Mechanics of the
Operation:
For Canada to export lentils to Nepal several obstructions must be resolved. The first task that should be done is surveying the market place (Surveyonics, 2011). This will help obtain more accurate information needed before the trade agreement is made (Surveyonics, 2011). This basic information gathered would be about: How much demand is there for the product? How competitive is the market place, and what is the cost of the competitions’ product? In general this information would indicate; if exporting lentils is a good idea? How much product should be exported? Also how much cost can go into getting the lentils to Nepal, where they will still be price competitively to other products? After the surveying is completed, and that it is determined that exporting lentils is a good idea, then a trade agreement is needed to be set in place. The company required for this task is Export Development Canada, or EDC. The EDC is a Canadian company based in Ottawa that assist companies in creating new trade agreements, deals with all the legal documentation, and helps handle any other legal issues (Export Development Canada, 2014). Secondly, producers are then needed to grow the product. Most lentil producers are contracted (Chen, 2014). This is very beneficial because farmers are able to know in advance of the price they will be paid for their product. So they are able to calculate profit margins and how much they are able to spend on production (Agriculture and Consumer Protection, n.d.). Another way contracting is beneficial is that it reduces waste, since the company the farmer is contracted with can control how much product they require, to match demand (Agriculture and Consumer Protection, n.d.). The third obstacle is processing and transporting the product. The company for this job is Agricorp International. They are a Singapore company that specialize in the processing and transportation of speciality crops, in particular pulses (Agrocorp, 2014). They are a well-established company, with various processing plants in Canada, and work with Canadian producers to deliver high quality product around the world (Agrocorp, 2014). They have offices all over the globe, including offices in Vancouver, and one located in India (Agrocorp, 2014). This will be an advantage when forming an agreement, and for communication purposes, since as already mentioned, Nepal is close to India. In addition to this, Agricorp International already exports Canadian lentils to India (Chen, 2014). So getting the lentils to India will be no problem. The lentils will be transported by train from a processing plant in the Prairies to a port in British Columbia (Agricorp, 2014). From there they will travel across the Pacific until they reach a port in India, for example Nhava Sheva (Chen, 2014). From there another company is needed to get the lentils from the port in India to Nepal. A company that could get the lentils from the port in India to Nepal is the UPS. They are a courier company that can handle freight (UPS, 2014). They operate all over the world including in India and Nepal (UPS, 2014). They can get the product from any port in India to Kathmandu, the capitol of Nepal (UPS, 2014). Once in Kathmandu, local transport will be required to get the product from there to local markets in rural and urban Nepal. Figure 1: How Exporting Lentils to Nepal Benefits Canada
Potential Consequences
to Canada:
Everything in the world has its pros and its cons, and unfortunately this trade agreement is no exception. This trade agreement has the potential to decrease profits for producers and processors in Canada. Nepal is a poor country, so the product will have to be priced competitively so the Nepalese can afford to buy the product. By exporting lentils to Nepal it takes away the opportunity to export the lentils to another country. Another country that could be wealthier, and so processors and producers could charge more, leading to more profit. Another similar way exporting lentils could lower profits for producers, is by having to grow the product. If there is increase demand, a farmer may be contracted into growing more lentils. This requires the use of the farmer’s land, and so dictates what the farmer has to grow. This could restrict the farmer from growing a potentially more profitable crop, and so could decrease profits for the farmer (Agriculture and Consumer Protection, 2014). |
Picture above from: http://www.yesvegetarian.com/wp-content/uploads/2014/10/Red-Lentils.jpg
Background Information
on Lentils:
The item to be exported is packaged red lentils, some basic information on lentils are: they are similar to beans, and are the seeds of leguminous plants (Barber, 2001). Lentils are a cool season monocot plant (Government of Canada, 2013): that are very drought tolerant (Carr, 2014), so they do not require much irrigation for production. Since lentils are legumes they are a good source of protein, iron, many other essential vitamins and minerals, and fibre, while containing low amounts of fat and zero amounts of cholesterol (Government of Canada, 2013). They are so healthy in fact that they are considered a superfood, and offer various health benefits; such as reducing heart disease (Fitzpatrick, 2014). For the most part all types of lentils have the same or very similar nutritional value, the only real difference when it comes to the types of lentils is their size and colour (Kerns, 2014). Table 1 in the appendix offers more insight on the nutritional value of red lentils. Lentils originated in West Asia and have been consumed by humans since the ancient times, around sixty thousand years ago (Carr, 2014). From then because of their usefulness they have been brought along where ever humans decided to migrate to (Carr, 2014). The most popular variety is red lentils (Vandenberg, 2010). Ironically enough the colour of the seed coat of red lentils can vary from black to green (Vandenberg, 2010). Another fact about lentils is that they have a relatively long shelf life of two to three years after harvesting (Vandenberg, 2010). This is good because it gives time for the transportation to get the product to Nepal, and also gives the marketers time to sell the product. As for Canadian lentils, ninety nine percent of all lentils grown in Canada are grown in Saskatchewan: The other one percent is split between Alberta and Manitoba (Pulse Canada, 2014). In the Prairies they have the optimal environmental conditions for growing, which is cool and dry conditions (Pulse Canada, 2014). In Canada the two main varieties of lentils that producers grow are large green and red lentils (Pulse Canada). Other varieties can grow in Canada though they are less common (Pulse Canada, 2014). This is because most of these lentils are contracted by companies and so get to dictate what variety they would like the producer to grow (Chen, 2014). Furthermore, Canada is one of the world’s greatest producer and is the world’s largest exporter of lentils (Vandenberg, 2010). Today Canada exports lentils all over the world particularly to the Mediterranean area (Vardenberg, 2010), though also to India and China (Khan, 2014). In Canada, the lentil industry is a quite large industry, valued at three billion dollars, which is still expanding (Pulse Canada, 2010). Refer to Table 1 for more information of the nutritional value of red lentils.
