Alberta’s soft white wheat industry could virtually disappear if something isn’t done quickly to improve grower returns, say industry officials.
A long term problem with pricing became critical when delays in starting a Saskatchewan ethanol plant resulted in a wave of unexpected soft white wheat being delivered to the Canadian Wheat Board.
Lynn Jacobson, chair of the Alberta Soft Wheat Producers Commission, said growers are watching prices carefully as they finalize 2010 seeding plans.
“If the price isn’t there, I suspect acreage will drop down below 5,000 acres,” he said.
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“That will pretty well decimate the industry in southern Alberta.”
In recent years, seeded area has typically been 25,000 to 30,000 acres. Yields average around 70 bushels per acre, but can exceed 100 bu.
Jacobson said if seeded area drops as low as 5,000 or 10,000 acres, Canadian processors may have to import soft white wheat to meet needs.
“That would seem very strange to producers here,” he said.
In a bid to save the industry, the commission is working with the Canadian Wheat Board and processors to develop a new approach. It’s expected to be based on a pricing contract that will reflect the value of soft white wheat delivered to domestic processors for human consumption.
“We’re hoping to develop a program that addresses both the pricing concerns of producers and the sourcing concerns of processors,” said CWB spokesperson John Lyons.
The new program, discussed at last week’s CWB board of directors’ meeting, is still short on detail.
“Right now, we’re not sure exactly what form this is going to take,” said Lyons, adding the board knows that time is short. ”We expect to be able to announce something in the next couple of weeks, well before seeding.”
Jacobson praised the CWB for quickly responding to the commission’s request for a pricing review.
There are two distinct markets for soft white wheat, one focused on quality and the other on quantity.
The commission would like to see the Alberta crop increase to around 40,000 to 50,000 acres to serve the domestic milling market.
In Saskatchewan, farmers seeded 700,000 acres in 2009, all of it destined for the ethanol market.
Due to startup problems at an ethanol plant last year, about 160,000 tonnes of lower quality soft white wheat ended up being offered to the CWB. Sales of that wheat drove down the pool return for high quality growers, resulting in prices below the costs of production.
The current Pool Return Outlook, basis Alberta, for No. 1 CW soft white spring select, with less than 9.9 percent protein, is $142.19 a tonne ($3.87 a bushel). For 1 CWSWS, the PRO is $118.19 a tonne or $3.22 a bu.
