American flour mills attempt to displace spring wheat

One of the world’s largest milling companies is running a pilot pro-gram in Kansas aimed at replacing “high-priced” spring wheat with top quality winter wheats. | Reuters/Todd Korol photo

An analyst doesn’t think a program to encourage higher quality winter wheat varieties will affect Canadian sales to U.S.

An effort to displace spring wheat in the grist of flour mills in the southern United States isn’t overly concerning, according to a couple of Canadian market analysts.

One of the world’s largest milling companies is running a pilot program in Kansas aimed at replacing “high-priced” spring wheat with top quality winter wheats.

Grain Craft LLC recently completed a test with a baking partner of flour milled from a selection of 33 preferred hard red winter wheat varieties.

The test was a success and the miller has been given the green light to expand the program to other locations operated by the baker.

“Grain Craft believes the program holds the potential for widespread adoption in the milling industry,” stated the company in a recent news release.

Grain Craft is the ninth largest flour miller in the world, according to agriculture consultant David McKee. And it is the largest miller in Kansas.

Millers in the southern U.S. often use a blend of 75 percent hard winter and 25 percent hard spring wheat to make breads and buns.

But spring wheat typically costs Kansas millers about US80 cents per bushel more than hard red winter wheat and that is before the cost of shipping the product 1,300 kilometres from the upper Midwest.

The baking quality of hard red winter varieties is highly variable and the vast majority of the wheat is commingled at elevators, so it has been difficult to segregate the top performers from the bottom.

Grain Craft is attempting to address that shortcoming by partnering with growers and grain companies to segregate a select group of high-performing hard red wheat varieties.

It has convinced its baking partner to pay farmers and the grain elevators a premium to grow and segregate the varieties.

“Until now, there has not been a mechanism to reward farmers for growing specific varieties,” David Green, executive director of the Wheat Quality Council, said in the news release.

“These types of programs are a major first step in trying to get better varieties planted by the farmer. I think it is a big deal.”

The goal of the program is to eliminate spring wheat’s 25 percent share of Grain Craft flour blends in Kansas and throughout the entire southwest U.S.

MarketsFarm analyst Bruce Burnett doesn’t think the program will have a big impact on spring wheat sales to one of Canada’s top customers.

The U.S. is Canada’s third-largest wheat buyer, buying $544 million of the product in 2019.

“I don’t think this is a huge game changer but it could eat into hard red spring demand in some of the southern mills,” he said.

“It’s something that’s interesting but it’s not going to move the needle permanently.”

Burnett said quality is one factor in the blending formula but so is price and he thinks the program will be “run over” in years when there is not much of a spring wheat premium.

In addition, quality is partially a function of weather, which can greatly impact the program.

For instance, this year’s U.S. hard red winter wheat crop has lower-than-average protein, which will necessitate the imports of spring wheat from northern tier states.

The upshot is he thinks U.S. spring wheat will continue moving south to flour mills and Canadian spring wheat will continue to cross the border to backfill supply.

Neil Townsend, chief market analyst with FarmLink Marketing Solutions, shares that outlook.

“If it had an impact I think it would be relatively small to begin with,” he said.

“If (Grain Craft) switched over to producing this I would think some other miller would be like, ‘well, now I can use more spring wheat.’ ”

Townsend said millers will still require spring wheat to make high gluten products like pizza dough and tortillas.

However, he acknowledged that the quality difference between spring wheat and the top hard red winter wheats is narrowing.

Grain Craft launched a similar program at its mill in Blackfoot, Idaho, in 2001. At that time the mill was importing most of its wheat from Kansas, Nebraska, Montana and Wyoming.

By 2005, it was able to source 100 percent of its wheat from a 300-kilometre radius of the plant by paying growers a premium to plant select winter wheat varieties.

The challenge in Kansas is trying to segregate the high quality winter wheat in a system that is increasingly moving to 100-car unit trains.

But the program is gaining traction. The company hopes 50 percent of the hard winter wheat it uses will be preferred varieties within five years.

Reuben McLean, senior director of quality for Grain Craft, said the preferred variety program will have spill-over benefits for the entire U.S. wheat industry.

“One of the things that I think U.S. Wheat (Associates) has heard loud and clear from their overseas customers is that there has been somewhat of a decline in the quality of U.S. wheat,” he said.

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