What The 'Lentil King of Saskatchewan' Knows About World Trade

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1:25Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Alloway. Tracy, Canadian elections last night. Yes. Big event. I think a lot of people are talking about it in the context of U.S. politics, right? Yeah, of course. So we just saw Mark Carney and the liberals win. And in a lot of ways, I think people would agree that Mark Carney is sort of the antithesis of Trump, right? He's the sort of globalization, Davos, former central banker guy. And the funny thing is, or the slightly ironic thing is, it seems like Trump might have swung the election in the direction of the liberals.

2:07Well, yeah, you go back like three months ago or four months ago or something, and it just seemed guaranteed that the conservatives, Pierre Poiliev, was going to win. And then Trump started talking about making Canada the 51st state, and suddenly fortune turned very quickly. But that was just a news hook. We're not really doing a Canadian politics episode today, per se. We're doing something better. We're doing something better. The real reason that we're doing this episode, this just happened to be good timing for The Hook. The real reason we're doing this episode is that several weeks ago, I was reading an article, and I saw a title about a man named the Lentil King of Saskatchewan, or not named, but titled as such.

2:49And I thought to myself, the Lentil King of Saskatchewan sounds like a great Odd Lots character, someone that we should talk to to learn about a very specific business and how it works. The Lentil King of Saskatchewan, the Sultan of Split Peas, the Grand Poopa of Pulses, the Baron of Beans, Monarch of Multigrains. I can keep going. You did your prep. That's really good. Anyway, we have the Lentil King of Saskatchewan on the podcast today. and we're going to really learn about how the international pulses and grains trade actually work. What does it mean? How does trading work with the U.S.? How does it work with the rest of the world?

3:29How do you build that supply chain? I'm also just incredibly surprised that Canada is such a big player in this market. I think it exports like a third of the world's lentil crop, something like that. That's kind of crazy. That is a lot about lentils, but they have a lot of land in Canada for this type of thing. Not a ton of people, a lot of land. Anyway, let's learn all about the lentil trade, the pulse trade, the grain trade, and so forth. Are we going to take the pulse of the pulse trade? We are going to take the pulse of the pulse trade. We are speaking with Murad Al-Khatib. He is the president and CEO of AGT Food and Ingredients, credited with turning Saskatchewan into such a powerhouse of trade from lentils.

4:11So, Murad, thank you so much for coming on Adlot. Well, thanks for having me. Why don't you start with what does the Lentil King of Saskatchewan do? Tell us about the business of AGT Food and Ingredients. Is it good to be the Lentil King? It's definitely been an interesting career for me to kind of contribute to the transformation of agriculture out in Western Canada. So, you know, coming up on 25 years since I made a decision to quit my job in government at the government of Saskatchewan and moved to the basement of my house and drive the transformation of a cropping system that, you know, when I was a kid growing up in a little town called Davidson, Saskatchewan, we grew wheat and we grew canola.

4:54And then the farmers had to leave their soil to summer follow because the nitrogen fertilizer that they used in canola and the oil seed was so heavy that the soil needed to replenish naturally. The alternative to that was to plant and nitrogen fixing legume. So lentils, chickpeas, peas, beans, these crops actually fix nitrogen. They don't require nitrogen fertilizer. And so, you know, that was my bet. I mean, I was a 27 year old young entrepreneur who kind of looked at this situation and said, look, agronomically, if we can grow these things, the world demands them. They're protein crops. If we could intersect, you know, taking our summer follow into protein and reaching global markets, I could create a business.

5:38And that was kind of the premise. So it's been quite exciting to build a multi-billion dollar company based right out of Regina, Saskatchewan, you know, to kind of reach the world, drive the Canadian trade and participate in growing and consolidating a global supply chain in this business. So how big a player is Canada nowadays in pulses and grains and lentils and all those things. I mentioned earlier that I think it produces like a third of the world's lentil crop. I did see an estimate that said 60 percent of the world's lentil crop. So I went with the third, trying to be conservative here. But like, give us some context around where Canada sits in this space.

