos/ kilo (about US$ 0.52/lb). Just this week, Zacatecas Governor Miguel Alonso Reyes tweeted about the issue.

“Full support for our state’s bean producers seeking a fair price. We are negotiating with the Sagarpa representatives.”

All the traders we spoke to were not only against such a move, they also saw it as being highly unlikely. Everyone wants to help the producers — many of whom have a tough time as it is — but there are other better ways to protect them, they said. “It’s just politics,” said Patricio Garcia Luna, who markets beans and other products in greater Mexico City. “The producer always wants to earn a little more. But realistically speaking, the asking price is not logical. It’s not feasible. We’re about to start harvesting in a few weeks and everyone says it’s going to be a very good harvest, that the price will go down. So what really determines the price? Supply and demand. It’s not something the government can impose.” Even if such an initiative were set in motion, enforcement would likely be superficial at best, due to the sheer size of the market and the behavior of its players, Guemes observed.

“There are always people who, in order to sell their product, in order to receive money, will sell at a lower price. Mexico is big country and there are beans coming in from everywhere. So I think [price fixture] is a tough sell and it goes against free trade, even though the government wants to help. It’s just that 15 pesos, in this case, is unreasonably high,” he said.

One thing that’s important to understand about the Mexican market, a few traders told IFT, is that the price of beans affects the entire food system. As Abascal explained, when the consumer is paying too much for beans, that leaves less of a margin to buy other products and vice versa. Unlike the price of rice which is relatively stable, bean prices fluctuate quite a bit, and traders—especially those with a varied inventory—have to anticipate these changes. So what prices are traders actually seeing? “Right now we’re seeing prices of 8 or 9 pesos for beans, washed or unwashed. I’ve seen black beans for 9 or 10 pesos,” said Guemes. Abascal confirmed that bean prices were hovering around 9 pesos/kilo (US$ 0.32/ lb), though he expects prices to come down further if yields are as good as government sources have suggested.


“If things turn out the way they should, they’ll reach a fair price. That helps boost the economy and the agriculture sector in the end because all of the other products and grains that play a secondary role in the country are going to have higher consumption,” said Abascal.

“I would be really worried if I had to buy beans at 16 or 17 pesos,” said Garcia Luna. “Right now we’re selling at 18 pesos, but that’s been trending down. Next month we might see it at 17 pesos, then at 16 pesos, and when the harvest rolls in I might only be able to sell at 15 pesos. Then I’m losing money,”

IMPORTS The recent rumors of possible import restrictions in Durango and (potentially) other bean states have had many exporters worried, particularly in the U.S. and Canada. With production back on its feet, some Mexican officials are arguing that allowing imports would force growers to sell at bargain rates. The traders we spoke to were highly skeptical of the situation. “It’s not the right thing to do. Sure it’s possible and there are many ways to do it, but I wouldn’t want something like that to happen. It hinders free trade. Here there needs to be total openness and the market needs to work itself out. That’s what really works. This is just a momentary thing, a political issue rather than a commercial one,” said Garcia Luna. “I think it’s a misunderstanding,” said Guemes. “The Free Trade Agreement between Mexico and the U.S. and Canada is really strong for Mexico. We can’t just unilaterally close borders without expecting some kind of repercussions. Mexicans consume a lot of American beans as well as lentils. And we get a lot of sunflower, popcorn and birdseed from Canada. To close the border unilaterally in order to ‘benefit’ Mexican producers is something that I don’t think is very likely.” Guemes also noted that many consumers today prefer American beans because they cook faster, even though the flavor may not be as good as some of the national varieties. This has to do with the economic reality of those who rely on beans for their daily protein intake.

View photos from IFT’s Exclusive Insider Report at the Central de Abastos in Mexico City, Mexico.

32 IFTmag


“People want to spend less on gas if they can,” he said. Though they are still waiting for crop data to come in, the traders we spoke to had pretty much decided that they would not be buying as many beans from the States this year. While demand for American beans will inevitably be lower this year than it has been, high prices are the more significant factor pushing Mexican buyers in this direction.“This year the Americans are offering really high prices, but here in Mexico there’s going to be plenty of cheap beans,” said Guemes. He said pinto bean predictions were especially favorable in the states of Chihuaua, Zacatecas and Durango, where prices were more accessible in comparison to the US $55/cwt he was seeing coming out of the U.S.

