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Dealing With The Argentina Bean Crop Disaster 14

Healthy Grains: An Interview With Georgie Aley 04 28 Burman (Myanmar) Monthly Pulse Report: July 2013

30 Land of Boundless Opportunities:

An Interview with Shannon Berndt

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Richard Phillips, On The EU-Canada Pulse Trade 08

U.S. Popcorn Harvest: What To Expect 22

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INTERVIEW

Healthy Grains: An Interview With

Georgie Aley By Charlie Higgins

The director of Australia’s Grains & Legumes Nutrition Council (GLNC) discusses some of the work her organization is doing to promote pulse consumption. The health benefits of lentils, peas, garbanzos and other pulses are widely known. These hearty grains provide a lean source of protein and are rich in essential nutrients such as folate and potassium. Increased consumption of pulses has been associated with lowered risk for heart disease and diabetes, among other ailments.

In collaboration with a wide range of organizations, including Pulse Australia, GI Foundation, Healthy Kids Association, Dieticians Association of Australia, Heart Foundation, and ILSI Primary Food Alliance, the GLNC is at the forefront of initiatives to further our understanding of just how beneficial pulses are for our bodies.

Yet in most parts of the world — Southeast Asia and the Middle East being exceptions — pulse consumption is relatively low, with most westerners relying on meat as their primary source of protein. Georgie Aley, head of Australia’s Grains & Legumes Nutrition Council (GLNC), is trying to alter this trend by spreading the word, both in her country and abroad, about the many health benefits of pulses as well as trying to uncover new ones.

IFT spoke to Aley recently about some of the projects her organization is working on and her views on some key issues facing the pulses industry in Australia and abroad.

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“Australians need to increase their legume consumption by 470% to access the nutritional and health benefits of eating legumes. This is a significant increase.”


IFT: Describe the work that you’ve been doing through the GLNC regarding pulses. Is the focus mostly on education or is there a strong scientific research component? Georgie Aley: GLNC operates in three core operational areas: Nutrition Science, Advocacy and Education. All of these areas include legumes (we don’t say “pulses”). The key initiatives we have undertaken over the last year and will focus on into FY14 are: • Legumes cognitive study: In collaboration with GLNC and its contributors, the University of Manitoba (Canada) and University of South Australia have undertaken replicated studies with a population of 120 either overweight or obese adults to assess the impact of legumes on cognitive function over a 12-week period. Results to be published in March 2014 (Nutrition Science) • Legumes cohort study: GLNC commissioned a secondary analysis of two key studies relating to cohort studies involving legumes and the overall health benefit and outcomes of the study. Manuscript to be published December 2013 (Nutrition Science) • Health claims: GLNC, in collaboration with Pulse Canada, will be pursuing legumes-related health claims under the new health claims standard in FY14. Claim is to be determined. (Nutrition Science) • Nutrient analysis – GLNC will be conducting an analytical nutrient analysis of nine key legumes produced in Australia in early 2014. Australia currently doesn’t have this data so it will be a new initiative we will be releasing to the industry and will see FSANZ uptake the data into NUTTAB. (Nutrition Science) • Liven Up Legumes: A cookbook initiative conducted in FY13 focused on dieticians as a resource for the main grocer buyer and food prep person in the household. We have distributed over 6,000 copies since its release in May. (Education)

“What we do know is that consumers know legumes are good for their health. They just have limited knowledge and awareness of how to prepare, cook and incorporate them in to meals.” 06 IFTmag

• Australian Dietary Guidelines: GLNC was disappointed with the recommendation for legumes in the 2013 ADGs and as such advocated for some changes to references to no added salt which NHMRC have now amended in the ADGs. We will also be preparing a discussion document that will incorporate legumes and the desired recommendations along with supporting science for their inclusion in the next review. (Advocacy) IFT: What kind of work does the GLNC do outside of Australia? Georgie Aley: I have just returned from key meetings in Canada and the US. We work closely with Pulse Canada, HEALTHGRAINForum (EU), AACC International (formerly American Association of Cereal Chemists), Kansas State University and the University of Manitoba. We also link into organizations like Kellogg, General Mills and CPW globally through our work with AACCI. Part of this work includes global collaboration on unifying grains health messaging, health claims (grains and legumes, nutrient profiling and functional foods research) and grains and legumes cognitive studies, like the ones I mentioned. We were a member of the AACCI Whole Grain Working Group that recently launched a Whole Grain Food Characterization for the US, which GLNC supported. And of course, we now link in with CICILS and will work with them on the upcoming International Year of Pulses in 2016. IFT: Some members of the pulses industry argue that in order to keep pulses competitive they must be marketed as a healthy alternative to meat. What is your view on this? Georgie Aley: GLNC promotes a balanced diet. Yes, there are comments from a marketing perspective, but from both a sustainability perspective and the need for a balanced diet for optimum health and nutrition, GLNC believes in promoting grains and legumes as part of a balanced diet through evidence-based information that cultivates good health. Meat is a core food and so are grains and legumes. People need to eat from each of the five core food groups for optimum nutrition and health.