Benefits to Canada:
Exporting package red lentils is beneficial to Canada in many various ways. The first way it benefits Canada is through job creation. Exporting lentils to Nepal increases demand for the product, with increased demand this leads to an increase production of lentils, and therefore more jobs (International Trade Administration, 2014). It would create permanent and temporary jobs for Canadians. The temporary jobs this would create are for the people to work on the creating the trade agreement, and surveying in Nepal, finding information needed to maximise profit while being the most efficient. The permanent jobs this would generate would be in production, processing, and transportation, of the product. These are just the direct jobs this trade agreement would make. In addition, indirect jobs would be generated out of this agreement. With increased production of lentils, seed and genetic companies would begin more research and development into improved seed. The same can be said with farm equipment companies, with more demand for specialized equipment directed to the production of lentils, more research and development of machinery would occur. The second way this trade agreement benefits Canada is by helping the environment. With increased demand for lentils, it will encourage farmers to grow more lentils, which will benefit Canada’s environment (Pulse Canada, 2014). Lentils are legumes and therefore do not require nitrogen fertilizers (Pulse Canada, 2014). This reduces the amount of fertilizer run off and total amount of energy required to grow a plant (Pulse Canada, 2014). In addition, it also decreases the amount of nitrogen fertilizer needed to grow another crop the next season (Pulse Canada, 2014). When the lentils are harvested the remnants are high in nitrogen. Over time, as the remnants break down it will release this nitrogen into the soil. The soil will absorb the nitrogen where it can be utilized by another crop, for example corn (Pulse Canada, 2014). With the farmer growing lentils and another crop with reduced amounts of nitrogen fertilizer required, this means less cost is needed for production, and more money in the farmers’ pocket (Pulse Canada, 2014). The third way exporting lentils benefits Canada is by stimulating the Canadian economy. Exporting lentils will bring in revenue to the Canadian economy, and will bring in money to the companies involved, which are Canadian companies. These companies will spend this income in Canada, again supporting the Canadian economy. In addition to this, exporting lentils to Nepal will strength ties between Canada and Nepal, which could open the door for other trade agreements, benefiting Canada even more. The last way that this trade agreement could help Canada is by causing more trade agreements with other nations. In the world there are many other countries similar to Nepal, countries that are poor with most of their farmers being subsistence farmers. If this export idea takes off, displaying that it is beneficial to the Nepalese, and that the product is a reasonable price and good quality. This might engage other countries into forming trade agreements with Canada. This could be again with lentils or with various different crops. With increased trade it will lead again to more jobs, revenue, and the benefits already stated with exporting lentils to Nepal. Go see Figure 1for an illustration of how exporting lentils to Nepal benefits Canada. |
References:
Agriculture and Consumer Protection. (n.d.). Contract parming. Retrieved October 21st, 2014, from http://www.fao.org.subzero.lib.uoguelph.ca/docrep/004/Y0937E/y0937e03.htm
Agrocorp International. (unknown). Global offices. Retrieved October 2, 2014, from http://www.agrocorp.ca/agricultural-trading-company-global-offices/
Barber, K. (Ed.). (2001). Oxford canadian dictionary (First ed.). Don Mills ON: Oxford University Press.
Carr, K. (2014). Lentils. Retrieved October 21st, 2014, from http://www.historyforkids.org/learn/food/lentils.htm
Chen, S. (2014). In Ted Vanhie (Ed.), Agrocorp international, jr.trader. email: [email protected].
