Is Canadian wheat in decline?

Some international buyers say Canada’s reputation as a high-quality provider of top protein wheat is in jeopardy because of changes to how grain is loaded and blended for export

An international marketer of Canadian wheat is ringing the alarm that Canada is jeopardizing its reputation as a source of high quality, consistent crop.

If this continues, markets could be lost.

“It is the first time in our history that our clients are asking us to look for other origins in replacement of Canada,” said Erwan Boubet, chief executive officer of Geneva, Switzerland-based grain company IFACO.

“When you have been the main Canadian wheat sellers in West Africa for 30 years, it hurts when your clients say ‘OK, don’t bother me anymore with your crappy wheat. Sign me something else.’ ”

IFACO and its Canadian subsidiary, Montreal-based exporter Agrohall, were so concerned by African clients upset by quality problems with Canadian wheat in the past two years that they arranged recently for senior Canadian International Grains Institute staff to travel to Cameroon to meet with West African millers to hear their concerns and bring back the news to Canada’s farmers and grain industry.

The concerns from West Africa are similar to those expressed by Singaporean buyer Prima last spring at the Canadian Global Crops Symposium. IFACO and Agrofall are noting the same mix of quality uncertainty and grading divergences that create unhappy customers.

Boubet and Agrohall chief trader Patrick Nolan said in an interview that bad weather and logistical challenges in the past two years have revealed that Canada has botched its transition to a post-CWB monopoly system. They said the country hasn’t just removed a crucial guarantor of quality and consistency but also changed Canadian Grain Commission grading in a way that makes it inconsistent.

The old wheat board isn’t there to pull in the right grain from wherever it is to where it’s needed, and the grain moving now through the system isn’t necessarily as true to its billing as it was three years ago, they added.

“It’s Mother Nature, and it’s the system,” said Boubet.

“You can see that when Mother Nature is not helping, then the new system is not protecting the quality and the reputation of Canada as it used to be in the past.”

West Africa is a market that the Canadian grain industry hopes to develop. At the Western Canadian Wheat Growers Association convention in January, a senior Cargill marketer focused on the region as a promising source for expanded Canadian crop sales.

However, Boubet and Nolan said clients in that region have been angered and frustrated for two years by Canadian grain that is not what the client ordered.

They believe the problem is occurring because grain companies have less access to western Canadian wheat than did the CWB and are showing less commitment to customer satisfaction. The grain companies are also moving wheat to port with grading that is now less uniform because the grain commission has privatized inward grading.

Boubet and Nolan also blame the move to composite loading at port rather than the incremental loading that was formerly used.

Composite loading means that rather than uniform quality throughout the ship’s load, which occurred with incremental loading, companies are now just loading a mix of qualities that arithmetically add up to a certain quality but often vary between a vessel’s holds.

“Now with a composite, you can deliver 12.5 (protein) against a 13.0 contract as long as you put some 13.5 in one of the other holds to offset it,” said Nolan.

Boubet said the grain companies don’t want to offer incremental loading because it is more demanding and they don’t seem worried about customer concerns.

“Private suppliers, they don’t care. Essentially, they don’t care,” he said.

“It’s just, ‘read your contract and if you want more, you have to pay more,’ ” said Boubet.

That, in fact, is what Agrohall has turned to, just to guarantee a formerly secure minimum standard.

“We as a (port-based) seller buy from the country 13.2 (protein) and we sell to the client 13,” said Boubet.

During the CWB monopoly era, the grain arriving at port and delivered to customers was always at least the minimum required and often a bit better.

Boubet acknowledged that these problems would probably never have arisen if 2013-14 didn’t have epic logistics challenges and if the 2014-15 crop didn’t have widespread quality problems.

However, he said that was the key to the success of the old system. Customers were almost never unhappy, even in bad years.

“In my opinion, Canada has lost its reputation in this (disappearance of the CWB) monopoly and we are trying to work hard to keep our clients and keep their satisfaction on the Canadian wheat, but it is very hard for us these days to keep pushing on the Canadian wheat when we are more and more going in the typical U.S. type of (lower quality and consistency) system.”

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  • guest

    It appears after 50 years of trying to discredit the CWB, it’s detractors may have to learn to emulate them, or risk becoming the lowest common denominator for grain quality. Who knew the customers saw wheat as a foodstuff and elevators saw it as a commodity. Only an Ostrich farmer could have missed that reality!

  • Kevin

    Sounds to me like the CWB is being inserted into a story about buyers agreeing to composite loading because its cheaper, and then complaining that the ship has been composite loaded.
    This issue really has nothing to do with the quality of Canadian grain. The whole ship is up to spec, but the buyer didn’t want to pay for blending into the ship, but didn’t want blend it themselves on their end. Did the old CWB blend for free? Now we’re getting paid for blending.

    • Kang

      Composite loading means your head is in the ice-box and your feet are in the oven, so on average you are comfortable. Try composite fuel in your vehicle and see how you like it.

    • Grain Be Free

      “Now we’re getting paid for blending.” Farmers aren’t getting paid for blending or composite loading. just getting the shaft and watching their hard work and commitment producing lesser returns and the reputation of Canadian grain declining.
      Would really like to see how composite loading is marketed to buyers. Some of these shipments go to one buyer, some have multiple buyers(different hold, different buyer). But either way, if you don’t keep customers happy, you don’t keep customers. Doesn’t matter who the seller is.

  • Dr

    Bigger farms and bigger grain companies have bigger expectations of profit than small family farms. Anyone remember when oats was $1 a bushel? Whose interest was that in? To say the 4 grain companies will work in producers favor as much as the CWB is ludicrous. Shareholder bottom line and greed has migrated from Wall Street to farmers fields. This shows once again that primary producers are the bottom of the barrel and it is open season on fish in a barrel. Kind of like fishing with dynamite but not using hearing protection isn t it ? … Rhetorical question of the few grain companies left on the prairies.

    • Grain Be Free

      As long as the big companies are able to make money, there is no concern for the farmers. No representation.

  • Doug

    Does this really surprise anyone. This is all about (free) margins at the farmers expense

    • Grain Be Free

      It is all about the least amount of effort to make the greatest profit for the big grain companies. The spin we hear is the farmers wanted less cwb and more money in their pockets. Bye, bye, little guy.

  • Grain Be Free

    The grain companies are also moving wheat to port with grading that is now less uniform because the grain commission has privatized inward grading.

  • ed

    Who didn’t see this coming, this coming, this coming, etc…etc.. etc.


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