IFT: Lately there has been a lot of interest in pulsederived products such as lentil chips, pea protein bars, bean cookies, etc. Is the GLNC supporting the development of these kinds of products? Georgie Aley: We are not directly funding any work in this area. However we are in discussions with Pulse Canada in respect to the functional foods research they are currently conducting. We support the investment and product developments in this space, and our nutrient profiling work on legumes will assist in accelerating some of these opportunities in Australia. IFT: What have been some of the big trends in Australian pulses at the consumer level? Georgie Aley: Based on our 2011 Consumption Study data we know that Australians on average are eating less than 3/4 of a serving per week, which is much less than our recommended minimum of 2 – 3 servings per week. Australians need to increase their legume consumption by 470% to access the nutritional and health benefits of eating legumes. This is a significant increase. What we do know is that consumers know legumes are good for their health. They just have limited knowledge and awareness of how to prepare, cook and incorporate them into meals. This is why we produced publications such as the Liven Up Legumes Recipe Book and the Tips & Tricks Fact Sheet to help consumers incorporate legumes into their everyday meals. IFT: We published an article recently about some changes to the FAO’s standard measurements of protein quality and how these could affect the marketing of pulses. Could you comment about these developments and what they mean for the industry? Georgie Aley: We have reviewed the CODEX change and are in discussion with Pulse Canada about the work they are doing to review the impact. The fact that we don’t use this measurement in Australia in respect to high protein claim means it will have minimal impact in the Australian market. The issue for Australia will be the export market and the overall impact on Australian-produced pulses in this global marketplace if the CODEX reform is accepted.

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INTERVIEW

Richard Phillips, On The

EU-Canada Pulse Trade By Charlie Higgins The head of Grain Growers of Canada rings in on pulse trading with the EU and their joint commitment to sustainability. While the European Union may not be buying up Canadian pulses at the same insatiable rate as India, the EU market has remained vital for years. In 2012 the North American country exported 271,830 MT, 6% of its total pulse exports, to Europe, according to Pulse Canada. The market is bolstered by the fact that pulse production in the EU has been declining in recent years, dropping 15% annually on average between 2004 and 2008. This is primarily due to a gradual shift in production from France, the EU’s main supplier, to Canada and the U.S. One of the stipulations requires farmers to designate 5% of their land to crops of ecological interest, which include pulses such as peas and beans. Failure to comply would result in the loss of up to 30% of a farmer’s direct payments subsidized by the EU. Meanwhile, the Canadian pulses industry has been watching these developments closely as negotiations over the Canada-EU Free Trade Agreement continue. Europe’s proximity to key Middle Eastern markets gives it a competitive advantage in the pulse trade, so an increase in production — albeit government-driven — could have consequences for the Canadian industry.


Richard Phillips, the Executive Director of Grain Growers of Canada, is a prominent voice on the subject and one who speaks for his fellow grain producers. When asked by The Western Producer about the recent reforms to the EU’s policy, Phillips noted:

“What’s of interest to Canadian farmers is how they’re restructuring some of the payments and what they’re tying it to. It’s interesting where this is going and whether or not it becomes a trade issue.”

Phillips spoke to IFT recently about the Canada-EU pulse trade, sustainable agriculture and the future of the pulses industry. IFT: What is Canada’s relationship generally with the European Union in terms of pulse trading? Richard Phillips: We’re relatively collegial with the European Union, not just with pulses but for all grains. Over the last four years, the agriculture sector in Canada has been very engaged with the EU as a result of ongoing negotiations surrounding the Canada-EU Free Trade Agreement. That’s helped to bring a lot of us over to Brussels quite a bit more often and meet with people from all the agricultural industries. So I think it’s opened our eyes to the realities of the European market and it’s been very educational for both sides. IFT: How has this relationship evolved since Canada started becoming a major pulse producer? Richard Phillips: There’s nothing like a free trade agreement to get you more engaged. One of the first things you do is say, well, we’re agreeing on 95% of all tariff lines going to zero immediately on signing. But when everyone gets in there, well, what does that mean? What are the tariffs on pulses or wheat or pork or beef or whatever? And at that point in time you also look at what the non-tariff barriers might be. So like pulses in India, for example, face some phytosanitary challenges. Wheat in certain countries faces some phytosanitary challenges. People look for weed seeds or disease issues their country doesn’t have. Whether it’s real or not, it gets put up on the wall to be negotiated away. I think over the last four years there’s been a deepening of the understanding of the production on both sides of the fence and the agronomic challenges as well. 10 IFTmag

IFT: What do the recent changes to the EU’s Common Agricultural Policy mean for the Canadian pulses industry? Richard Phillips: I think everybody’s watching this really closely to see how many more actual acres might go into the ground there because, if they can produce the same quality of pulses, certainly their distance to market is substantially shorter than ours, especially for the Middle Eastern market. It remains to be seen whether the growers over there will actually seed more pulses or whether they’ll put the acres into grass or trees to meet their 5%, the mandatory amount of land per farm set aside for biological or ecological reserve. It’s yet to be determined whether people who have quite a bit of land already just designate it that way; tree stands, stream beds and stuff like that. Or are they actually going to take the time to change current production and put into that program. In most cases I think farmers, if their philosophy’s much like a grain farmer in Canada, if they have a chance to seed a different crop they’ll probably seed the different crop rather than actually keeping the land out of production if it’s good soil. So there’s certainly potential there for more pulse production. Again it’s another country’s policy though and it’s not like you can actually do anything about it other than watch and observe. IFT: What can the European market learn from the Canadian market? Richard Phillips: I think what has made the Canadian market so successful is the entire value chain pulled together through Pulse Canada. So you’ve got the actual exporters, the actual processors, and the actual growers. And then you have the industry people supplying, you know, the seed and fertilizer companies. You’ve got the whole value chain plugged in there. And I think if Europeans are going to do that, if they want to be as successful as Canada, they should have a really good look at the model that we’ve put in place.