6:19Yeah, we would be more, depend on the crop year, but somewhere around 50 percent or more of the world trade. So, you know, you have to recognize that the traditional growth of these crops were in areas where they consume them, right? Turkey, Middle East, India. India is the biggest giant in this business. You know, with all of the vegetarians, you know, you look at 1.3 billion people, 450 million vegetarians. Vegetable protein is essential for the diet of countries, you know, in the emerging markets. So, you know, they grow them and they consume them. Well, what was missing was global supply in nations that could grow them, but not consume them, but export them.

7:00And so that's where, you know, Canada came into the play, Australia, the United States. Now we have emerging origins like Kazakhstan, Russia, Ukraine. You know, the global consumption of these crops are over 100 million tons now, you know, because, you know, you're talking about the traditional crops that we consume. Let's talk about the traditional diet of the world. Let's do it. Rice. You know, rice is 6 % protein. Corn, 8 % protein. Lentils, 22 % protein. Faba beans, 34 % protein. Chickpeas, 26 % protein. I mean, these crops are not in the same class when it comes to protein availability. And the world is in a global protein deficit.

7:42So, you know, we always forget one thing. We talk a lot about energy and energy security. We talk about, you know, oil and gas. But we have to recognize that protein and, you know, diets are human energy. And so when we look at that, there's a protein deficit in the world. It's causing major socioeconomic problems. Let's look at a country like India. 18 % of children in India are stunted due to protein deficiency. right the world has you know 800 million people who are malnourished on a daily basis over 2 billion people who are food insecure on a daily basis so this has become one of society's global challenges 10 billion people by 2050 quantifies into a statistic where in the next 40 years we have to produce the same amount of food that the world produced in the last 10 ,000 years of civilization.

8:35Just wrap your head around that. Go back 10 ,000 years, go ahead 40 years, you got to equal food production. And that's only if we curb food waste and we actually can store the crops that we harvest. So, you know, when you look at it, it's a global challenge and land and water are not being created. So those are the scarcest resources in the world. And Canada is blessed with a northern hemisphere, you know, that ultimately is more resilient on climate change. We have arable land and water, and we have the best farmers in the world with technology and innovation driving our sector. Those are all recipes for what I would call a generational economic driver for this country.

9:14Joe, could you say that Canada has been blessed in growing grains? Do you get it? Okay, I'm going to stop. I get it. I won't do any more funds. I'm going to have a few of those over the course of this interview. I'm sure you've heard them all, over there. I'm glad you brought that up actually, though, about the calorie as the original unit of energy that was important. We've never had him on the podcast, but Vaclav Smil talks about that when he talks about the history of energy and just these calculations in the beginning. Okay, how many calories did a farmer have to expend to produce this much land and then so forth and how many calories were produced and so forth?

9:53So just even thinking about it from that equation is a very like sort of important, I think, lens. Why don't you just describe the actual role of AGT Foods? Where do you sit in the supply chain and distribution? Do you have farms yourself? Do you work with farmers? Do you contract with them? Like talk about where you sit and how a lentil grown in Saskatchewan gets to a consumer in, say, India. Well, the entire business plan was set up modern state-of-the-art processing infrastructure in the areas where we grow these crops. So we contract directly with farmers. We are the ones who transform their products into saleable, you know, human consumption products.

10:35So we own factories in Canada, the US, Australia, South Africa, Turkey. So I started with one small little factory in Regina. We now have 46 manufacturing and processing facilities in five continents around the world. I started in the basement of my house. There's now 3 ,600 employees. So, you know, what we do is we take those crops, we clean them, we size them, we peel them, we split them, we can them, we package them, we put them out and we fraction them into protein, starch, fiber, flours. I mean, we put them into food products. We do the full range of value adding. And in the scale of our business now, you know, with let's say around 3.2 billion in revenue this year, we've become a major global supply chain in this particular segment of the business.

