Durum sales to Italy slow to a trickle

Country-of-origin labelling has seen country ‘disappear as a Canadian customer,’ but farmers plan to increase acres

Canadian farmers intend to increase durum acres despite losing their top customer.

Farmers told Statistics Canada they will plant 5.78 million acres of the crop, an 11 percent increase over last year.

They are boosting acres despite losing the pasta-eating capital of the world as a customer.

Italy purchased 1.07 million tonnes of Canadian durum in 2016, accounting for 25 percent of exports that year.

In July of 2017, Italy announced it was introducing country-of-origin-labelling on pasta, causing Canadian durum exports to plummet to 597,998 tonnes in 2017.

“Since (the labelling laws) were officially announced last July, we have seen Italy disappear as a Canadian customer,” said Cam Dahl, president of Cereals Canada.

“Since October, we haven’t shipped any durum to Italy.”

Actually, small amounts are still trickling in each month but the volumes are a fraction of what they used to be, and Dahl doesn’t see that situation changing any time soon.

In addition to the COOL situation, there has been a two-year campaign in Italy to tarnish the reputation of Canadian durum led by Coldiretti, Italy’s largest farm organization.

That campaign has included blockading Canadian ships. There have also been claims of Canadian durum samples containing 30 times the acceptable level of vomitoxin. That claim turned out to be false when the ship was properly tested at port.

Rumours have also spread that Canadian durum contains unacceptably high levels of glyphosate, which is also false, according to the Canadian Grain Commission.

Dahl said between COOL and the negative public relations campaign, the prognosis is grim.

“As we speak right now, I don’t know if or when Italy is going to come back to the Canadian market,” he said.

Neil Townsend, senior market analyst with FarmLink Marketing Solutions, thinks there is another contributing factor for Italy’s reluctance to import Canadian durum in 2017-18.

“We didn’t grow the kind of crop that Italy would have loved last year,” he said.

Italy is a value-based buyer that likes to import No. 3 quality durum, blend it with local supplies, mill it into pasta and export it around the world.

The problem is that Canada produced an overwhelmingly No. 1 quality crop last year and Italy was able to get cheaper durum from places like France.

“We weren’t really competitive into the Italian market,” he said.

Dahl said Cereals Canada has asked the federal government to challenge Italy’s COOL legislation through the World Trade Organization or the Canada-European Union Comprehensive Economic and Trade Agreement.

In the meantime, the organization is exploring other diplomatic approaches to solving the problem and other markets for Canadian durum.

Fortunately, the United States has been buying a lot more Canadian durum than usual due to a small and poor quality domestic crop.

Through the first seven months of 2017-18 the U.S. has purchased 747,266 tonnes compared to 289,696 tonnes during the same period in 2016-17.

That has helped offset the precipitous decline in Italian purchases. The U.S. Department of Agriculture estimates U.S. durum acres will be down 13 percent this year and it is still dry in some durum growing areas, so it could be an active market again in 2018-19.

But Townsend finds it hard to get excited about the crop with all the problems swirling around Italy and the generally lacklustre global demand.

“I’m pretty pessimistic about durum,” he said.

“It’s a zero growth market.”

It doesn’t help that Canada will have a substantial carryout of good quality durum and farmers are intending to increase acres largely because the market for alternative crops like lentils is even more dismal.

Another reason for his pessimism is that there are good crops on the way in North Africa, which is Canada’s other top consumption region.

The International Grains Council is forecasting a 1.8 million tonne year-over-year increase in North Africa’s durum crop.

“I don’t think it looks too good,” said Townsend.

Dahl isn’t worried about North Africa’s crop. He said countries like Algeria and Morocco are quality-conscious buyers that like to import Canadian durum.

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