Of course it’s much easier because Canada’s just one country and over there you’ve got 27 countries, so to try and form a body would be very challenging for them I think. I don’t anticipate they will get to the same place Canada has gotten in terms of that sort of coordination. IFT: Do you foresee similar green reforms happening in Canada any time in the near future? Richard Phillips: Well actually Pulse Canada has provided a lot of leadership in Canada on sustainability. They’ve put a lot of money into research on trying to define sustainability and the measures that define sustainability. They’ve gone through and shown how sustainably we are farming wheat, canola and pulses in different rotations with the minimum tillage that we practice in Canada. Canada comes out looking pretty good in all of this. And so in some ways we’re a little bit ahead of the curb. Now our beef people and pork people are also looking down that road. Just in early July we had our first national sustainability summit in Canada where we pulled together all of the sectors to talk about sustainability and get a working group together to go forward on that, to try and set some definitions of sustainability before the private sector does all of it for you or the activists drive it too hard on you. So I think that Canada’s well positioned. The European Union is spending a lot of time on this as well. So we may be going down slightly different paths but the end result is the same. IFT: How would you describe the general attitude of farmers towards implementing environmentally responsible practices, even if it affects their bottom line? Richard Phillips: Well the short answer is, of course, we ought to get paid for it [laugh]. I think the reality is if it means continued market access, then farmers will adapt to new things. The fact is that sustainability is coming and so if you are Unilever or Walmart or the European Union buying, you simply want to be

able to trust someone who says, you know, this is sustainably produced wheat, or sustainably produced canola, or sustainably produced pulses. They want to know what the auditing procedures are — how do they know that you’re not just saying that? And so that traceability is going to come right back down through the system. I think the progressive farmers will understand, look into the future and see where all of this is going. They will adapt and they will do the necessary paperwork. I know we have vegetable growers who have four or five different sustainability programs on their vegetable greenhouse operations. Each different company requires different paperwork, and they’re doing that already because at the end of the day, that’s where you’re making your sale. Either that or the customer’s always right. IFT: Have you noticed much enthusiasm in Canada for low-impact controlled farming methods, such as Controlled Traffic Farming? Richard Phillips: In the last two years we’ve had more people coming from Australia, talking about some of these new ideas in farming, the potential yield and savings. This is something that’s just in the very forefront and something that farmers are looking at, but there’s yet to be adaptation here. You need a few leaders in every community to do it first. The early adopters have to do it and show that they’re making money out of it and the rest of the herd will follow. It’s like you need a bell cow in every herd. We’re not quite there yet, but it looks interesting, like I said. I sat through a presentation a year ago last February by


an Australian farmer. It looks very, very interesting. To some degree Canadian machinery is still growing in size and some of these systems actually require you to have almost a fixed size because you’re going to be setting more permanent tramlines all the time and not disturbing the other land. And I don’t know if most of our guys here have reached that optimal size of their machinery to say, okay, my 120-foot sprayer is actually where I want to stay—or is it going to be 140 feet next year? I think there’s still a little bit of growth in our farming yet. IFT: How do you see the future of pulses in Canada and in the world? Do pulses stand a chance against big cash crops like corn and soybean? Richard Phillips: I think what’s probably going to make pulses successful will be not the competition with corn and soy. It will be the competition against meat for people to get their protein. You see a growing world population and I think the question will be how beef can be sustainably produced. I think pulses have a chance there against meat proteins — that will be the driver more so than making the first priority competitiveness with corn and soy. The reality is there’s simply not enough research invested in pulses and pulse yields to keep up with the corn and soy complex. That would require massive, massive investments in seed research to improve yields to catch up there. Even the wheat complex is really struggling. The U.S. wheat growers, Canadian wheat growers, and Australian wheat growers are going “man, is anybody going to grow wheat anymore?” at the rate corn and soybeans and canola are getting money. Pulses will be the same as wheat that way except wheat actually has to compete with corn and soy for acres. I think if they can market pulses as a sustainable protein over beef then there might be a whole new segment of consumers that would look at that.

“I think what has made the Canadian market so successful is the entire value chain pulled together Pulse Canada.”

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IFT: How important is crop diversification for the future of farming? Is Canada doing anything to promote crop diversification as it is required to by the new CAP reforms? Richard Phillips: Well, I actually grow pulses on my farm in Canada. We like growing pulses, just because it puts nitrogen back in the soil and it’s a nice break from other crops, but we’re far enough north that we don’t grow corn and soy. So where I am, from a personal perspective, we already have a lot of diversification on my farm. We’ve had oats, and we’ve got wheat and canola, and there’ll be peas and barley. I have quite a bit of diversity already. But, to answer your question, I think we’re a fair ways away from any policy like that in Canada. I think a lot of farmers are growing them because they make economic sense in their rotations. That’s what’s been driving it so far. You just make money growing pulses. And so they compete on their own two feet, and they compete strongly against any of the cereal grains. Canola is still probably the number one profitable crop in Western Canada for sure. In eastern Canada probably corn is their number one. Those are the number one crops, but once you get past that, then you see soybeans competing on the east and you see peas, lentils and chickpeas being able to compete very well with wheat, barley and oats in the west. And I think from a grower’s perspective we like to see that because it’s always nice to base your farming decisions on the market signals and not government drivers forcing you to grow certain crops. That would be the last motivator we’d want to see in the marketplace.


