Canada’s once lofty position in the world of wheat is declining, says a leading agricultural economist.
“Total world trade has levelled off so Canada’s relative importance in the wheat market has fallen,” says transplanted Canadian, Colin Carter, of the University of California.
Canada exports 70 percent of its production so the slowdown in world demand and change in the makeup of customers has a major impact.
Not long ago, Canada provided 20 percent of the world’s wheat but has slipped to 15 percent.
Carter told the Western Barley Growers Association that Canada is competing in price-oriented markets willing to substitute product from other countries if the price is right.
Read Also
Calf hormone implants can give environmental, financial wins
Hormone implants can lead to bigger calves — reducing greenhouse gas intensity, land use intensity and giving the beef farmer more profit, Manitoba-based model suggests.
Other markets have disappeared because importers now produce enough of their own wheat to consider selling some abroad.
“Some of the key markets for the Canadian Wheat Board are no longer there,” he said.
Russia and Brazil were once major customers.
“We were told 10 years ago that Brazil couldn’t possibly substitute away from Canadian wheat,” Carter said.
However, Brazil has started buying more from Argentina, where production potential is huge.
In the former Soviet Union, Kazakhstan farmers are growing more acres and producing a high protein wheat similar to what is found on the Prairies. The country is building more terminals and improving infrastructure to join the world market.
Canada was a significant supplier to Iran but that country plans to increase its domestic production. Egypt is looking for a specific type of wheat and has strong political ties with the United States.
New possibilities may occur in the Middle East within the Black Sea region. There are also some niche markets for high quality to the U.S., the United Kingdom and Japan, but these remain small markets, said Carter.
For example, Japan imports about five million tonnes, of which Canada contributes 1.5 million tonnes. There is little hope for growth in this area.
“In the big scheme of things it’s a fairly small market. It’s not a market we want to lose,” he said.
These changes have occurred in the last decade, forcing Canadian and American farmers to adjust. The U.S. is moving out of wheat by about two percent a year. Canadian statistics are similar. In 1990, prairie wheat acreage was 28.2 million acres while the U.S. planted 69.1 million acres. Other crops like oilseeds are more productive and pay better.
Canada and the U.S. were large holders of wheat stocks between 1990-2002. When carryover stock reached historically low levels, people expected the prices to rise, but they did not. Other countries like China and India are holding large stocks and are poised to become major exporters.
“It is significant that China and India now hold over 50 percent of the world wheat stocks,” Carter said.
In addition, Argentina and Brazil are closing in on oilseeds production. They have become major soybean exporters, doubling production to 25 million tonnes since 1990.