11:24In fact, if I look at, you know, containerized agricultural shipments, AGT would be among the two or three largest containerized shippers of agri-products in the entire world. So, you know, we ship to 110 countries actively. And how does it get there? Like, what is the, okay, so from a farmer in Saskatchewan, And how many links are there on that chain? So we'll take it into, let's say, a farmer in Eston, Saskatchewan will deliver to our location at Eston. OK. We will then take that grain. We'll put it into a rail car that we own. So those owned rail cars then go into the CN rail system. They get transported to a port facility.

12:03Let's say I just did one as an example. And on May the 6th, we're going to ship a vessel of lentils to Turkey. so those Esten farmers would have filled the rail cars we're shipping it to Thunder Bay at Thunder Bay we have an ocean terminal where we'll load a vessel that vessel will transport 21 ,000 tons of lentils that will go to Turkey they will be offloaded in the port of Mersin Turkey which is in the southern Mediterranean we have factory seven kilometers from the port will peel them, split them, polish them, package them, and then they'll be shipped to Iraq. They'll be shipped into the Gaza refugees.

12:42They'll be shipped into the Middle East region, and they'll be consumed locally in that entire region on the food side. Wow. So, you know, where we play is in the entire supply chain, taking it right from the farmer, right through to the distribution, directly onto the consumer shelf. And, you know, that was the strategy that we wanted to build out. It gives us resiliency. I was going to ask, is it normal for agricultural companies to actually own their own like transportation capital? You mentioned train cars just then. That seems extremely vertically integrated. Well, yeah, actually, I was definitely not, you know, the normal thought in that.

13:21And in 2015, I decided to build a transportation business. And so we bought 650 kilometers of short line railway. Wow. We bought the Saskatchewan government grain car fleet. So when the Canadian Wheat Board was dismantled, the Saskatchewan flagged grain cars, I bought them. We bought 13 locomotives. We set up our own transportation infrastructure, linked it in a long-term agreement to CN Rail. And, you know, we're able to access it through Ocean Port Infrastructure. We actually took that business in 2025 in January and we sold it for$192 million to an infrastructure fund in the United States. And then we contracted them back to provide a service for the next 20 years.

14:08So you are correct. We actually built out a transportation infrastructure that didn't exist to handle these kinds of commodities. And then we found a partner to run it for the long term. And it gives us a competitive advantage to get our products to market. Thank you.

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15:33EasyCater, your business tool for food. To learn more, visit easycater.com slash podcast. I have a question. You mentioned that the only scarce resources are land and water. Can you talk Talk about yields on an acre or yields on a given farm today versus when you got started in the industry and how what you've seen in terms of technology and productivity growth at the land level. Massive, massive transformation. So precision agriculture, digital infrastructure has transformed the productivity of Canada. And, you know, when I was a kid growing up in that little village of Davidson, 1200 people in the middle of Saskatchewan, you know, as an immigrant Turkish family, the farmer would go out and kick the dirt.

16:18He would put his hand into the soil. He'd have his wife with him and say, what do you think? Should we go? And she'd say, yeah, let's go. And they would go and start seeding. Today, we're soil sampling. We're analyzing the soil and the nitrogen in the soil. There's, you know, precision weather stations that are measuring moisture. We have zero minimum tillage where GPS systems are giving the farmer the exact placement of seed fertilizer in a single pass without breaking the soil using air channels we're putting the seed in a precision basis to maximize the yield to lower the amount of nitrogen fertilizer being used in all crop rotations which ultimately saves inputs and lowers the carbon intensity of our agriculture our yield curves have been massively increasing you know to a point where if i look at the next decade ahead in saskatchewan i'm forecasting seven to ten million additional tons of grain from the same amount of acres that are being seeded you know that is a massive wait what's the baseline what's the base seven to ten million on top of how many we're growing about 30 million tons we're gonna have another seven to ten million i mean you're talking about 20 to 30 percent yield increase over the next seven years.