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FEATURE

Dealing With The

Argentina Bean Crop Disaster By Dario Bard

In the aftermath of the Argentina bean crop disaster that resulted in layoffs and a force majeure declaration, sellers and buyers look for a way forward. In the wake of the worst drought to hit Argentina’s bean-producing region in 70 years, CLERA, the Argentine chamber of legume producers, issued a force majeure declaration. The magnitude of the damage to Argentina’s bean crop is indisputable, but some foreign buyers feel that the situation does not technically meet force majeure conditions under GAFTA rules; consequently, insinuations have emerged that CLERA’s announcement has given Argentine exporters undue leverage at the negotiating table. IFT spoke to several bean industry experts in Argentina and elsewhere to review the on-the-ground effects of Argentina’s bean crop disaster and take a look at how sellers and buyers are doing their best to move forward.


THE WORST DROUGHT IN 70 YEARS This campaign, Argentina’s bean-producing region received 200 mm of rain from December to April; the average rainfall for that period is 700-750 mm. In the wake of the resulting devastation, BCBA, the Buenos Aires Grain Exchange, surveyed the damage and found that 350,000 hectares of crop production had been lost, including corn, soy sorghum and bean crops. Just for the Province of Salta, the value of losses exceeded AR$ 3 million; of the 220,000 hectares of bean fields that were to be harvested, a mere 35,200 actually were. In the prime alubia-producing region of Embarcación, Province of Salta, news reports indicate that many companies were forced to lay off 50% or more of their employees, and 15,000 migrant workers were turned away from the dried-up fields this harvest season.Adriana Bertini of Alimar says,

“This is the second consecutive campaign that has had difficulties due to drought,” says Hugo Torena of Argencrops. “This year, we are looking at nearly zero exports. There is very little product of exportable quality. Some clients are accepting whatever producers have in order to fulfill contracts.”

“Very little was harvested. To give you an idea, Argentina normally has good average yields of 30 fifty-kilo bags per hectare. This year’s average was two 50-kilo bags. Six bags in the best of cases.” “Never before have we had a situation where we couldn’t meet our contract obligations,” says Matias Macera of Desdelsur. “This year is a rarity. We’ve never seen anything like this in the 25-year history of our company.” “No one expected this drought disaster,” says Bertini, noting that early on there were good rains and Argentina’s bean crop was progressing well. “The drought didn’t only affect beans. It first hit the soy crop. As a result, many producers then planted black beans, but that also dried up. And the third and final option was alubias, where we were expecting a bumper crop. We had rains, but it wasn’t enough. We especially lacked rain when the plants were flowering. We just didn’t get rain at the end, when we needed it.”

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PICKING UP THE PIECES Since June, says Torena, growers have been looking at how they can make it to the next campaign. “Some are taking out loans to maintain personnel and purchase the basics, like fuel, so that they can start to generate revenues come next campaign.”

“In the case of beans, because of the drought, there is practically no seed left, and so there will be much less bean acreage planted next campaign than there was this time.”

Next campaign, though, didn’t escape the effects of the drought either. Torena explains: “Producers lost hybrids they had been developing for years; the loss in genetics is bound to impact quality this coming campaign. Also, some growers don’t have enough seed left to cover their planting intention for 2013/14.” In an interview with La Gaceta newspaper, businessman Santiago Bayón echoed Torena’s concerns.As the Argentine bean industry turns its attention to the upcoming planting season, it must also address the concerns of buyers who were left empty handed this time around. “There were a lot of growers that signed pre-sale contracts,” notes Torena. “I really don’t know how they can fulfill those contracts.”

“The drought hit hard,” explains Bertini, “and because of the law of supply and demand, prices have gone up drastically.”

At Desdelsur, Macera says they are re-negotiating with their clients, offering them a rollover of their position from last campaign to the 2013/14 campaign. “This has been generally well-received by our clients,” he says. “Most of them have already accepted this offer. We are maintaining the price for them, and most of them see that as attractive. White bean prices have risen significantly from last campaign, from US$ 1,400 to US$ 2000.” Macera believes Desdelsur’s approach to clients will be generalized, noting that his company is in contact with other bean exporters for the purpose of establishing a single, uniform and integrated approach to Argentina’s historic drought and resulting bean crop failure. At Alimar, the situation is different. “We have a policy of not entering into pre-sale contracts,” says Bertini. Nonetheless, they do work with clients who were expecting to receive bean shipments from Argentina.


“We are working with our clients to find solutions. We don’t believe in making excuses. We can’t offer alubia beans, but we can offer them garbanzos and popping corn, and give them all the logistical support they need to export these products.” The latter service is of great importance, Bertini stresses, because of government policies that complicate the exportation of agricultural products. Argentina, explains Bertini, is the world’s top bean exporter. “Argentines are not in the habit of eating beans, so practically everything we produce, we export.” But Argentine exporters must contend with an unfavorable monetary policy and increasingly burdensome bureaucratic paperwork. This is the landscape facing Argentina’s bean industry as it heads into the 2013/14 campaign.

