Return of the MarkaZoids

VANCOUVER - Jan 26/07 - SNS -- In Canada, a surprising increase in efforts to push for a green lentil marketing board was somewhat distracting for markets, if only because the reasoning used to promote the concept is misleading and naive.

Dramatic and unnecessary increases in the amount of green lentils grown in Canada between 1995 and 2004 had predictable consequences both for the structure of the marketplace and the value which could be obtained for Canadian product.

Rampant expansion of pulse area in western Canada sparked a massive expansion of the processing industry, with nearly all the growth accounted for by farmer-owned processing plants. The resulting explosion in machine dressed product and the inability of the existing trade to handle the growth, lead to a significant increase in the number of people who called themselves "traders" and who were competing with one another for the attention of buyers.

Poor crops between 2001 and 2003 created a supply crunch, whereby processors were forced to pass the maximum value from the market back to growers in an effort to attract enough product to meet monthly cash flow needs -- needs which were defined by debts carried by the processing plants and their overhead. This resulted in a serious decline in trading and processing margins, ultimately leading to several bankruptcies.

Sinking margins angered the industry's old guard, who persistently asserted Saskatchewan's processor-exporters were more interested in volume than value -- the precise charge contained in the report written for the Saskatchewan Pulse Growers by the former XCAN pulse trader, who started trading when green lentil exporters expected to make a net profit of CDN $3 to $5 per 100 pounds (cwt) on every container shipped.

And the precise claim picked up by western Canada's MarkaZoids, who -- worried they might lose the fight to deny wheat, durum and barley growers marketing choice -- have launched an apparent public relations campaign to discredit processors and exporters. No one is letting the crop's recent history and actual reasons for the poor price performance of 2005-06 cloud the debate.

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