March 14, 2022
The CEO of Columbia Grain on why more and more young people are getting into the industry and what advice he’s passing on to his son.
Columbia Grain International (CGI) is a global distributor of grains, pulses, beans, and oilseeds, which has been operating for almost 44 years. Starting out primarily as a wheat, corn and soybean supply company for the Asian market, CGI has evolved into one of the largest pea, lentil, chickpea, and dry bean specialty crop companies in the world, with over 60 facilities in the northern tier of the United States.
Kirsten Provan spoke to Jeff Van Pevenage, CGI’s President and CEO, about the current pulse market, the North American droughts, and the role of young people in the industry today.
Jeff Van Pevenage will feature on the Chickpea panel at the GPC’s Pulses 22 convention in Dubai on May 10-12.
Absolutely. Columbia Grain is a wholly-owned subsidiary of the Marubeni Corporation. We operate nine pea, lentil and dry bean processing and bagging facilities in the United States, with one origination facility in Winkler, Manitoba, Canada. Additionally, we operate multiple full-service agronomy centers in North Dakota and Minnesota and 6 certified seed outlets in Montana, Washington, and Idaho. Currently, we have approximately 550 employees and I myself have been with the company for 32 years. I started as a grain buyer in Washington and have since dealt in origination and grain elevator management and traded multiple commodities. In 2005, I was put in charge of our pulse program and have spent the last 17 years concentrating on growing our speciality crop business. My role today involves thinking about how we build culture, how we build the company, and what’s the next opportunity we can be the leader in introducing to our customers.
We have 45 facilities that accommodate the origination of specialty crops and 25–30 managers talking daily with the farmers around them. We’re passionate about supporting the communities surrounding our facilities. CGI endeavors to handle almost any grain, pulse, or oilseed crop grown within the key producing regions and we make it our mission to remain connected. Our merchandisers from our corporate Portland trading center join our managers in their communities, conducting growers’ meetings and integrating themselves into the fabric of our industry. During COVID, we performed Zoom grower meetings. A key part of our business is to provide farmers with information on market activity and industry trends, helping them to adapt to any new practices.
I’ve spent time in every region we encompass and immersed myself in every division of our business while fostering great relationships with our farmers. Some of these relationships go all the way back to when I was a grain buyer in Colfax, WA. So, of course, I keep in touch with everyone; I still go out and participate in growers’ meetings with the merchants, as well. I’ve spent a lot of time in different parts of the world, visiting over 42 countries. In fact, just two weeks ago, I visited our clients in Spain, and that’s something I want to continue to do annually, not just in Spain but all over the world. It’s so important to have a dialogue with our customers to ensure that we keep fulfilling their needs.
Yes, it really is. I love to travel, but it’s more than that for me. It’s about the relationships I have with people. That’s what business is all about.
We work with green peas, yellow peas, every type of lentil, chickpeas, and multiple dry beans, including pinto, black, navy, and small red beans. We also participate in the kidney bean market partnering in supply agreements with high quality supplying companies.
In terms of price trends, if the rest of the world has normal conditions and crops this year, I would say that price trends in the United States will probably move towards the lower levels. This is because we’ve recently experienced the largest drought I’ve seen in my career. Obviously, you get pockets of drought from time to time, but this was across the Pacific Northwest, which is typically our region for chickpeas, green peas, and pardina lentils. Montana, our largest pea and lentil producing state, and western North Dakota experienced unprecedented drought.
Our supplies, which have been dwindling over the last couple of years, are going to be tight. I predict that most of the lentils and peas will be gone by July. The US will be a net pea importer this year as opposed to a net exporter, and pardina lentils will largely be gone as well. Chickpeas have seen subdued demand this year, so I suspect there’ll be more chickpeas around than people had anticipated earlier in the year. The recent war in Ukraine is igniting demand from Pakistan, Turkey, and the UAE of late so this could change.
We’ve been witnessing Canadian exporters offering lower export prices on lentils and peas, and I think we’re okay with that, for the most part, because we don’t have the supplies left to hit all the markets that need the product. Montana is still very dry, still in red conditions on the drought index map throughout most of the production area, and there’s not a single forecast that tells me that’s about to change. I think we could be in for another year of this, and I expected that. My experience of droughts tells me that they usually last for two years, particularly in Montana.