THE VIEW FROM THE BUYERS’ SIDE In late June, CLERA issued a force majeure situation. “I’ve heard a little bit of grumbling, not a lot, from buyers that the sellers have invoked force majeure in a place where it might not be appropriate,” says Richard Duty of Trinidad Benham. According to a leading bean industry expert who requested anonymity, “As I understand it, under GAFTA rules, which is how most of the contracts are drawn up, not having a crop or having very little crop is technically not force majeure.”

“Sellers shall not be responsible for delay in delivery of the goods or any part thereof occasioned by any Act of God, strike, lockout, riot or civil commotion, combination of workmen, breakdown of machinery, fire, or unforeseeable and unavoidable impediment to navigation, or any cause comprehended in the term ‘force majeure’.”

In an email response to a query from IFT, Pamela Kirby Johnson, GAFTA’s Director General, wrote, “A lot will depend on the terms of the parties’ contracts, what standard clauses they included and what their actions have been.” Johnson noted that GAFTA has a range of 80 standard forms and contracts with varying terms. She singled out contract Number 89 as one that is often used for containers. Contract 89’s Force Majeure clause reads:

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“What we are seeing, with respect to the lack of large caliber white beans due to the drought in Argentina, is that it has had a knock on effect to great northern beans,” observes Duty.”

The unnamed expert believes force majeure applies generally to strikes, lockouts and wars that result in delayed shipments. “I’ve never seen a force majeure work as to a totality of a crop because there is always something that can be shipped.” He cites the 1986-87 pea bean crop failure in Michigan and Ontario as a historical precedent.

“In case of prohibition of export, blockade or hostilities or in case of any executive or legislative act done by or on behalf of the government of the country of origin or of the territory where the port or ports of shipment named herein is/are situated, restricting export, whether partially or otherwise, any such restrictions shall be deemed by both parties to apply to this contract and to the extent of such total or partial restriction to prevent fulfillment whether by shipment or by any other means whatsoever and to that extent this contract or any unfulfilled portion thereof shall be cancelled. Sellers shall advise Buyers without delay with the reasons therefor and, if required, Sellers must produce proof to justify the cancellation.”

“The crop was almost completely wiped out, but not completely. So they couldn’t declare force majeure. But the market went way, way up, and people found alternatives. For example, I bought a lot of South African pea beans that some people could use as substitutes.” Alternatives are already emerging for alubias. “The value of great northern beans right now reflects the lack of the larger caliber beans; some buyers have chosen to switch over to great northerns, and that shift in demand has led to higher values for great northerns.” Like alubias, great northerns are white in color, and although they are a smaller-sized bean (300-330 seeds per 100 grams versus 180-210 for alubias), they will likely work for most users. “Because there just isn’t any supply of the larger beans available, some buyers will choose to go down the scale in size and buy a slightly smaller bean.”


Returning to the force majeure issue, the leading expert points to the Prohibition Clause, Article 20 of GAFTA 24: The problem in the Argentina bean crop disaster, notes the expert, is that an industry association, not the national government, declared force majeure. In any event, as the leading expert sees it, there is a contract technicality on the one hand, and reality on the other. “We are talking about a major crop that means a lot of business for Argentina. And it’s not only the white beans; it’s the black and colored beans, too. Nobody wants every company in Argentina to go bankrupt. I’m sure that was a persuasive argument made in their chamber when they declared force majeure because this could be a multi-million dollar situation if all those companies had to pay compensation of at least US$ 500 to US$ 800 a ton. That’s why they are banding together and that is just common sense. Argentina was looking at possibly losing its entire bean industry. It is complicated.”

“If a company is good through thick and thin, you would think that buyers would have some empathy with the Argentine exporters. I do a lot of business in Argentina and nobody there is trying to hide anything. I think that’s important to keep in mind.”

Buyers have limited options in this situation. They can take the sellers up on the offer to rollover last campaign’s position, demand a substitute crop, or pursue legal action. In the case of the latter, the process typically starts with GAFTA. Macera doesn’t expect many sellers to take that route. “We sell the most volume and so far none of our clients have mentioned going to GAFTA. We’ve made our offer to practically all of them and they have all accepted.” The expert doesn’t see the legal-action route as viable. It is expensive to take a case before GAFTA. And although a GAFTA ruling can be expected within six months of filing, enforcement of that ruling typically requires the initiation of legal proceedings in the losing party’s home country, requiring the expenditure of more time and money. “One time I had a problem in Brazil, and we figured out the legal costs alone would have been US$ 300,000 to US$ 400,000,” recalls the expert. “So most people back off and try to resolve it commercially.”In the expert’s opinion, the markets for white beans of the caliber of a great northern or larger are going to be very firm this year. This prediction is based on the lack of carryover in North America, the challenges facing Argentina’s next campaign and reports from China that the harvest there may be less than expected.

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22 IFTmag


FEATURE

U.S. Popcorn Harvest:

What to Expect By Dario Bard

Planted acreage is up, but worldwide popcorn supply is expected to remain tight through 2014. With the Seedmen’s Combined Field Day held in Lafayette, Indiana, and the Popcorn Board releasing the results of its 2013 planting survey, August proved to be an eventful month for the US popcorn industry. As the bulk of the popping corn harvest gets underway, IFT reports on what to expect.