17:34I mean, when I chaired the national strategy table for agriculture and food for the government of Canada, we set a target in 2019 that the agriculture sector in our country would grow from 45 billion to 85 billion of exports in a five-year cycle, and domestic agricultural output would grow from 120 billion to 145 billion. And we reached that target in three years. I mean, what sector of our economy can deliver 65 billion of growth in three years? Agriculture did that in this country. So the tangibility of that opportunity of global food insecurity, the productivity of precision agriculture in our country, and, you know, the ability to get our products to market, you know, this is the recipe that I believe is going to be a big part of the government economic agenda going forward.

18:28So, you know, we talk a lot about natural resources that are in, you know, conflict in certain mindsets, whether it be oil and gas or mining. There's very little controversy on the growth of the natural resource sector in agriculture. So from that perspective, I see that as being a key opportunity for this country, you know, and one that I'm very excited about for the next 20 years of my career. So I take the point about yields having been improved, but at the same time, there's a lot of talk about soil exhaustion, right? And one of the reasons this is on my mind is because I was gardening over the weekend on an old farm property and the soil is just terrible.

19:09It's basically dust. Like there's no tilth. I think I found one earthworm in like six hours of digging. How big a problem is soil depletion? And you touched on this earlier, but what role can lentils and beans play in that? Well, that's actually the key. The key is that farmers in Western Canada are now practicing a sustainable three-crop rotation. So one year, they'll grow that wheat, like when I was a kid. The next year, they'll grow an oilseed like canola. and then the year after that they'll plant the legume that will fix the nitrogen. By using zero minimum tillage we're conserving soil moisture, we're managing pests and the health of the soil and we're actually using farming practices where without tilling we're returning biomass into the soil.

20:00So from that perspective when I look at the sustainability of soil health the farmers in western Canada have got it and you know that is something that bothers me is people talk about how regenerative agriculture is such a key part. Well, in Western Canada, we've been doing regenerative agriculture for the last 40 years. This is something that is actually foundational to the success of the Western Canadian and I mean the Canadian agriculture sector in general. So, you know, I think that when I look at soil depletion and soil health, it's about farmers pushing the wrong rotations, growing crops on top of crops, the same crops, You know, ultimately, if you don't rotate, you have pests that multiply, you have diseases that ultimately get resistant to any type of management.

20:48So, you know, this kind of diversity of our agricultural system is one that not only has to be celebrated, but it's actually yielding that yield gain. So, you know, not only is our soil health at a peak, but it's also something I want to be clear. We can't take for granted. We have to be continuously innovating to make sure that we maintain that. I mean, I say the canola fields of Saskatchewan are the same as the oil fields of Saudi Arabia. Only every year it replenishes naturally. So we can take crops, we can produce renewable fuels, we can take crops, extract protein and feed the world. But we have to make sure foundationally that soil health is at the forefront.

21:26And I think it is in our farmers' minds and in the practices that they do. So, you know, you've described this global supply chain that exists and the fact that you can get the lentil product from a farmer in Saskatchewan all the way to a consumer in India or Iraq or Turkey, etc. Obviously, we're having this conversation, at least on the U.S. side, with this turn against globalized supply chains, globalized trade and so forth. Talk to us a little bit about how you see the state of U.S.-Canada ag trade or give us the sort of the short history of the various turns of the dial there and how some of these conversations are affecting your business.

22:10Look, I think we've got to recognize one thing. We have a president in the United States today who's just very loud and using tariffs as the mechanism to not only provoke conversation but to drive policy. Protectionist agricultural policies in the United States are not something new. Right. You know, I always have to remind people that country of origin labeling was a Barack Obama policy that, you know, continued through the Trump administration and into the Biden administration. So, you know, every government in the world, agriculture is the most political business in the entire globe because farmers have to be protected by governments that are elected.

22:48Yet food inflation and food security are paramount considerations in the health, wealth and security of every nation in the world. So when we look at it, let's not forget one thing. When a baby is hungry, they cry. when an 18 year old man is unemployed and hungry, they protest. So, you know, ultimately a big part of civil obedience in the world is available food. And that growing food insecurity is one that I think, you know, is going to be paramount. So when I look at even U.S. policy, look, food security is a foundational part of U.S. intelligence and foreign policy. And so from that perspective, You know, I believe that agricultural trade will have to be preserved as a part of the overall policy framework.