Well, we’re very innovative, we’ll find ways to deal with it. We have some of the best processing equipment of all the companies in North America, so we’ll source the product that we need to keep our customers happy and we’ll continue to pray for rain on a daily basis.
I presume that buyers will look to other markets, wherever they may be. Earlier, you sensed the Black Sea could increase production but the war will affect that in the end. However, a lot of what we do here is pretty niche. In the US, the two biggest lentil commodities are medium green, which is 80% of production, and pardina or small brown. My message to the world is, if you’re a green lentil seller, I would not go into next August or September thinking about waiting for lower prices. I would make sure I had myself covered for my customers’ needs, probably up until December, even if prices are high. It’s 50/50 whether we’ll get a reasonable crop this year.
One of the things we’re hearing here in the Pacific Northwest is that there will be increased canola production; partly because of price, but also because of agronomy. A lot of producers are fighting different weed problems that tend to evolve because of lentils and wheat rotations and one way to break this cycle is to grow oilseeds. We have a lot of interest in growing canola, but that’s going to come at the expense of chickpeas.
If I had to guess, I’d say that pea acreage will be up by about 10%. Typically, the US grows around 70% yellow peas and 30% green peas, but I believe that this year we’ll see something more like 80% yellow to 20% green peas. Chickpea acreage may very well end up lower than it was last year, and lentils will probably only be up by about 5 percent. For dry beans, pinto acreage will be up maybe 3–5%; black beans will remain largely unchanged.
We’ve fulfilled every contract that we’ve sold without issues, other than late shipments due to massive supply chain issues. However, over the next five to six months, we will have to be selective in our offers for products like larger size chickpeas, pardina lentils, and top quality green lentils. Yellow peas will be uncompetitive to all markets other than USDA food aid and green peas are getting tight as well.
Ukraine is a large agricultural country; they could feed over 600 million people with what they produce there. I think one of the major things you’re going to see is a problem with inputs and the flow of inputs into that area of the world. The ability to export back out is also going to be compromised. Already this morning, three container companies have sent messages saying they’re stopping all business into the area. I’ve seen a bulk grain vessel that was hit by projectiles. A lot of people are going to avoid that area, making it more difficult and more expensive to procure product. Banking sanctions will make business impossible. There will be input supply issues, production issues, and infrastructure is being compromised daily.
Yes, for sure, food shortages will emerge. I think we’ll see a similar situation that we faced, and continue to face, with the COVID-19 pandemic, where there was an increase in the number of people needing food. I think USAID will be more involved in food aid this year as there will be an increased demand for it. And, what food aid means, really, is pulse crops. As a result, commercial buyers might be out of opportunities. When we get heavily involved in food aid, our processing facilities get booked up because USAID takes product in a 28-day window, so we get busy doing that, and we can’t always get to the commercial needs, as well. One of the things that COVID has told me is that we need to be better prepared for emergencies. We need more warehousing and bigger stockpiles because the biggest battles we fight today are transportation and logistics. A big part of the increase in prices in the last year has been because of transportation prices doubling or, in some cases, quadrupling.
We haven’t concentrated on India for five or six years. The reason behind that is the market is too unpredictable. There are many bad actors in India; it’s important to know who your customer is. If you look at the industry as a whole, India hasn’t been the go-to market, but, even with these tariffs, US product will still get there. The majority of the US product that’s been going to India since these tariffs were put in place has been going disguised as Canadian product. Canadian companies will come down to the US, take the stock back to Canada, re-label it as Canadian, and ship it to India. Canada needs to drastically restructure its phytosanitary certificate, including closer oversight.
Definitely! We’re seeing a lot more interest in our product now that these tariffs are coming off. We have still traded with Europe while tariffs were in place as some of our customers have been happy to pay the difference in order to secure the US quality. We also have a Canadian origination facility, so we’ve been able to supply some of our European customers with dry beans because they were Canadian and not US. But, yes, we’re definitely getting more inquiries from Europe now.
