Canada pulse crop exporter poised to benefit from dry India

Fri Jan 9, 2015 2:21pm EST
 
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By Rod Nickel

WINNIPEG, Manitoba Jan 9 (Reuters) - One of the world's biggest lentil shippers expects Canadian exports of that crop and other legumes to climb to near record levels this year, as dry conditions in India limit output in that country, the biggest consumer of the protein-rich foods.

Chief Executive Officer Murad Al-Katib of AGT Food and Ingredients Inc expects that strong prices will entice Canadian farmers this spring to plant about 10 percent more lentils and dry peas, sowing the country's largest area in about five years.

Al-Katib, 42, started AGT 14 years ago in his basement in Regina, Saskatchewan. The company, which specializes in so-called pulse crops but also processes durum wheat, now has a market cap of $518 million.

Lentils and peas are staple foods in some developing countries. AGT depends on India, north Africa and the Middle East for 65 percent of its revenue.

"The reason I love this business is it is a cross-income product," Al-Katib said in a phone interview from Regina. "The richest consumer consumes (pulses) and the poorest consumer consumes. The only difference is how much they consume, and the quality."

In India, weak monsoon rains will limit output of pulse crops this year to around 18 million tonnes, falling 4 million tonnes short of India's consumption, Al-Katib said.

Nitin Kalantri, a miller in India's western state of Maharashtra, said Indian chickpea output could fall by 20 percent, resulting in larger yellow pea imports.

Still, Canada's ability to cash in on India's crop problems depends on how willing and able farmers are to plant more pulse crops four months from now. Saskatchewan, the province that grows the most pulses, is prone to flooding, and farmers will also assess wheat and canola prices in deciding what to plant.

AGT stock jumped 67 percent in 2014 as it diversified further from its lentil focus. The company has enjoyed a sharp turnaround from 2012, when the stock slid to a three-year bottom due to failure of the 2010 Canadian pulse crop, followed by the Arab Spring unrest and collapsing currencies in emerging markets.

AGT struck an agreement last year with Ingredion Inc to distribute flours, protein and bran ingredients within the food industry. It markets proteins for pet food through Cargill Inc. Together, the deals give AGT greater footholds in North America, western Europe and China. (Additional reporting by Rajendra Jadhav in Mumbai; Editing by David Gregorio)