U.S. seeks open access for wheat

Trade rumblings | Growers seek solution for unregistered wheat varieties

Canada must take steps to ensure that wheat grown in the United States can move freely and fairly across an open international border, says the American wheat industry.

Alan Tracy, president of the United States Wheat Associates, said some critical issues must be addressed to ensure that wheat producers in Canada and the U.S. enjoy the same unfettered access to markets and delivery points on both sides of the border.

The USWA and another influential American wheat organization, the National Association of Wheat Growers (NAWG), both passed resolutions in late January calling for an open border that will permit reciprocal bilateral trade in wheat.

“In a truly open market, some wheat would indeed move north as well as south across our long border,” Tracy wrote in a recent USWA newsletter.

“There are still some key issues to be resolved, such as Canada’s strict variety registration regime and other barriers to U.S. wheat moving into Canada.”

There are long-standing disparities between the American and Canadian wheat industries, not only in the way wheat varieties are registered and classified but also in the varieties of wheat that can be grown and sold.

In the United States, the vast majority of wheat varieties grown are not registered for commercial production in Western Canada.

As a result, much of the wheat produced in America’s northern tier states will not qualify for sale in the Canadian marketplace come Aug. 1, at least not as milling wheat.

Unregistered wheat varieties delivered to Canadian elevators must be declared as unregistered before they are unloaded. Upon declaration, the wheat is automatically downgraded to feed.

By comparison, the American grain handling system is not expected to place limits on which varieties of Canadian wheat can be delivered to U.S. elevators.

Canadian wheat arriving at U.S. elevators after Aug. 1 must be identified as a Canadian-grown product but varietal declarations will not likely be required.

In other words, Canadian wheat will qualify for U.S. milling wheat prices as long as the grain meets the grain handlers’ protein and quality parameters.

Tracy said concerns arising from the sale of non-registered varieties will be raised with diplomats and trade representatives on both sides of the border in hopes that an open and mutually beneficial wheat trade can be established.

Darryl Beswitherick, program manager with the Canadian Grain Commission, said the CGC is aware that some Canadian farmers may be thinking about growing unregistered wheat varieties this spring.

“We have heard rumblings about this kind of thing,” Beswitherick said. “You hear a lot of producers inquiring about it but … we don’t have an estimate at this time as to how big of (an issue) it will become.”

Beswitherick said unregistered American varieties that promise slightly higher yields might look appealing to Canadian farmers, but he reminded growers that most American varieties have no track record north of the border.

In some cases, performance may not live up to expectations.

“I’m sure there are lots of people looking … at all of these magical U.S. varieties, but will they yield the same up here as they do down there? I guess we’ll see.”

The grain commission will not be regulating the delivery and sale of unregistered varieties at Canadian delivery points after Aug. 1, he added.

But Canadian farmers should consult with the Canadian Food Inspection Agency before growing or selling unregistered crop to ensure that the practice is legal.

Rob Davies, chief executive officer of the Weyburn Inland Terminal, agrees that regulatory differences must be addressed to ensure that American and Canadian growers are competing on an equal footing.

At a recent grain industry conference in Ottawa, Davies spoke about the need to examine Canada’s variety registration system and ensure that Canadian growers — especially those near the U.S. border — have access to the same varieties as their American neighbours.

Davies contended that some wheat varieties grown in the United States produce higher yields but have slightly lower protein profiles.

Depending on the market and the protein premiums being offered, farmers who grow a lower quality, higher yielding wheat variety might be better off financially.

“My perspective is that Canadian growers are probably going to be at a disadvantage to American growers because our variety system has been (designed) to ensure that we have a consistent quality standard for a single marketer (the Canadian Wheat Board),” Davies said.

“We have a higher protein profile and a lower yield profile, especially in durum, than a number of American varieties that are being actively used by U.S. durum millers.

“Our higher protein varieties may or may not be what every customer in the world wants, so giving our farmers access to lower protein varieties that are higher yielding might (benefit) … the farm customer.”

Davies suggested that the amount of grain moving north or south across the international boundary will likely be small.

Exact tonnage will hinge largely on logistical efficiencies and differential freight rates that exist between Canadian delivery points and nearby locations in the U.S.

“I’m not sure that there’s going to be a lot of cross border traffic in grain, quite frankly,” said Davies.

“Prices will arbitrage and there’s not likely going to be a huge difference. Will American growers want to deliver into the Canadian grain handling system? Potentially, if we have better transportation costs but I don’t think there’s going to be a lot of cross border traffic, quite honestly.”

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