“There’s some speculation that there are still some beans leftover from the previous harvest. There has been a fair amount of purchases for the incoming harvest, but the prices for imported beans are not cheap. In April and May I was seeing prices out of Michigan around US$ 45/cwt. Now they’re asking US$ 58/cwt,” said Garcia Luna. “What I’ve learned is that farmers in the U.S. have money and they don’t care that much if they don’t sell. They say ‘Here we are. This is what our beans cost.’ In this case, it’s US$ 58/cwt. They don’t mind not selling because they have support and personal money. They’re not desperate to receive cash,” said Guemes.

EXPORTS None of the traders we spoke to were very involved in bean exports, but they did see the possibility of Mexico sending some of its expected surplus abroad this year. Venezuela and Brazil have been mentioned as potential export markets this year, for example, though it all depends on how much product is left over after the national demand is met. “We’ll have to wait and see in November if we have leftover beans to export to Brazil or other countries where there’s a deficit,” said Juan Carlos Abascal. “What we do know is that Brazil has always had tightly closed doors and last year they decided to lower the import tariff to zero to be able to supply the market with beans purchased from other countries.” “Venezuela will never pay us, that’s what I think!” said Garcia Luna. “But you know today the market is global , so if I have some leftover product here and they’re willing to pay me over there at a fair price, I’ll send it to them. Guatemala, Honduras, Nicaragua, Brazil, or whoever needs it.”


INTERVIEW

The Shipping News: An Interview with Steven Pocklington By Dario Bard IFT catches up with Steven Pocklington, CEO of CFT Corporation, one of North America’s top shipping and logistics companies handling specialty grains. Just about anyone involved in the food trading business is familiar with the following scenario or one just like it: an order placed for ten containers of red lentils a month ago has been delayed at port due to a local railway strike, and meanwhile the price of the grain has dropped 15 percent. The buyer wants a discount but the seller claims he’s not at fault. That’s where Steven Pocklington comes in. As CEO of CFT Corporation, he and his team handle shipping and logistics for all the major pulse and specialty crop markets across North America. Need to send a large order of pinto beans to Angola in a few weeks? CFT’s got you covered. With over 30 years in the business, Pocklington has witnessed just about any shipping issue you can think of which caused conflicts between buyer and seller. “When things get a little testy we’re always in the middle trying to help out,” he says. Though it’s not always easy being the middleman, Pocklington says resolving issues has gotten a little easier with the advent of the Internet. The ability to get timely, crucial information — everything from railway or port strikes to weather events and equipment space issues — certainly helps.

34 IFTmag


IFT spoke to Pocklington recently to hear his insights on how the shipping and logistics industry has changed since he began and where it may be heading. IFT: How did you get your start in the logistics and shipping industry? Steven Pocklington: I started out during the infancy of the business when specialty grains first started moving in containers. It goes back to the early 80s. I worked for another logistics company, and learned the ropes there. That’s when they first started shipping lentils, canary seeds and peas through the port of Montreal. I worked in operations and eventually moved to Toronto, worked for a few other logistics companies and then started out on my own in ’87. Over the years I’ve always been involved with shipping specialty grains.

IFT: So you’ve seen the Canadian market develop from the get go? Steven Pocklington: The Canadians started moving some product out of the farms, putting it in containers at the port, and then it pretty much developed from there. If I think back to the early 80s, there were only a few Canadian growers, but the Americans pretty much dominated the export markets. Some of the American trading companies helped set them up, shipping out of Canada while doing the same out of the U.S. so it kind of developed that way. Eventually over the years the Canadians took over their own exporting and started to dominate as a good supplier of peas and lentils. If I look at the last couple of years, the Canadians ran into some trouble with their crops — poor quality, high prices — and they lost some market share. But now we see a great quality crop with good prices so the Canadians are starting to reclaim some of that.


