Canada must remain vigilant and deliver consistent quality, says official
The Canadian wheat industry is ignoring at its peril a mounting quality challenge from the Black Sea region, says the CWB.
North America has this outdated notion that wheat from Ukraine and Russia is inferior, said Neil Town-send, director of CWB Market Research.
“This is a good quality wheat that’s almost better and more desirable in some cases than Canadian or American wheat,” he said.
It has excellent extraction rates and it is dry wheat so customers are not paying for water. That is why Black Sea wheat is making inroads in markets like Nigeria, Mexico and Peru.
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“This is going to be an uphill battle for Canada and the U.S. going forward,” said Townsend.
Cam Dahl, president of Cereals Canada, touched on the same theme during his presentation at the Canadian Global Crops Symposium.
“The global wheat market is becoming increasingly competitive and Canada must remain vigilant,” he said.
However, in an interview following his presentation, Dahl dismissed the Black Sea threat.
“They are competing with us on price but that’s not the part of the market that we want to occupy,.”
Dahl said the Black Sea region is capable of delivering a vessel of top quality wheat, but it cannot do it consistently like Canada, which is what customers like Japan require.
“Frankly, that’s why the transportation troubles we had in 2013 and 2014 were so problematic because it bit into that reputation and understanding that Canada is a consistent deliverer of quality,” he said.
Team Canada was formed in an effort to repair that sullied reputation. Representatives of Cereals Canada, the Canadian International Grains Institute, the Canadian Grain Commission, provincial crop commissions, exporters and farmers visited more than 20 countries between mid-November and mid-December 2014.
“It was a little bit of a marathon,” said Dahl.
They spoke to customers about the formation of Cereals Canada, changes to the commission’s vessel certification process, improvements to the variety registration system and the tightening of quality parameters for the Canada Western Red Spring and Canada Prairie Spring classes of wheat.
Team Canada also solicited feedback from customers.
“The No. 1 question all across the world was, will the transportation problems of 2013 and 2014 reoccur,” said Dahl.
The team explained how the federal government implemented mandatory weekly grain targets for the railways and highlighted the ongoing review of the Canada Transportation Act.
“Customers were reassured by that,” he said.
Buyers also wanted to know what happened to the gluten strength of Canada’s CWRS wheat.
Members of the team explained that gluten strength declined because of a combination of poor weather conditions and the popularity of varieties that offered good agronomic traits but lower gluten strength.
Buyers acknowledged that gluten strength is on the rise again despite unfavourable harvest conditions last year. That is because growers have already switched to varieties that offer better end-use quality characteristics, said Dahl.
The industry is also tightening quality parameters for the CWRS and CPS classes of wheat.
Some customers wanted to know how Canadian producers make planting decisions.
“If they’re not growing as much durum, why don’t you just tell them to grow more?” one customer wanted to know.
A farmer member of Team Canada explained how growers do not take their marching orders from government or industry. Instead, they plant crops based on maximizing farm profits.
There were also concerns about exportable supplies of this year’s No. 1 and No. 2 CWRS wheat and No. 1, No. 2 and No. 3 durum.
Fifty to 60 percent of last year’s CWRS crop made the top two grades, which is down from the long-term average of 77 percent. Only 13 percent of the durum crop made the top two grades, down from the 10-year average of 58 percent.
A Canadian exporter was able to assure a Japanese customer that with carryover from the 2013-14 crop there would be ample supplies of top quality wheat to meet Japan’s needs.
Dahl said there were not a lot of questions about the demise of the single desk for wheat and barley.
“It’s very safe to say that the lingering uncertainty over the deregulation of the Canadian wheat market has largely evaporated,” he said.
Dahl said the overall impression he got from customers was that “Canada is back” after a brief hiatus because of weather and transportation problems.
He said the Team Canada approach to customer relations proved highly successful.
“This will continue,” said Dahl.
