“There are a number of different assessments of the potential for plant-based foods and plant-based meat markets, but they all draw one conclusion: the market potential is huge and growing quickly. We believe the intrinsic health and sustainability qualities of pulses can not only be a key driver for the sector’s growth, but also can help play a role in the shift towards healthier, safe and sustainable consumption and nature positive food systems.”
In this era of climate change and population growth, pulses are the key to sustainable food systems. Hopefully, the demand for pulses on the rise. The food industry is turning to pulses to satisfy this demand. Plant-based foods are growing in popularity. Ingredients made from pulses are increasingly being used in food products. As the demand for plant-based proteins is booming, it is becoming more important for Canada, the largest pulses exporter, to provide a sustainable supply to world markets.
How has the COVID-19 pandemic affected the pulse markets? What are the major challenges for the Canadian pulse industry? How close Canada to achieve its goals determined in the ‘25 By 2025’ strategy?
To find the answers, we interviewed Greg Cherewyk, the President of Pulse Canada, the national association of growers, traders and processors of Canadian pulses. With his 17 years of career at Pulse Canada, he is an esteemed leader in the industry. As President of Pulse Canada, Mr. Cherewyk highlights the importance of digital marketing and sustainability. Here are the highlights…
Mr. Cherewyk, could you please give some information about Pulse Canada? What is the mission and objective of your Association? We are guided by the vision that worldwide demand for Canadian pulses will grow each year as every market segment recognizes their value as nutritious, sustainable and functional foods. As a national industry association, Pulse Canada’s purpose is to enhance the profitability of the Canadian pulse industry, now and into the future. Our vision and the profitability equation inform how we structure our organization and the programs and services we offer to growers, processors and exporters of Canadian pulses. In that way, everything we do is guided by our need to deliver outcomes that maximize revenue or optimize costs. In terms of maximizing revenue, our focus is on diversifying market opportunities for pulses. When it comes to optimizing costs, our focus is on ensuring Canadian pulses have unfettered access to markets and ensuring that the supply chains that help serve those markets are fluid so that as a supplier we can meet a brand promise of consistency and reliability.
You assumed the leadership role at Pulse Canada in March 2021. What are your priorities as President of Pulse Canada?
As you can appreciate, the demand for plant-based proteins is booming and as an organization, we’re committed to ensuring that Canadian pulses are considered the premier plant-based ingredient. That goal is central to the success of our market diversification strategy. I assumed the leadership role as our organization renewed its 25 By 2025 strategy so the directive from the Board has been clear from day one. With all that said, there are 2 priorities that I’d highlight as highly relevant right now. The pandemic has made it abundantly clear that every organization must have a digital business strategy; one that not only ensures it can effectively deliver results in a remote environment but also ensures that its service offerings are scalable and can reach a broad audience. As demand for plant-based protein booms, there are many new entrants to space and new products being introduced. And while that’s great for our industry, the reality is that the overall volumes utilized in each case are still relatively small so we have to be able to extend our reach to a very broad audience. Our investment in our digital marketing strategy will help us do more in today’s constrained environment and will position us well as the world finds a new normal.
The other focus for our industry right now is sustainability. While we hired our first director of sustainability back in 2008 in anticipation of a new demand driver, the world is now truly awake to the important link between agriculture, food and climate change. Pulses are nitrogen-fixing legumes that can simultaneously enhance the nutrient density of a food product and reduce its environmental footprint. Our priorities are to ensure that we continue to build the body of science to support these claims and to ensure that every link in the food value chain embraces pulses as solution providers when it comes to health and sustainability. There couldn’t be a more important time to leverage our strengths.
A TURNING POINT FOR THE INDUSTRY
Can you tell us Canada’s position in world pulses production and trade?