IFT: What are the main pulse markets you deal with? Steven Pocklington: We ship from all the origins in North America, mostly Canada and the U.S. The odd time we’ll ship chickpeas out of Mexico but predominately it’s the U.S. and Canada. So if you focus in on the areas that these specialty grains and pulses are grown you can draw a ban across the continent where you have the Canadian prairies — Manitoba, Saskatchewan, Alberta — and the U.S. prairies — North Dakota, Minnesota,Nebraska,Colorado, Montana. You also have the sunflower and millet seeds, which can be found in this region including Kansas. We also ship soybeans, corn and DDG’s from Minnesota, Iowa, Ohio, Michigan, Ontario and Quebec. So like I said, you draw a ban across the continent and it’s pretty much shipping a variety of grains and seeds grown there. We export these commodities worldwide but predominately to countries in the Eastern Mediterranean, North Africa, the Mediterranean, the Middle East, the Indian subcontinent, Southeast Asia, and then also North Asia (China) for peas and soybeans for Japan. There is some north-south trade. Countries in the Caribbean and Venezuela will buy lentils and beans. The odd time we will ship to Brazil and Argentina. Sometimes there’s a narrow delivery window when they’re short on beans, which they have been a little bit this year because of Argentina. South Africa will also buy navy beans and peas from Canada and the U.S. The only business we see shipping to Australia is mostly navy beans and occasionally some colored beans. They certainly don’t buy many lentils because they produce their own.

36 IFTmag

IFT: How has the shipping and logistics industry changed over the years in relation to pulses and specialty crops? Steven Pocklington: It’s become a lot more sophisticated and focused on details. I’m not sure how well entrenched and sophisticated the carriers are in understanding the global market of pulses. I know the regional offices working out of these respective countries seem to have their control over what their doing and that has a lot to do with the supply and demand of their equipment and space. You know these commodities generally move at the low revenue rates so carriers have to decide how much of this commodity they wish to load on their vessels at any given time. IFT: When you say “more sophisticated” what have been some of the developments there? Steven Pocklington: Well it’s the information. They’ve become much better informed and of course the Internet has a lot to do with that. The process of handling loading containers, getting the documentation, you know with all of the security that the carriers have imposed on everybody for filing manifests on time. It’s just tightened up tremendously. There are quicker transits and there’s less time to file your documents. It’s a much speedier process now with less room for error. IFT: Do you feel there is still a long way to go or has it reached a pretty good level of efficiency? Steven Pocklington: They will always continue to try to improve what they do. I think they do have to get better at planning what they can handle at any given time when it comes to accepting bookings and supplying equipment and space. That’s always been difficult for them to foresee and plan for. From the point that they want the cargo, then price into it, accept the booking then they actually have to execute, things could change. You’ll probably find similar issues in most of the countries specialty grains are shipped from. Late shipping is a common problem somewhat caused by railroads and carriers not supplying equipment on time. These are service issues that they still need to improve on.


IFT: What happens if you find yourself in the middle of a conflict where a shipment is not arriving on time, for example? How do you deal with that as sort of the middleman?

IFT: What countries pose the biggest challenges for shipping and logistics? Steven Pocklington: We’ve heard about difficulties shipping out of China. They have been unreliable in the past and you don’t always know what rate you’ll be paying. Also if anyone tries to ship out of the Ukraine or Russia — there’s been lots of problems there as well since they’re not as sophisticated and lack infrastructure. I haven’t heard too much about issues shipping from Argentina or Australia that are any different to North America. IFT: What are some of the key variables that influence shipping and logistics in the pulses and specialty crop industry? Steven Pocklington: There could be potential strikes with the railways or at the ports. These always have a negative impact on shipping and we have experienced them in Canada and the U.S. Otherwise weather can also be an issue. Certain times of the year you can experience storms and winter weather that could delay shipping. Typically every winter we have some sort of problem, especially in Canada. The main issue is the growers having a reliable means of transporting from the farms, which is typically in the interior of these countries, to the ports. So they’re very dependent on the railways, and we all know the railways can be unreliable. Since they influence everyone’s business you’ve got to somehow work around that and be realistic with the contract that you’re trying to fulfill. Hopefully the buyers understand that as well. You know it’s not a simple thing to just buy twenty full containers of lentils for immediate shipment, especially if it’s coming from the interior which I would expect is probably the case shipping from South America, Australia and other originating countries.

Steven Pocklington: The common issue that comes up is, to use an example, you have a contract for shipment at the end of October on-board vessel and of course it gets delayed and it moves into November, and then depending on the price of the commodity the buyer may come in and want a discount of some sort or refuse to pick up the documents or not want the goods because it’s too late. What can happen is the shipper is stuck asking CFT to negotiate with the shipping line to obtain extra free time at destination while they try to find a new buyer. So when things get a little testy we’re always in the middle trying to work out a solution while minimizing the losses. So it’s mostly about dealing with the shipping lines and trying to get an extra grace period. That’s part of our service of minimizing risks by shipping with reliable carriers which helps avoid these unforeseen expenses when they become an issue. IFT: Where do you see the future of shipping and logistics heading? Steven Pocklington: Technology is certainly going to make a difference and help the industry because it’s all about information and working through the details. If you’ve got everything you need you can pretty much formulate a plan to get this to ship properly, and if all the players are on the same page then obviously it will become easier with fewer surprises. Information technology has certainly made a difference. When you think about how specialty grains are handled, you’ve got to remember that the larger the volume in containers the better organized you must be. Otherwise to minimize risk you’ll need to convert to shipping bulk conventional or break bulk as opposed to just containers. I think if you have a handle on both, you’re in pretty good shape to cover your customers shipping position at a competitive price.