PLANTING SURVEY Participants in the Popcorn Board’s 2013 planting survey reported sowing 184,241 acres with popping corn seed. Although this represents a more than 10% increase over what was reported in 2012, Deirdre Flynn, the Popcorn Board’s Executive Director cautions, “It is not an apples to apples comparison from year to year.” She points out that the survey is voluntary and participants may change and their numbers vary from one season to the next. Popcorn Board Chair Richard Duty adds that the report should not be interpreted as a complete picture of acreage planted. “However,” he says, “you can extrapolate two pieces of information from each year’s report.” “First, if you look at the folks who participated in this year’s report and look at what they reported for last year’s acreage and look at what they reported this year, it is safe to say that acreage is up to some degree compared to last year.” “Second, if you look at the reported acres harvested last year and the production in pounds, you can see that yields last year were roughly 3,000 pounds to the acre. That is an important piece of information because in the last 10 years we’ve been issuing this report, we haven’t seen national yields below 4,000 pounds. So the 3,000 pound figure gives you a sense of the impact of last year’s drought.”

“If you estimate in the number of acres that went unreported by non-participants, we should be over 200,000 acres,” says Duty, who characterizes this planting season as average.”

Daryl Hunnicutt of Preferred Popcorn, a farmer-owned company in Nebraska, where most of the US. popcorn is grown, estimates the planted acreage for his state is about the same as in 2012. “There was a strong price incentive to grow more acres of popcorn this year,” says Hunnicutt. “Prices are high because of the decreased production nationwide in 2012 due to drought.” Duty concurs, noting that the dealer price for popcorn is at a historic high.

“In my estimation, last year we had up to 50% reduction in both the U.S. and Argentina (the world’s top popcorn exporter) in consecutive crops, leading to a worldwide popcorn shortage that in turn resulted in high prices.” 24 IFTmag


Further, he points out that most of the U.S. popcorn acreage was contracted in February and March, before Argentina’s harvest figures were in and the full extent of the shortage became evident. Based on this, Duty concludes that prices are likely to remain high.

TABLE 1.

STATE-BY-STATE ACREAGE AS REPORTED TO THE POPCORN BOARD

U.S. POPCORN CROP CONDITIONS This year’s Seedmen’s Combined Field Day brought together the largest gathering of popcorn producers Duty has seen in many years. The event was held in Lafayette, Indiana, where Flynn described the mood as optimistic.


Duty says that the crop is in pretty good shape, but he did note two things at the Combined Field Day test plot that led him to readjust expectations: the crop was one or two weeks behind normal maturity and the pollination was spotty. “They had a heavy rainstorm in July that coincided with some of the pollination dates, so there were ears with blanks in places instead of kernels. It is difficult to say if this is going to be a widespread issue.”

“Nonetheless, Duty says, “I don’t anticipate above-average yields considering the condition and lateness of the crop, and the heat and stress we are seeing now.”

Recent weeks have seen heat and dry conditions in the heart of the corn belt. “In the states of Iowa, Illinois and Indiana, we’ve seen field corn come down from excellent to good to fair in a significant way over the last few weeks,” informs Duty. “I think we might see some yields compromised because of it.” In Nebraska, where fields tend to be irrigated, the onset of hot dry weather is less of a concern. “Irrigation helps with a consistent yield,” says Hunnicutt. “Except for some areas that had hail and wind damage, the crop is looking really good this year. The rainfall has been spotty here, but we’ve gotten more rain this year than last year, so we haven’t had to irrigate as much, and that obviously helps. This week, we are hot and dry with above normal temperatures, but our irrigation will get us through this hotter period.” He anticipates Nebraska will deliver above-average yields this year.

U.S. POPCORN STOCKS “Right now, we have a historically tight popcorn inventory,” says Duty. “ Argentina has some new crop product that they are selling and shipping, but here in the U.S. we are next to out. When the new crop comes in, mostly in September and October, the pipeline will be basically empty. I don’t see any relief in sight till November at the earliest.” Duty sees a need for big crop years from both the U.S. and Argentina to rebuild supplies and return prices to “what I call a more natural level.” This might have to wait another year; Argentina’s last harvest was slightly below average. “We are certainly not going to have a bumper crop here in the U.S.,” says Duty.

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EXTERNAL MARKETS “Any country that has a large population that is gaining in personal disposable income and is able to go to the movie theaters and enjoy popcorn is a potential market for us,” says Hunnicutt; Preferred Popcorn exports popcorn to 57 countries, including Mexico, Japan and China. Duty seconds this assessment: “Popcorn is a snack food purchased with discretionary income, so any market with a growing middle class has potential.” Both Hunnicutt and Duty point to India and China as examples, two nations that are currently on the Popcorn Board’s radar. “Exporting to India is a challenge for U.S. processors because, not only does India have 56% custom duties, it also requires that food shipments be treated with methyl bromide before being allowed off the dock and into the country,” says Flynn. Methyl bromide was phased out in the United States in 2005 in accordance with the Montreal Protocol to reduce the use of ozone-depleting agents.

“This has become a real trade barrier for U.S. popcorn going into India,” says Duty. “We are seeing demand grow in India. It is an important market but we are having difficulty getting our product in.”