Canada is the world's largest producer/exporter of peas and lentils and a significant player in the edible bean and chickpea trade. In 2020/21 Canada produced about 30% of global dry pea production and roughly 50% of global lentil production. Canadian pulse exports represent significant portions of global pulse trade, accounting for roughly 44% of total exports to all countries in 2020. The top 5 exporters by the percentage of total volume in 2020 were: Canada (44.1%), Australia (9.4%), United States (8.4%), Russia (5.2%), and Turkey (5.2%).
You have been in the pulses business for nearly 20 years. How has the pulse industry changed for the last decade?
The Canadian pulse industry’s growth has been very much linked to demand in traditional pulse markets where peas, lentils, chickpeas and beans are consumed as staple sources of protein. Canada’s consistent quality and competitive price have helped it gain market share in major markets where population growth alone can drive demand. Over time, however, the Canadian industry has evolved from simply supplying a generic bulk product to supplying a food ingredient that’s recognized for its versatility in a wide range of food applications. Where the majority of bulk yellow peas from Canada were once exported to the open-air markets of Mumbai or into Spain’s feed industry, today they’re fractionated and both the starch and protein fraction are valued in plant-based food markets the world over. If there was a ‘turning point’ it would have been close to the 2016 United Nations designated International Year of Pulses. While the designation on its own didn’t drive demand, it did serve to pull together the global pulse industry and the result was an unprecedented level of cooperation as industry players around the world executed campaign strategies designed to raise the level of awareness of pulses and the attributes that make them food that’s healthy for people and the planet.
Four years ago, Pulse Canada established “25 by 25” strategy. What are the goals of this strategy? How close are you to achieve these goals?
25 By 2025 is the Canadian pulse industry’s global diversification strategy to move 25% of Canada’s productive capacity into new markets and new uses by the year 2025. The directive from the national board came on the heels of the International Year of Pulses where nearly every marketing-oriented goal was reached or exceeded. For the board, it wasn’t a time to sit back and celebrate social media impressions; it was time to translate awareness into tonnes moved into new markets. With that high-level directive, a national team set out to develop tonnage targets for peas, lentils, chickpeas, beans and faba beans. The target and strategy for each type is based on analysis of the opportunities that exist to incorporate pulse flours, proteins, fibres and starches into specific applications in the food, feed and pet food industry. Whole food opportunities are also part of the focus as well, especially as it relates to targets set for edible beans in Canada and for lentils in the U.S. food service market.
In terms of tonnes moved into new markets, clearly the usage of pea protein stands out as a leader. According to Businesswire, the plant-based meat market was estimated to be valued at $4.3 billion USD in 2020 and is projected to reach $8.3 billion USD by 2025, with a compound annual growth rate (CAGR) of 14%.
This same report notes that “by source, the pea segment is projected to grow at the highest CAGR during the forecast period”. Creating new demand for beans, lentils, chickpeas and faba beans will take time, but there are strong signals that the food industry is looking for a wider range of options in the plant-based protein space.
Why pulses are important in our diet? What is the role of pulses in sustainable and healthy food systems?
Pulses are extremely nutritious; packed with protein, fibre, complex carbs and a range of important vitamins and minerals. Getting foods with that kind of nutritional profile into your diet can help lower cholesterol, lower blood pressure and maintain healthy blood sugar levels. And diets that accomplish those objectives lead to reduced risk of cardiovascular disease, diabetes and even certain types of cancer.
From an environmental perspective, pulses are a truly unique solution provider. With the help of soil bacteria, pulses fix their own nitrogen. Nitrogen is essential for crop development and crops that can’t fix their own must be fertilized. When you fertilize with nitrogen, soil micro-organisms convert some of the applied nitrogen to nitrous oxide, which is 300 times more potent than CO2 and represents nearly ½ of the of Green House Gas emissions from global agriculture. And GHG from the production of food represents 1/3 of the GHG resulting from all human activity!