Belize’s Top Bean Exporter: An Interview with Otto Friesen By Dario Bard Otto Friesen explains how a farming cooperative from a Mennonite community in Belize became one of the world’s top exporters of black-eyed peas and red kidney beans. As the 20th century came to a close, the bean growers of Belize’s Mennonite community of Spanish Lookout were regularly ending up with surplus production. Their red kidney bean supplies were especially abundant, well beyond the country’s domestic demand. As a result, they began contemplating overseas sales. As a first step, in order to meet international quality standards, they pooled together their resources and purchased a processing plant from Peru. “That plant was set up here in the year 2000. The farmers installed it themselves and also bought out a private plant that was already here, and that’s how we got our start,” says Otto Friesen, CEO of Bel-Car Export & Import Company Limited, a cooperative formed by 200 bean farmers from a community with a population of less than 2000 individuals. Within a decade, Bel-Car was shipping 8 million pounds of black-eyed peas throughout the Caribbean and to markets as far away as the Middle East, making Belize the world’s fourth largest exporter of the pulse product.

38 IFTmag


INTERVIEW

The volume has since dropped off a bit, but Bel-Car continues to export about 6.5 million pounds of black-eyed peas and 5 million pounds of red kidney beans every year. Asked what he attributes Bel-Car’s rapid success to, Friesen mentions two fundamental guiding principles: collaboration and trust. These are principles rooted in the community’s history. The Mennonites arrived in Belize in 1958, most coming from Mexico, where the government there was attempting to impose a social welfare system on them; this would have required their children to attend public schools instead of Mennonite schools, and also would have made male adults subject to a military draft. “Our beliefs based on the Bible say it is not right to kill,” notes Friesen, summing up the Mennonite’s pacifist stance.

In Belize, which was then called British Honduras, they found a welcoming host. The colonial government at the time was then ruled by the Peoples United Party, which was pushing for independence; as such, it was interested in building an agricultural sector to feed the future sovereign nation. The Mennonites agreed to take on that task in exchange for religious freedom, exemption from military service and the right to educate their children as they saw fit. Belize achieved independence in 1981.

“Belize was very welcoming, but financially the first years were rough,” says Friesen. “The first Mennonites moved into the jungle with very little and started chopping. Quite a few people gave up early on and moved back to Mexico and Canada. But working together, they managed to change things significantly.” And Bel-Car’s position as a leading bean exporter in the Caribbean region and beyond is a testament to that legacy.


IFT: What bean varieties do you produce? Otto Friesen: Black-eyed peas are what we produce most. Then come light red kidney beans. We can also produce black beans and light speckled kidney beans if there is an interested buyer. We plant the red kidney beans in November and early December, and then harvest them in February and March. Black-eyed peas tend to be planted a little bit later because they are very sensitive to rain when they are drying out; rain discolors them. The dry season begins around February, so farmers like to plant them so that the harvest takes place during the dry season, when there is less chance of rain. Beans are our winter crop, so after they are harvested, corn, our summer crop, is planted in the same fields. So we have a rotation of corn and beans over the course of the year. IFT: Black-eyed pea exports peaked in 2009 at 8 million pounds. Now Bel-Car is exporting about 6.5 million pounds. What do you attribute this decrease to? Otto Friesen: Part of it is that farmers have been facing serious problems with fungus out in the fields. Additionally, for the past year and a half, worldwide black-eyed pea prices are dropping. Farmers grow the commodities that they believe will give them the best return, so with fungus in the fields and the price being what it is, they are slowly changing over to other commodities like soybeans, corn and sorghum.

