Defensive Markets to Remain

International grain trade flows have become dominated by Russian exports. Canadian pea and lentil demand, following the same for wheat, flax and other crops, is eroding from cheaper competition.

In a phenomenon known as ‘friendshoring’, to sidestep the effects of trade sanctions and to finance war, Canada and other NATO allies losing export market share. Driven by factors that are unique in the global grain trade, Russia offers bulk shipments always at discounts, into countries that need to import food to feed domestic populations and can’t afford to pay premiums.

The impact of these new dynamics on prices paid to Canadian farmers have been muted in recent years due to crop failures in India. As the world’s largest consumer of legumes by far, Indian supply, demand and tariff dynamics tend to dominate global markets.

Canada used to influence world pulse crop markets too, as the dominant exporter. Now, with Australian and Russian exports cutting increasingly into Canada’s market share, domestic producers need to defend their businesses in new ways.

Cutting production costs on peas and lentils is one key strategy that many farmers are starting to figure out. When it comes to long term farm business resiliency, bringing food to market without wasting money on unnecessary expenses in the process, is the way to go, and the key takeaway in this report.