Some winter wheat growers think the Canadian Wheat Board isn’t paying enough for their product.
The Western Canadian Wheat Growers Association said the spread between winter wheat and spring wheat in Canada is about $50 per tonne, but it’s only $15 per tonne in the United States.
“The board has encouraged farmers to grow winter wheat but its current pricing regime is discouraging its production,” said association president Ted Menzies.
“The Canadian Wheat Board must change its pricing policies for winter wheat as farmers continue to seek ways to improve their bottom line.”
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Wheat board officials say the WCWGA comparison is rife with mistakes. For one thing the association is comparing winter wheat with the top grade of spring wheat. But the biggest flaw is equating Canadian winter wheat with American winter wheat.
“You’re talking about a very different crop in terms of its baking characteristics and its milling characteristics,” said spokesperson Rheal Cenerini.
“The type of winter wheat that we’re selling has its place in the market but it’s not of the same quality. In other words, it doesn’t compete directly with the kind of winter wheat they’re growing in the U.S.”
Menzies doesn’t agree: “I would like to suggest that we’ve got probably just as good quality as they have.”
Wheat board market development director Gord Flaten said both countries have a wide range of quality and protein in their winter wheat crops. But Canada produces such a small amount of winter wheat that it’s hard to amass enough good quality product to compete with the Americans in markets that offer decent prices.
Statistics Canada estimates this year’s production at 521,000 tonnes, or just under three percent of Western Canada’s total wheat crop.
Flaten said the board has launched a program that will pay premiums to farmers who grow some of the higher quality wheat varieties, many of them new, like AC Readymade, Norstar, CDC Osprey, AC Tempest and AC Bellatrix. The program kicks in on Aug. 1, 2002.
There’s not a lot of seed of those new varieties available yet, but once acreage starts expanding it will help the board compete in some of the medium quality markets with American hard red winter varieties.
Flaten said most of the winter wheat that is exported, which varies from one-quarter to two-thirds of the western Canadian crop, is sold into the Middle East, which uses the wheat to make a variety of flatbreads.
That non-discriminating market is limited and could disappear. Conversely, the market for medium quality wheat, where much of the American winter wheat is sold, is the biggest wheat market in the world.
“If we could get reasonable quality shipments, then there’s no limit really to what we would be able to sell,” said Flaten.
Menzies contends there should be no limit right now. He thinks even the lower quality winter wheat should be sold, but he said the board isn’t interested in moving it.
“They like marketing the easy, high protein hard red spring wheat.”
Menzies said he has received numerous calls from farmers complaining that no winter wheat is moving this year.
“We have bins full of winter wheat. Usually winter wheat can be a cash flow item because there’s movement before you ever get to harvesting your other wheat and this year it just
hasn’t happened,” said Menzies.
“There doesn’t seem to be any contract calls on it and there doesn’t appear to be any in the near future.”
The board has issued an acreage-based call for 40 kilograms or 1.5 bushels per acre of No. 1 and No. 2 CWRW. On Sept. 26 it issued a series A contract delivery call for 25 percent of the No. 1 and No. 2 CWRW and a 25 percent call for No. 1 and 2 CWRW with 11.5 percent protein and higher.
The other aspects of the Wheat Growers’ complaint that troubled board officials were the numbers used in the comparison. The $50 spread represents the difference between winter wheat and No. 1 CWRS with 14.5 percent protein.
Cenerini said that’s not a fair comparison since winter wheat has a protein content that averages 11.5 percent.
Flaten said a better comparison is between winter wheat and Canada Prairie Spring red. The spread between those two crops is $5 per tonne on the latest Pool Return Outlook.
Menzies said it doesn’t matter what class of wheat was used in the comparison. The point is that the spread in the U.S. is much slimmer than it is in Canada.
