WINNIPEG – More Canadian durum wheat could soon be on its way to Europe duty-free.
Canadian Wheat Board commissioner Richard Klassen said a meeting with European Union officials last week produced some positive developments on the longstanding and prickly issue of access for what the EU defines as low quality durum.
He said the two sides agreed in principle on new rules that would allow No. 2 CW amber durum to be moved into the EU without being subject to the often prohibitive import duty, which now stands at $130 a tonne.
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The details remain to be worked out, and the two sides will be exchanging proposals over the next few weeks.
“We’d like to have this in place as soon as possible,” Klassen said after the June 8 meeting between CWB officials and an EU delegation led by agriculture commissioner Franz Fischler.
A change in the rules would open up significant new markets for Canadian durum, particularly in Italy, where a number of processors want to buy No. 2 and 3 CW amber durum wheat but are effectively prevented from doing so by the duty.
“It would be a tremendous benefit to Canadian farmers,” said Klassen, adding there is a potential market for 400,000 to 450,000 tonnes.
The issue revolves around the definition of wheat quality.
Under the EU’s rules, durum with a high vitreous kernel (HVK) content of less than 73 percent is considered to be low quality wheat and importers must pay the duty.
The board says that’s unreasonable and constitutes a non-tariff trade barrier.
It says there is nothing magical about 73 percent and that other quality characteristics, such as color, gluten strength, protein and intrinsic quality, are just as important to buyers as HVK content.
“You can still have very good quality durum with slightly lower HVK,” said CWB market analyst Peter Watts. “It’s not the sole criterion.”
For example, No. 2 CWAD, which has a minimum HVK content of 60 percent, is an excellent quality product much valued by processors. No. 1 CWAD has a minimum HVK of 80 percent.
Board officials also say Canadian durum tends to have slightly lower HVK levels than U.S. varieties, which puts Canada at a competitive disadvantage.
All three top U.S. grades have a minimum of 75 percent, so they move duty-free.
The board has proposed that a new category be established to cover what might be called mid-quality durum, perhaps with a range of 60 to 73 percent HVK and a much lower duty, in the area of $5 to $10 a tonne.
The board said there is a precedent in the one-year exemptions negotiated by Canada in 1995-96 and again in 1997-98, which set the duty level at 60 percent.
Klassen said that while the EU delegation seemed to accept in principle the notion of a new mid-quality range, the outcome of discussions will depend on the details of the EU proposal.
“The money is in the details,” he said, adding the board will prepare a set of specifications for the durum it feels should fit into the category.
Canada has exported an average of about 600,000 tonnes of durum to the EU in recent years, representing about two-thirds of the total EU import market.