Not only do pulses fix their own nitrogen, but a crop grown after a pulse benefits 1.) from residual nitrogen in the soil and 2.) because of the positive contribution to soil organic matter – which increases nitrogen use efficiency and generally has a positive impact on crop yields. For example, studies show that energy use drops 8% when wheat is grown on pea stubble AND energy efficiency goes up 15%.
Finally, in a world where 70 percent of the water used by people is used in food production, pulses are very important because they are a very water-efficient source of protein. They use HALF to 1/10th the amount of water of other sources of protein.
Reformulating to include pulse ingredients can help enhance the nutrient density of a food product and lower its environmental footprint. At Pulse Canada, we’ve been conducting research on the benefits of a pulse cereal partnership for example – looking at the impacts of reformulating wheat-based foods like pasta, pan bread and breakfast cereal. Working with ETH-Zurich, nutrition and Life Cycle Analysis (LCA) was applied to three wheat-based food products and the results are clear - reformulation with lentil or pea flour can improve the nutrient balance score by increasing protein and fibre levels AND significantly decrease their greenhouse gas footprint. In the case of pasta reformulated to include 30% lentil flour, the GHG emissions associated with the finished pasta product were 31% lower than a traditional formulation.
Now the same approach can be applied to meat or dairy products where sustainability metrics can also drive innovation at the product level. Partnering plant-based with animal-based foods provides new opportunities that go beyond what we see today in the marketplace.
Last year, Pulse Canada commissioned a study called the Nutritional and Environmental Sustainability of Lentil Reformulated Beef Burger, and the results appeared in a 2020 issue of the journal Sustainability.
Researchers found that substituting just one-third of a 100% lean U.S. beef patty with cooked lentils results in a blended burger that is more sustainable, nutritious and cost-effective. The blended burger had 12% fewer calories and 32% less saturated fat per serving compared to an all-beef patty, and had a 26% lower production cost. Including lentils also reduced the carbon footprint, water footprint and land-use footprint of the patty by about 33%, a very significant improvement.
Food production’s environmental impact is anticipated to increase with the dual challenge of feeding a growing population and rising incomes. The growing global middle class is putting pressure on the food system to produce more protein and more calories. Shifting diets will not only impact the environment, it will also impact the incidence of non-communicable diseases.
Pulses are well-positioned to positively impact both of these factors and we believe we’re only scratching the surface of the opportunities that exist for this future food. If readers are interested in exploring the above-mentioned studies in more detail they can visit www.pulsecanada.com or contact our office for more details.
NEW POST-PANDEMIC NORMAL IN THE MARKET
How has the COVID-19 pandemic affected the pulse markets? What are the effects of the pandemic on Canada’s pulse exports?
I’m sure we all heard and perhaps even experienced some of the panic buying that occurred in the early days, weeks and months of the pandemic. From March 2020 through to June there was a surge in buying of shelf-stable foods. People were obviously cooking from home and looking for ways to stock the pantry. Canned pulses were a good fit so there was reportedly a bump in sales in the early stages of the pandemic. Hotel, restaurant, institutional and foodservice sales were down so while there may have in fact been a surge in retail sales and steady sales throughout the year, it was offset by losses in these other market segments – particularly food service. So while retail grew 14%, foodservice (institutional canned and dry pack) saw a 31% drop in demand between the 2019-2020 calendar year.
Beyond beans and into the plant-based foods space, there’s better news. Plant-based meat substitute sales spiked in the early months of the pandemic and were consistent throughout 2020. Consumers cut back on food service in many cases out of necessity and turned to home meal preparation.
Mintel reports that 33% of plant-based protein consumers reported eating more than a year ago and 50% of those who specifically eat meat alternatives reported eating more than the year prior. Why? Consumers say it’s because there’s more selection and because of the health halo – that is they feel it’s a healthier way to eat. Ingredient and product sales support those statements as well. Euromonitor reports that global pea protein demand (not incl pet food) was up 12% on the year with North America and Europe driving it – making up 85% of demand. North America had the highest growth in milk and meat substitutes demand with a 40% increase in meat substitutes sales by volume and 17% increase in milk alternatives sales.
