For the first time in at least 45 years, Canada has moved ahead of the United States in the ranks of wheat flour exporters.
However, both countries remain far behind European Union exporters, who take advantage of export subsidies to dominate the world’s flour trade.
“Unless the EU subsidies are eliminated or dramatically reduced, there are few opportunities in the key import markets in North Africa and the Middle East,” said Gordon Harrison, president of the Canadian National Millers
Association.
Recently released statistics from the Canadian Grain Commission indicate that Canada exported 242,425 tonnes of flour in 2004-05, while U.S. exports totalled 231,060 tonnes. Statistics going back to 1960 show the U.S. ranked ahead of Canada every year.
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Over the past 10 years Canada exported an average of 179,000 tonnes of wheat flour per year, while the U.S. shipped an average of 704,000 tonnes, according to statistics from the United Nations’ Food and Agriculture Organization.
World trade in wheat flour in 2004-05 was 6.3 million tonnes. France is the perennial top flour exporter, making use of generous EU export subsidies to ship about one million tonnes a year, mainly to North Africa and the Middle East.
About 85 percent of Canada’s wheat flour exports go to the United States, with the remainder distributed among many small buyers, sometimes more than 20 a year.
Harrison said the world flour market is so distorted by European export subsidies that it’s amazing Canada is able to export overseas at all.
“It’s noteworthy that trading houses from all over the world continue to try to purchase Canadian flour and semolina, notwithstanding the obvious long-term impact of trade distorting subsidies,” he said, adding his office receives calls every week from prospective buyers.
If the buyer is insistent and more interested in quality and service than just price, some mills will provide export price quotes.
But the spread between European and Canadian values into the major import markets in the Mediterranean region are so great that sales are few and far between.
“The manufacturing costs and freight to Canadian ports, before ocean freight, exceeds the landed value of the flour the Europeans put into North Africa and the Middle East,” Harrison said.
Canada has more success selling to Asia, although it faces disadvantages relative to other suppliers such as Australia and Japan, especially with high ocean freight rates of recent years.
In 2004, the top overseas buyers of Canadian flour were Hong Kong, South Korea, Japan and Bahamas. Small volumes were also sold to Bermuda, Netherlands Antilles, Greece, China and Peru.
Harrison said the millers association doesn’t engage in export market development work, having decided some years ago that it wouldn’t be worthwhile, given the economics of world wheat flour trade.
In a non-subsidized world, say industry officials, Canada could at least compete for business on the basis of quality and service, even in the face of a serious freight disadvantage.
However, no one should expect a return to the halcyon days of the 1960s, when Cuba imported a million tonnes of wheat flour a year from Canada, courtesy of the Soviet Union.
“There is potential for growth into those countries we’re now selling to, but I think it will always be somewhat limited,” said Jim Thompson, the Canadian Wheat Board’s marketing manager for Canada and the U.S.