23:39So, you know, we're going to see tariffs. We're going to see protectionist measures being more prevalent in the world. But I do think that ultimately food are going to be concessionary items. Governments are going to allow them to flow. Governments will use tariffs to protect their farmers when they need to at times when they harvest their crops. but they need food available. And, you know, the COVID post-supply chain disruptions and food lines and food inflation and, you know, food being a big driver of that inflationary environment in the world is something that everybody recognizes can't continue.

24:12On the U.S. policy side, domestic agriculture in the U.S. and Canada are very integrated. So if I look at, you know, the pasta on the shelves of the U.S. consumer come largely from durum wheat in Western Canada, the overall integration of our livestock sectors, cropping sectors are there. And ultimately, I think we're going to see further integration. We're going to see, you know, getting over this current protectionist conflict laden dialogue to recognizing that the Americas integration and more reliance on each other as nations in the Americas is going to be part of economic prosperity. And, you know, I think that, you know, if I look at the Trump administration, you know, kind of policy on Canada, we have to just remind everybody very clearly to have calm heads.

25:0331 U.S. states have Canada as their largest trading partner. The ultimate availability of food in the United States is, you know, not completely reliant, but we certainly have a big influence on food prices. And so, you know, I'm a very strong optimist that agriculture will continue its integration and that, you know, ultimately food and I believe energy are going to be the two sectors. And the third one, from a Saskatchewan perspective, is potash. I mean, 80 % of the potash in the United States, which is a necessary nitrogen element, you know, comes from Canadian mines. So, you know, from that perspective, you know, there's certain sectors that I think are mutually beneficial that are going to enjoy heightened access in some sort of resolution.

25:47OK, so agriculture might be special in one way or another, but just to drill down a little bit into specifics, if the U.S. slaps tariffs on Canadian lentils, what is the first thing that happens in your supply chain? And I guess maybe we could go back in history and talk a little bit about the tariffs from India on lentils, because you have experience with this, right? Like you have gone through this process. So what exactly happens? Agriculture is no different than any other sector, except that our markets are already a lot more diversified than, you know, other sectors. So, you know, when I look at the crop sectors in particular, wheat, canola and pulses, we do have shipments into the U.S.

26:33on a regular basis, but it's still making up a relatively small percentage when you look at it compared to other sectors reliance on the U.S. So, you know, one of the key things to having strength in a tariff or a trade protectionist environment is to have alternative markets. Now, for us, I worry more about the reciprocal tariffs in places like China, India and other large markets than I do only the U.S. market. I mean, it's one of the considerations. We want that resolution. But, you know, what we do is we pivot. You know, when we were facing the tariffs on the March deadline, then the April deadline, you know, as a company, we already prepared for this.

27:14We have a North Dakota manufacturing facility that was going to manufacture more for the U.S. market. We were going to switch our supply chain to reliance on North Dakota and Montana. And we were going to take the Western Canadian product and we were going to go out to the Middle East, into other markets in Asia. We're going to put a heightened focus on South America and we were going to ship into Europe. So, you know, that's where you have to be. And I think that this is ultimately, you know, my dialogues with Prime Minister Carney prior to the election and my dialogues after with Prime Minister Carney are going to be trade diversification agenda is not something that we can blink at.

27:49no matter how quickly or how comprehensively the resolution is with the U.S. We need to finally execute trade diversification in this country. We need to recognize that our industries have become overly reliant. We've been complacent. You know what? This has to be a wake-up call to my colleagues in every industry in this country. Wake up, over-reliance, eggs in one basket is a dangerous remedy for long-term sustainable health of your business. and you know ultimately that's where we have to go we need bilateral trade agreements we need to resolve India and China as powerhouses that balance our reliance on the U.S.