We’ll be watching to see how these patterns evolve as we find our new normal at home and around the world.
It’s difficult to examine exports to traditional markets and isolate the impact that COVID-19 had on buying behavior. For major markets for Canada, like China – new demand was fueled in large part by the recovery of the swine industry and growth in demand for feed. Perhaps one could make a case that COVID-19 played a role for a period of time in India with the Government providing 1 kg of pulses to each household covered under the National Food Security Act, but domestic production, domestic prices to farmers, food price inflation all factor into decision-making so it is difficult to link changes specifically to the pandemic.
Many countries have implemented restrictive measures against grain exports to safeguard national food security. You are a strong advocate of free trade and transparency in trade policies. What is the importance of functioning international trade in terms of world food security?
In March of 2020, the heads of the WTO, the WHO and the FAO came out early with a statement that stressed that as countries work to address the pandemic they must minimize impacts on food supply and unintended consequences on global trade and food security. In the context of COVID-19, there was support in the short term aimed at keeping food supply chains fluid. However, if you combine the trend towards protectionism with the experience that some countries had during the pandemic – it’s not unreasonable to think that there will be even more emphasis on doing what it takes to protect the domestic food supply and to secure supply chains into the future. It’s hard to tell right now what the ultimate post-pandemic plan will look like; we haven’t completely come through to the other side yet, but it’s something we all need to be mindful of.
Pulse Canada and its partners in the Global Pulse Confederation believe that government and industry partnerships can ensure that the health of people and the environment will be protected and that adequate supplies of high-quality food can flow to food-deficit regions of the world 365 days a year. But in order to deliver against these important objectives, governments around the world must create an enabling environment through predictable and transparent trade policies that are rooted in science. The Canadian pulse industry will advocate for this approach to international trade at every opportunity.
What are the other major challenges for the Canadian pulse industry today?
The Canadian pulse industry ships on average 30% of its exports in containers and unfortunately, there’s a massive shortage right now. For those who have got access to equipment, they’re facing huge delays due to congestion and rolled bookings. On top of that, they’re being hit with detention fees and shocking General Rate Increases (GRI).
In speaking with a long-standing member of the Canadian trade earlier in June, I learned they’ve had product tied up on dock at the port of Vancouver for 2 months.
The GRI had eaten through the profit associated with that sale and it will move at loss if they can convince the buyer to accept this extremely late delivery.
The rates on shipments going from Asia to North America are simply too attractive to carriers right now. Steamship lines are commanding $14000 for these routes and with rates like that, they clearly want empties back to Asia as quickly as possible. Canada and the Canadian pulse industry are not alone in facing this challenge; it’s truly a global problem. But in the short term, it’s clear, container capacity is going to be a significant constraint for exporters.
Plant-based meat made from pulses is becoming popular. Can you share some information on the growing plant-based protein market and your opinion about its future?
There are a number of different assessments of the potential for plant-based foods and plant-based meat markets, but they all draw one conclusion: the market potential is huge and growing quickly.
In addition to the Businesswire figures I referenced earlier, a recent study commissioned by Protein Industries Canada and completed by EY, forecasted that the ‘base case’ estimate of the value of the plant-based meat market is estimated to reach USD 85 billion by 2035. The ‘bull case’ has the market exceeding USD 143 billion by 2035.
These projections are driving investment today. The Good Food Institute reported that in 2020 alone, there was a record USD 3.1 billion invested in alternative proteins – more than any other year in the industry’s history.
There are a number of reasons for this growth, but few are as important as the consumer. A recent study conducted by the NPD Group found that Millennials, born 1981-1996, are the top consumers of plant-based meat alternatives. The report suggests “this generational group has adopted plant-based meat alternatives as a way to indulge sensibly while addressing their long-term health goals and animal treatment concerns. Gen Xers, born 1965-1980, are also a core consumer group of plant-based products, and because many in this group are parents of Gen Zs, born 1997 to present, they've raised their Gen Z children on plant-based beverages and foods.”