IFT: Are you seeing a trend away from beans, then? Otto Friesen: I don’t expect we’ll stop producing beans in the short term. It depends on prices. Right now, farmers are putting quite a bit of effort into soybeans and rice. Rice has expanded quite a bit in the Spanish Lookout area and soybeans are really coming out now. That is a totally different market that we as a company are not even into as yet. We are having discussions with farmers, though. But besides beans, two and a half years ago, we put up a cornmeal plant that went off really well. We are supplying the Caribbean with cornmeal. And we do quite a bit of bulk corn for fed; we are supplying big farms and small feed mills in the CARICOM region with corn. It is actually growing faster than the bean side right now. But with our bean/corn rotation, that isn’t taking anything out of bean production. I see our business continuing with black-eyed peas and red kidney beans. I don’t see a strong downward trend, but I also don’t see a strong upward trend. IFT: Tell me a bit about how the cooperative works. Otto Friesen:The basic principles are trust and collaboration. Both helped our ancestors establish this community and have kept us around since then. This is a farmer-owned cooperative, and we don’t have a lot of bylaws and written rules. The farmers that own it confide their grains in us and we export the product for them; the trust is there that we will sell it for the best available price. That prevents farmers from competing against each other and causing prices to drop. We try to operate things so everyone benefits in the end. Different commodities are treated slightly differently, but to give you an idea, with black-eyed peas for instance, 95% of what we produce is exported. The farmers, right after harvest, put the crop into their storage bins. The farmers are responsible for storage; we don’t have black-eyed storage on facility. So after they have stored it in their bins, they come to us

40 IFTmag


and fill out a form letting us know how much they have in their bins. And now with traceability requirements, they also have to inform us of the date of planting and harvest, what chemicals were used, and what lot the production is from. Once the form is filled out, we give the farmer a down payment of up to 15 Belize dollars (about US$ 7.50) for every 100 pounds right on the spot. Then we know how much we have to export for the year, and we start exporting, making a payment to the producers every month. Usually about 5 dollars a month. We also pay a little bit of their storage costs on a monthly basis. When we start exporting, we randomly pick farmers and call on them to deliver their product, and we pay a part of that farmer’s storage costs up to the time he delivers. So whoever stores longer, gets more storage costs covered. That way we don’t have farmers pressuring us to empty their tank first. After we sell the entire crop, we calculate the total revenue we got out of that crop, we deduct our interest expenses incurred from borrowing upfront from the bank to make the down payment before selling, and the storage expense, and also take a profit for our factory to remain viable. And the rest of it goes to the farmers. That way, if the market price fluctuates over the course of the year, even if by a lot, the farmers all get the same price. It is not that the one who sells at the right time gets a lot more than the others.

IFT: What are your busiest trading months?

IFT: What are your primary export markets?

IFT: What are your stocks like presently?

Otto Friesen: We export black-eyed peas all over the world, especially to the Middle East, the U.S., Canada and Europe, but our priority market still remains the CARICOM region.

Otto Friesen:Right now, we aren’t exporting red kidney beans; what we have in stock is for domestic consumption.

CARICOM is also practically the exclusive market for our red kidney beans. With red kidney beans, it is more difficult for us to compete with U.S. subsidized farming. We might be able to with black-eyed peas, but not with red kidneys. In the CARICOM region, we have the benefits of the CET (Common External Tariff), under which there are tariffs on imports from outside the region if that same product is available from a country inside the region. This allows us to sell red kidney beans to other CARICOM countries at a slightly higher price than the U.S. would, or Argentina or whoever else has them. If it wasn’t for the CET, it would be hard for us to survive.

Otto Friesen: CARICOM is our priority market and we usually get a slightly better price there than into other markets. Over the years, we’ve gained the experience to know how much CARICOM consumes throughout the year, and we aim to keep a stock on hand to supply them accordingly. Anything more than that amount we like to sell as soon as we can, so the post-harvest months of April and May tend to be the busiest.

In terms of black-eyed peas, we had a large carryover from last campaign. What happened there is that we had a large contract with a Middle East client, but then there were problems with our bag supplier. The client wanted all the bags pre-printed with their company’s name, the expiration and packing date, and so forth. The buyer wanted the black-eyed peas for Ramadan. But it took three weeks longer than agreed upon to get the bags printed and that meant the beans wouldn’t have arrived on time. So we have a large stock of black-eyed peas right now. We’ve had discussions with U.S. importers that have expressed interest in buying quite a bit in November. The U.S. crop is being harvested now and I don’t know how big it will be. We’ve heard it won’t be that big. We’ll just have to see what happens in November.


Follow our daily Market Flash news on Twitter and become a fan!

AD_trade acos tr.pdf

1

02/08/13

15.07


IFT Magazine November 2013