Surging demand for organic meat and dairy products in the United States is helping mop up a surplus of poor quality Canadian organic wheat.
“I’m hearing from several guys that the feed market is really booming,” said Debbie Miller, Canadian manager of the Organic Crop Improvement Association.
She said semi-loads of low-protein wheat from the rain-soaked 2005-06 crop have been heading south of the border.
Canadian Wheat Board organic marketing manager Donna Youngdahl said sales have been brisk due to the phenomenal demand for organic meat and dairy products in the U.S.
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A recent survey of manufacturers conducted by the Organic Trade Association shows meat led all organic food categories with a 55 percent growth rate in the U.S. in 2005. Dairy was third with a 24 percent increase in year-over-year sales.
To keep up with demand U.S. ranchers are increasing the size of their organic beef and dairy herds, which is creating a trickle-down demand for Canadian wheat, especially considering there is a shortage of another common feed ingredient.
“The organic feed industries in the States are substituting feed wheat instead of taking higher priced corn,” said Youngdahl.
But the increased feed demand is not resulting in better prices, said Glen Neufeld, president of Sunrise Foods International Inc.
The appreciation of the Canadian dollar and the surplus supply of poor quality wheat have kept prices 25-50 cents per bushel below last year’s values.
“We have farmers not really that happy with feed prices,” he said.
Growers in southern Saskatchewan who harvested a No. 1 quality, albeit a low protein, wheat crop are particularly bitter about the prospect of having to sell into the U.S. dairy market.
“A lot of them have a real problem with selling a No. 1 wheat as feed, so I’m actually directing some of them to sell into the conventional (milling wheat) market because that may end up paying them more than feed prices,” said Neufeld.
This year’s marketing conundrum reinforces the notion that farmers should, at a bare minimum, plant their wheat on summerfallow fields and preferably following a plowdown crop so there is enough nitrogen to provide adequate protein in what is shaping up to be a wet year.
Quality hard red spring wheat is easy to sell as long as protein levels are adequate, said Neufeld, although he added that in the past couple of years European millers have said that Canadian wheat suffers from low gluten levels due to the excess moisture.
“That is a concern because they like to use our high quality wheat to blend their low quality stuff up,” said Neufeld.
Miller said there will likely be pent-up demand for quality milling wheat this year, which means better premiums.
“We really need high protein wheat this year to meet our traditional markets,” she said.
Youngdahl said overseas customers are already enticing farmers, who have been hoarding quality milling wheat, to market their crop.
“I have been surprised to see a few sales going through that were high quality wheat because I thought it was pretty hard to come by.”
