We know that the Black Sea is producing a lot more wheat. But what’s going on with peas, especially in Russia?
Three months ago, in February, we took a peek at the peas production in the Black Sea region. Specifically, we saw that Russian peas production in 2017 was then forecasted at a little more than 2.5 million tonnes, while Ukrainian peas production was just above 1 million tonnes.
Since the Black-Sea region is one of the world’s largest producers of peas and one of Canada’s main competitors on the peas exports, we wanted to take a peek at what’s going on there for the 2018/19 crop.
Peas production in major Black-Sea producing countries like Russia and Ukraine can easily influence the price points that we’re selling our peas here in North America.
From an acreage standpoint, we know that 2018/19 peas acres will shrink in major producer countries. For example, USDA reported that American farmers are seeding 20% fewer peas. In the Land Down Undaa, Australian peas acres are expected to stay flat. Peas acres in the EU will likely head lower in 2018/19 after they reached an all-time high of 2.5 million acres last year. On April 27, StatsCan said that they are expecting Canadian farmers to plant 3.87 million acres of peas in 2018/19. That’s down 5% year-over-year.
A quick glance at a chart that compares peas acres in Canada and Russia reveals two interesting things. In Canada, peas acres were choppy in the past 5 years with lots of ups and downs. In contrast, Russia’s peas acres grew exponentially from 2.3 million in 2015/16 to 3.6 million acres in 2017/18.
Similarly, Russia’s peas production expanded from 1.7 million tonnes in 2015/16 to surprising 3.3 million tonnes last year in 2017/18.
This is relevant now more than ever because the expectations are that the former Soviet nation may overtake Canada position as a world’s top peas producer.
The key question is why has Russia been able to expand its peas acreage so significantly?
The main factor to point to is an ambitious Russian government program initiated back in 2014/15 which helped their farmers to overcome issues such as the development of elite seed production, financing of the production and processing, upgrades in infrastructure, price risk management, and income support for farmers.
The strategy paid off because Russia was able to close the yield productivity gap. For example, Russia’s 2017/18 average yield was estimated at nearly 38 bushels per acre. Comparably, the Canadian peas yield in 2017/18 was estimated at a little more than 37 bushels per acre. It’s also worth noting that Mother Nature (read: optimal growing conditions) also lent a hand to last year’s crop.
Despite the better yields, fewer acres harvested means that Russia has not yet taken Canada’s place as the world leader in peas production and exporter. However, it’s clear that Russia is now an important player to contend with when it comes to peas production and trade
Whether Russia will take over Canada’s place as the world largest peas supplier is hard to say.
Russian officials indicated Russia’s acreage seeded to pulses, and peas implicitly, in 2018/19 are expected to increase roughly 10% year over year. That sounds like an ambitious plan.
Using the five-year average, we can assume that Russia’s 2018/19 peas yield could come in at 35 bushels per acre. This would mean that Russia’s peas production in 2018/19 could come in around 3.2 million, or slightly below 2017/18’s production.
In comparison, Canada’s peas harvest in 2018/19 could come around 3.85 million tonnes. Therefore, there will be roughly 650,000 tonnes that Russia needs to catch up on so that it becomes the global leader in pea outputs.
Granted, Mother Nature will have the final say, much like they’ve done with wheat, Russia can no longer be ignored when it comes to the peas market. Much like Brazil has seemingly come out of nowhere to compete with the US in global export trade, Russia could easily be put in the same category in the peas market, with Canada being the US in this situation.
Obviously, the India import tariff has compounded the situation but there still looks to be a fair amount of peas coming out of the Black Sea in 2018/19.