Canadian durum growers are raking in the cash from new markets and booming world prices.
But some of Canada’s best durum customers warn that the kind of world crop supply problems that have produced the high prices are forcing customers to cut their pasta production.
“At this time we have a little problem with the price. The price is growing,” said Abuid Orlando Cordero Lozada, the general manager for operations at Venezuelan pasta maker Alimentos Polar Comercial.
“We can’t increase the price of our products. We have a big problem with this situation.”
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Cordero Lozada was part of a group of international durum processors taking part in the Canadian International Grains Institute’s 11th International Durum Wheat Program in Winnipeg.
Simple market economics would suggest that the escalating price of world grains would lead to demand rationing. Higher prices would cause some consumers to stop or reduce their purchases of more expensive product, leading to a weakening of demand from the millers and pasta makers.
But in the Venezuelan situation, market economics aren’t creating the situation, so the cut in demand may be more severe. By law, companies like Cordero Lozada’s can’t increase the price of pasta beyond a set maximum. Until recently, that maximum allowed millers to make a profit from pasta. But because of the skyrocketing price of wheat, the maximum now produces a loss.
Venezuelan consumers won’t see their pasta prices increase. But they might not be able to find much pasta soon. Cordero Lozada said his company shut down two of its pasta lines two weeks ago.
His company is considering adding vitamins to its product so that it can be sold as a health food item, rather than bulk pasta, which might allow it to charge higher prices than the cap allowed for bulk pasta.
Cordero Lozada said Venezuelan pasta makers are rather blue these days when they meet.
“It is a difficult time for all of the food companies in my country.”
His company is blending lower grades of Canadian durum with the higher grades to reduce the price.
A different anxiety is gnawing at Ajmal Safee, the product development manager for Al Ghurair Foods in Dubai, United Arab Emirates. He’s aware of the vulnerability of his company to the relatively small regions of the world growing durum.
“We used to get regular supplies from Australia, but because of the drought the supplies are inconsistent and not the qualities that we need,” said Safee.
“Canada is the best option for (replacing) that. We’ve found Canada is really good in terms of quality and consistency.”
Prairie farmers have managed to steal some of the Persian Gulf market for durum that Australia normally owns, but Safee is worried about Canadian durum supplies if the country is hit by a drought similar to Australia’s.
Because of the quality of Canadian durum, customers will probably be loyal, but they need to know Canada won’t suddenly run out of crop some year.
“It is very important to learn from the experience of the Australian drought how to have continued supply in all such scenarios,” said Safee.
“They should be able to get the wheat quantities they need.”
Safee hoped durum could be grown more widely in Western Canada and joked that the crop should be moved to Ontario to avoid the threat of a prairie drought.
“Just transfer the soil and the weather from here to there,” he said.
Neither Safee nor Cordero Lozada showed much interest in American durum.
“We tried to buy wheat from U.S.A., but they have not so good quality,” said Cordero Lozada.
“It has more dockage. We prefer to buy Canadian wheat.”