People were definitely stockpiling in the beginning. The shelves were empty. We had international clients calling and asking if we could ship yesterday. But then, after the initial big push, once people had stocked up, things went back to normal. Internationally, customers have quickly built up stocks so international business has been a little slower this year. We spoke with customers in Spain and Morocco two weeks ago who hadn’t imported anything this year due to full warehouses and slow-moving stocks, particularly in the restaurant supply channels.
Over the last 18 months, we’ve experienced an increased domestic demand for our products, so we have less reliance on export markets. I said ten years ago that I thought the US would eventually focus most of its production toward domestic markets and COVID has certainly made people more aware of the power of pulses creating strong demand. The pandemic pushed people to think more about health and wellbeing, so it’s not surprising that people are starting to care more about where their food comes from, and this isn’t limited to people but also their pets.
More and more companies are trying to connect themselves to a supply chain. They want to buy from the farmer, handle the product, process it, and put it on store shelves. It’s all about traceability. There’s also a big push towards buying locally and utilizing local materials.
We’re one of the few companies operating today that can provide complete traceability. We raise the seeds, distribute them, manage the production and the growers, process the product, and deliver it to the food companies. We can tell you everything about that product, including which acre it came from.
These trends––traceability, the push towards organic––they’re still pretty small, but they are growing, and I think that is down to the drive of younger generations. In terms of tech innovation, we’re lucky to be owned by a company like Marubeni; they work hard at the research and tech side and pass that information onto us. At CGI, we have a lot of employees aged 35 and under, and they’re all so excited about the industry and the different crops we deal with; it’s something they want to be involved in, and their enthusiasm shows.
Early in my career, I only wanted to be a wheat trader. It was my only passion. In 1999, CGI asked me to move back to Washington, and I said no because it would include overseeing our newly acquired Dumas Seed and our Pullman, WA, pea and lentil business, and I didn’t want anything to do with pulses. By 2007, I had completely changed my mind, and I realized that the pulse business was cool and innovative, and it was growing, so I wanted to be a part of that world. I think that’s what young people are seeing today. A successful career is all about timing and getting involved with the trends.
The number one thing I say to my son, Ryan, is that business is about relationships. Our merchandisers aren’t successful in business because they have peas and lentils to sell or because we have quality processing facilities: it’s because they’ve built relationships with buyers.
Probably the best piece of advice I received when I was starting out was to know your customer. I mean no offense when I say this but the pulse industry has a lot of bad actors in it because there are a lot of smaller companies where the financial wherewithal isn’t anywhere near as good. On the wheat and corn side, you’re dealing with multinational companies that are going to, in general, be true to a contract. It’s not that way in the pulse business. There are a lot more people who will run if the market changes.
One of the things I say to Ryan is that we’re not a trading company, we’re a food company, and having good relationships with growers and customers is what’s important. I’m not interested in talking to people who just want to trade.
In March, we’re hoping to launch our new range of small-pack products under the label: Balanced Bushel. We’re setting up several small-pack lines in Hastings, Nebraska, for food distribution. We’ll be doing some co-packing and e-commerce with those products, so we’re looking forward to a successful launch in May.
We’re also working on some other projects revolving around protein fractionation and flour that I think you’ll see us make some sizable announcements about in the next year or so, but that’s all I’ll say about that!
Yes, I will be attending, and I’m absolutely looking forward to it. I’ve been asked to be on the chickpea panel, so I’ll be participating in that. For the last 17 years, I’ve spent maybe three months of the year traveling, so it’s nice to be able to do that again and connect with other people in the industry.
Jeff Van Pevenage / Columbia Grain International / United States / Canada / North Dakota / Minnesota / Montana / Washington / Idaho / Spain / green peas / yellow peas / pinto beans / black beans / navy beans / small red beans / kidney beans / pardina lentils / Pakistan / Turkey / UAE / Russia / Ukraine / USAID / India / Morocco / traceability / Balanced Bushel / protein fractionation / flour
Disclaimer: The opinions or views expressed in this publication are those of the authors or quoted persons. They do not purport to reflect the opinions or views of the Global Pulse Confederation or its members.