Export Development Canada. (2014). Growing your business outside of Canada. Retrieved October 30, 2014, from http://www.edc.ca/EN/Our-Solutions/Pages/grow-your-business.aspx
Fitzpatrick, K. (2014). Superfood: Lentils. Retrieved October 21st, 2014, from http://greatist.com/health/superfood-lentils
Government of Canada. (Oct. 1st 2013). Lentil. Retrieved September 25th, 2014, from http://www.agr.gc.ca.subzero.lib.uoguelph.ca/eng/industry-markets-and-trade/statistics-and-market-information/by-product-sector/crops/pulses-and-special-crops-canadian-industry/lentil/?id=1174596720488
International Trade Administration. (2014). Employment and trade. Retrieved October 21, 2014, from http://www.trade.gov/mas/ian/employment/
Kerns, M. (2014). Nutritional content in red lentils. Retrieved October 21st, 2014, from http://www.livestrong.com/article/542637-nutritional-content-in-red-lentils/
Khan, L. (2014, ). Canada to meet india's demand for pulses. The Hindu
Pulse Canada (Producer), & Pulse Canada (Director). (2014). 2016 - international year of pulses (IYOP). [Video/DVD] http://www.pulsecanada.com/news-multimedia/pulse-canada-videos:
Surveyoncics. (2011). Importanca of surveying market trends. Retrieved October 30, 2014, from http://www.surveyonics.com/SurveyCourseware/Importance-Of-Surveying-Marketing-Trends.aspx
UPS. (2014). Calculate time and cost. Retrieved November 17, 2014, from https://wwwapps.ups.com/fctc/processTimeAndCost?loc=en_IN
Vandenberg, A. (2010). Red lentils. Retrieved October 21st, 2014, from http://www.agriculture.gov.sk.ca/Default.aspx?DN=a88f57f0-242b-40f6-8755-1fc6df4dfa14
Agriculture and Consumer Protection. (n.d.). Contract parming. Retrieved October 21st, 2014, from http://www.fao.org.subzero.lib.uoguelph.ca/docrep/004/Y0937E/y0937e03.htm
Agrocorp International. (unknown). Global offices. Retrieved October 2, 2014, from http://www.agrocorp.ca/agricultural-trading-company-global-offices/
Barber, K. (Ed.). (2001). Oxford canadian dictionary (First ed.). Don Mills ON: Oxford University Press.
Carr, K. (2014). Lentils. Retrieved October 21st, 2014, from http://www.historyforkids.org/learn/food/lentils.htm
Chen, S. (2014). In Ted Vanhie (Ed.), Agrocorp international, jr.trader. email: [email protected].
Export Development Canada. (2014). Growing your business outside of Canada. Retrieved October 30, 2014, from http://www.edc.ca/EN/Our-Solutions/Pages/grow-your-business.aspx
Fitzpatrick, K. (2014). Superfood: Lentils. Retrieved October 21st, 2014, from http://greatist.com/health/superfood-lentils
Government of Canada. (Oct. 1st 2013). Lentil. Retrieved September 25th, 2014, from http://www.agr.gc.ca.subzero.lib.uoguelph.ca/eng/industry-markets-and-trade/statistics-and-market-information/by-product-sector/crops/pulses-and-special-crops-canadian-industry/lentil/?id=1174596720488
International Trade Administration. (2014). Employment and trade. Retrieved October 21, 2014, from http://www.trade.gov/mas/ian/employment/
Kerns, M. (2014). Nutritional content in red lentils. Retrieved October 21st, 2014, from http://www.livestrong.com/article/542637-nutritional-content-in-red-lentils/
Khan, L. (2014, ). Canada to meet india's demand for pulses. The Hindu
Pulse Canada (Producer), & Pulse Canada (Director). (2014). 2016 - international year of pulses (IYOP). [Video/DVD] http://www.pulsecanada.com/news-multimedia/pulse-canada-videos:
Surveyoncics. (2011). Importanca of surveying market trends. Retrieved October 30, 2014, from http://www.surveyonics.com/SurveyCourseware/Importance-Of-Surveying-Marketing-Trends.aspx
UPS. (2014). Calculate time and cost. Retrieved November 17, 2014, from https://wwwapps.ups.com/fctc/processTimeAndCost?loc=en_IN
Vandenberg, A. (2010). Red lentils. Retrieved October 21st, 2014, from http://www.agriculture.gov.sk.ca/Default.aspx?DN=a88f57f0-242b-40f6-8755-1fc6df4dfa14