The Popcorn Board hopes, however, that it can follow in the footsteps of the pea and lentil industry, which has secured a recurring six-month methyl bromide exemption from the Indian government. The uncertainty created by an agreement that has to be renewed every six months makes it a less than ideal solution, but, as Duty puts it, “It is better to have a sixmonth waiver and be able to do business than to not have it and not be able to get your product into the country.” With respect to China, the Popcorn Board is contracting a private firm to conduct market research into snacking preferences and cultural attitudes towards snacking. “The idea is to discover where popcorn would fit in,” says Flynn, “whether it be the grocery story, movie theaters, street vendors, etc. Once we have those findings, we can build promotions from there.” The Popcorn Board continues to develop markets in Costa Rica, Mexico and Southeast Asia, as well.

U.S. POPCORN HARVEST BEGINS Flynn expects the bulk of the harvest to be completed by the end of September. And although the crop is late, Duty doesn’t anticipate that early frost will be an issue. “The popcorn belt is far enough south in most of the growing areas; I haven’t heard concerns at this point.” The lateness of the crop, though, may result in the crop being harvested before it reaches full maturity, and that could adversely impact yields.


REPORT

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

REPORT HIGHLIGHTS Burma (Myanmar) exported 90,434 metric tons (MT) of beans and pulses in July, a decrease of 66 percent from the same period in 2012. Of this total, 67 percent (60,356 mt) was exported to India. It was note worthy to note that 125 metric tons of beans and pulses were exported to U.S.A.

GENERAL INFORMATION Burma’s beans and pulses in July 2013 totaled 90,434 metric tons (MT), a decrease of 66 percent from the same period of last year. Matpe beans (black gram) accounted for 59 percent of the total followed by Toor whole and Mung beans with 32 percent and 3 percent respectively. India accounted for 67 percent of total exports while Pakistan accounted for 13 percent. It was note worthy to note that 125 metric tons of beans and pulses were exported to U.S.A. 28 IFTmag


TABLE 1.

PULSE EXPORTS BY TYPES AND DESTINATION IN JULY 2013 (MT)


1 Yangon FOB Prices and Price changes in India’s Beans and Pulses Market (US$/ton) 2 FOB prices are minimum prices. 3 Prices in Delhi market are India‘s Toor whole and Myanmar’s Matpe SQ prevailing prices.

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MARKET SITUATION Domestic prices for beans and pulses were depressed in July due to weak demand from India and China (border trade). Previously there was a great demand for Green Gram and White Chickpea (big) from India and China, but recently China’s demand has decreased whereas India ‘s demand ceased. Confirmed trade sources said that this is usual in the month of July for India’s demand for beans and pulses to weaken including Matpe since this is the seeding season for Matpe in India and volume of Matpe imports are decided on the status of the crop situation. India’s beans and pulses are harvested in September and during these months before the harvest; traders speculate that the export demand is likely to increase after the end of July. Myanmar’s domestic consumption for Matpe is about 10 % of the production and the remaining 90% is being exported to India, Bangladesh, Malaysia, Dubai, UAE and Pakistan.

TABLE 2.

MONTHLY EXPORT OF BEANS AND PULSES (MT)


Land of Boundless Opportunities:

Interview With Shannon Berndt By Dario Bard

The Executive Director of the Northern Pulse Growers Association reminisces about how far they’ve come and explains why the future is theirs for the taking. When it comes to the pulse industry in one of the world’s most important agricultural regions, Shannon Berndt, Executive Director of the Northern Pulse Growers Association, has seen it all. She was there from the earliest days of pulse production in the Northern Plains region, having grown up on a grain and cattle farm in Pollock, South Dakota and, straight out of college, having worked with North Dakota’s early pulse growers who were then struggling to establish what eventually evolved into the country’s most productive pulse growing region. “When I first started working with them,” says Berndt, recalling her early experiences with the pulse industry in the late ’90s, “I wrote up a press release everyone was really excited about. We were about to double acreage … from a whopping 5000 acres to 10,000 acres the following year!” Now, less than two decades later, Montana and North Dakota account for more than 85% of U.S. dry pea production and more than 75% of lentil production. Berndt has witnessed every step of the industry’s growth firsthand and, as the 2013 campaign gets underway with 50% of the crop planted late and concerns of frost on everyone’s mind, she is as optimistic as ever about the future. “We continue to see new marketing opportunities emerge,” says Berndt. “As the acreage expands, processing facilities start to look at moving in and working with pulse flours and proteins and starches.” In fact, in early August, United Pulse Trading opened a new US$ 30 million processing facility in Minot, North Dakota, to do just that. “I think we’ll continue to see a lot of growth and excitement around pulses in the next several years to come.” 32 IFTmag


INTERVIEW

To hear Berndt tell it, the Northern Plains region is a land of boundless opportunities. IFT: Tell me about the experiences that led you to become involved with the pulse industry? Shannon Berndt: I started working with the pulse industry right out of college through an association management company that handled eight agriculture commodities; it just so happened that dry peas and lentils were among them. At the time, they had very limited acreage. There were several producers in the area that had pooled together funds and ideas and were trying to get the pulse industry moving in the region. They used their own dollars for marketing and that type of thing; their resources were really limited. Being associated with the company I worked for gave them the chance to really kick start their organization and launch their own association.

Then in 1997 they went to the North Dakota legislature and succeeded in having a check-off put in place on pulse crops that were sold or grown in the state. That meant that 1% of anything grown or sold went to marketing, research and education on pulse production in the region. That really kick started their organization because they then had funds to move forward with developing foreign markets, and they had money to put towards research into issues like disease and insect plagues. Eventually, the association got to the point where they were large enough to go off on their own. They hired me in 2006 and I became the association’s executive director in 2008. It started out as a very small association originally called the North Dakota Dry Pea and Lentil Association. We joined up with the Montana producers in 2007 and that’s when we became the Northern Pulse Growers Association.