And the way Gen Z thinks matters when it comes to the longevity of the plant-based food trend. In a McKinsey & Co report called True Gen: Generation Z and its implications for companies, the authors note that one of the top three implications companies should be attuned to for this generation is consumption as a matter of ethical concern.
Gen Z consumers increasingly expect brands to “take a stand”…to choose the specific topics (or causes) that make sense for a brand and its consumers and to have something clear to say about those particular issues. Making a statement with respect to nutrition and sustainability is going to be increasingly important.
It’s also important to note that in the past decade, more and more countries have started to incorporate sustainability considerations into their food policies and consumer education programmes.
A recent study conducted by the FAO identified four countries that had directly included sustainability in their guidance to consumers (Brazil, Sweden, Qatar and Germany) and more have followed since.
In the recent Swedish National Food Agency’s guide, the reference to diet and environment was very clear “…what you eat isn’t just important to your own personal wellbeing; it’s important to the environment as well.”
This theme is alive today in discussions that go far beyond national dietary guidance. Global discussions today are focused on the need to establish the framework to transform food systems into systems that can deliver affordable, healthy food in an environmentally sustainable way to a world population fast approaching 10 billion people.
This September, the United Nations will be hosting the 2021 Food Systems Summit. The Summit has been described as a turning point in the journey to achieving the Sustainable Development Goals by 2030. Over the year, the hope is that the Summit will raise global awareness, deepen understanding of the problems that must be solved, and set a course to radically change the way food is produced, processed, and consumed.
We believe the intrinsic health and sustainability qualities of pulses can not only be a key driver for the sector’s growth, but also can help play a role in the shift towards healthier, safe and sustainable consumption and nature positive food systems.
Which regions or countries do you see as potential new markets for Canadian pulses? Do you think global demand for Canadian pulses would expand?
In short and for all the reasons already stated, yes we believe global demand for pulse will expand. As mentioned earlier, the emphasis of our global diversification strategy has been and continues to be on developing sustained demand for Canadian pulses based on their unique attributes and the Canadian industry’s knowledge of how these unique attributes can help the food industry (and its customers) achieve their goals with respect to nutrition and sustainability. Creating knowledge and evidence that supports the ‘healthy people healthy planet’ brand promise is a top priority, as is creating knowledge and evidence on how pulse ingredients perform in a wide range of food applications. Investments are being made in areas where the industry believes it can differentiate Canadian product - make it difficult to substitute in pulses from other origins.
From a market perspective, the focus begins with an analysis of the food applications where Canadian pulse ingredients can make an impact at an inclusion level that represents significant volume potential. The 25 By 25 team then identifies the companies who are innovating in that space and who have substantial market share. The team develops targeted strategies aimed at moving those companies along a commercialization continuum, with the goal of course being to encourage the introduction of products that utilize Canadian pulse ingredients. The companies and their products are located and sold the world over, so the focus is not necessarily country or region specific even though the attention may be ultimately focused in certain areas. At this time, the 25 By 2025 strategy does not include a direct focus on countries.
How is Pulse Canada’s production outlook for this year? Could also share prospect for 2021/22 season?
I’m not an analyst and our organization doesn’t put together projections, however there are some simple facts about this year’s growing season that are inescapable. While we’ve got a rather large and diverse production region, as a general statement, it’s dry. Growers were able to seed early and fortunately for some, there was rain in mid to late May that helped with emergence, but soil moisture levels are still extremely low right now. Yields across the country will be impacted and the best way for those who are interested in getting the latest information on Canada’s harvest to learn more is to join our online convention on September 8 and 9 and tune in to the outlook sessions we’ll run on each pulse. Check out https://pulseandspecialcropsconvention.com/ for details.