IFT: Back when you were at the association management company, was there something about pulses that appealed to you? Shannon Berndt: When I started there I worked for three different groups: an association of buffalo producers; the dry pea and lentil group; and also a wheat and durum group. But the pulse industry was the most exciting at the time because there were so many things that were changing within that industry. And seeing its phenomenal growth is what has been most exciting. We’ve seen tremendous expansion with peas and lentils; with chickpeas, we are somewhat limited due to environmental conditions, but we are expecting a variety will come along that will work better in this region. So when I came in, it was a really exciting time. There was a lot of opportunity to expand acreage. Pulses were new to producers and they were interested in how they could fit them into their farming operations.IFT: How has this relationship evolved since Canada started becoming a major pulse producer? IFT: Over the course of your career, what are some of the more important changes you’ve noticed in the industry and in the Northern Plains region? You mentioned the acreage increase. Shannon Berndt: A lot of the increase in acreage is due to more marketing opportunities. When the association first started, there was only a couple of processing facilities in the region for producers to market their crop. We now have several. We hear of interest to build more on a monthly basis. We have international and regional companies that have shown interest in handling pulses. That’s good for our producers and good for the increase in acreage because as long as they have a place to market their crop, they’ll continue to plant pulses.

IFT: To what do you attribute this boom in processing facilities? Shannon Berndt: There’s two ways of looking at it. One is that producers have realized that pulses are a good fit within their agronomic practices; pulses put nitrogen back into the soil and help with soil health, and there is research that shows that crops following a rotation with pulses can have subsequent yield increases. So producers are seeing that pulses fit really well into their farming operations. The second is that, because consumers are becoming more concerned with health and nutrition, we are hearing more about pulse crops. It’s interesting now that whenever you pick up a magazine there seems to be an article about lentils or garbanzo beans. Years ago, I don’t think the general public could have identified those two products, but now you see them on restaurant menus and store shelves. There seems to be a lot of interest being generated on the nutrition and dietary side. Processors are going to pull these two factors together. They are going to work with producers to get the acreage planted so they can then have enough supply to satisfy the growing consumer demand. IFT: What changes do you anticipate for the future of the pulse industry overall and the northern plains region in particular? Shannon Berndt: I think we will see more processing facilities and more companies working with pulse flours, proteins and starches because there seems to be a lot of interest from the food industry. I also see such great potential for acreage growth in Montana right now. Fallow ground is now being turned over to pulse crops, so I see a very bright future for pulses in Montana. Producers there are excited about the nitrogen fixation properties of pulses. Some have told me that they can definitely tell the difference in soil health from having planted pulses several years in a rotation. Some of these guys might have gotten into pulses to give

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them a try and see how they performed and then, realizing the agronomic benefits and that the prices were there, they decided to stick with them. The 2011 disaster is a testament to that. In 2011, we had a horrible weather year in North Dakota and lost more than 80% of our crop. The years prior to that, our acreage had stabilized; in North Dakota, it didn’t go up, but it also didn’t go down. Since 2011, we are seeing the acreage go up by 150,000 to 200,000 acres every year. So we are almost back to where we were when we had our weather disaster in 2011. I believe that’s because there are producers that have been planting pulses for years, they saw the rotational benefits, and once the ground had dried up — because there were a lot of areas that were too wet to plant pulses — they got right back into that pulse rotation again. IFT: In terms of research, what are some of the recent new technologies that have been implemented or are under development? Shannon Berndt: Our biggest focus is developing new varieties through the breeding program we established. We are looking at producing public varieties to give producers more options and opportunities to plant different varieties of peas, lentils and chickpeas. The breeding program works closely with the quality lab and our pathology program. They can actually select genetics based on drought and disease tolerance. With the quality lab, we take it one step further to meet the needs of clients that, say, want a pea that is high in starch; we can have the genetics in place to deliver a pea variety that is higher in starch than others. That, in my opinion, is really interesting because it means the opportunities are limitless when we start looking at developing products that are suitable to just about any market.

IFT: What are the biggest challenges facing the Northern Pulse Growers Association? Shannon Berndt: Our biggest issue is continued growth on the acreage front. We want to make sure, as we are out there promoting and developing new markets, that the supply is always there to meet any new demand that we might generate. That’s our biggest hurdle. Making sure we get enough acreage in. Also, making sure producers are educated about pulse production. The first year they plant pulses, we want to give them all the education they need as far as what to look for in terms of disease presence in the field and what’s the best way to harvest; we want them to succeed. IFT: Do you see new markets emerging for Northern Plains pulses?

Shannon Berndt: Absolutely. We’ve always worked with the livestock market on feed, and there are opportunities there; again, the challenge is making sure we have the supply to meet any demand we would create. I see a lot of opportunities on the livestock side and the domestic marketing side. In terms of foreign markets, they have traditionally been the strongest for us, and I see that continuing as world population growth continues. Certainly, we are going to be in a lot of those countries that have always been big importers of our products. And of course products from major food companies that include pulse derivatives will be filtering into those regions, too. I think we’ll continue to see a lot of growth and excitement around pulses in the next several years to come.


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IFT Magazine September 2013