The number of Canadian farms has been dwindling, but remaining farms are getting bigger and more diversified. In 1996, 30.2% had gross receipts of C$100,000 or more. Major inputs are affordable and available; a short growing season and cold weather are the major production constraints.
Agricultural policy. Canada's federal and provincial support system aims to bolster farm income, stabilize prices, reduce regional disparities and enhance international competitiveness. Government support is shrinking, however, and Canada plans to reduce budgetary support for agriculture by 24% from 1995 to 1998.
Commodity specific supports have been replaced with a "whole farm" concept of income stabilization, introduced in 1991. The program encourages producers to build savings during high revenue years; the federal and provincial governments match farmers' contributions up to a preset level.
Canada employs "orderly marketing," a system where marketing boards oversee sales of agricultural products. The power of some boards has faded, but the Canadian Wheat Board retains its monopoly on wheat marketing and exports. Farmers have challenged the C.W.B. in recent years, calling for reforms that would yield more marketing options, and Parliament is addressing organization and accountability issues.
A significant change was the mid-1995 end of government grain transport subsidies to railroads. After that date, the full cost of shipping grain from the Prairie provinces to ports or consumption centers was assumed solely by producers and secondary grain handlers. The change has altered some grain flows, with Pacific coast ports increasing their export handlings at the expense of Great Lakes facilities.
Flour milling. Canada's food processing industry is quite modernized, including its 29 wheat flour mills. Of the 29 wheat flour mills, 13 are independent, with the remaining 16 mill facilities owned by three multiple mill companies. ADM Milling Co., a subsidiary of the U.S. multinational Archer Daniels Midland, owns 11 of the 16 mills, including Canada's largest individual wheat flour mill in Montreal. That mill has daily capacity of 855 tonnes of flour; total Canadian daily milling capacity currently is 8,070 tonnes in terms of flour.
According to the C.W.B. and the Canadian National Millers Association, the milling industry operated at 90% capacity in 1997, compared with less than 74% five years ago, and in the past decade, the industry gradually has been wringing out excess capacity. As 1998 began, however, total annual wheat flour capacity had jumped by 163,000 tonnes, or 7%, from a year earlier.
Canada's six durum mills have a total daily capacity of 948 tonnes of flour. Two mills are independently owned, with two each owned by ADM Milling and Robin Hood Multifoods, Inc.
In 1995-96, nearly 70% of Canadian mills' total wheat grind consisted of western red spring wheat. Ontario spring wheat made up about 13%, western red winter made up 6%, western soft white wheat was 2%, and durum accounted for 7%.
In 1997-98, Canadian wheat production dipped slightly because lower prices prompted many Western farmers to plant oilseeds and other specialty crops instead of wheat or coarse grains. Canadian wheat prices late in 1996 were 25% below their second quarter peak.
In the east, fusarium head blight problems in 1996 prompted farmers there to scale back winter wheat seedings in 1997. Statistics Canada reported that only 115.7 million hectares were seeded to wheat in 1997, 11% less than in 1993.
On the consumer side of the market, Canadians use about 1.45 million tonnes of wheat flour each year. The bread and pastry market alone was valued at $1.59 million in 1997, a 7% increase from the year before.
Livestock and feed. Coarse grains consumption was sustained in 1995 and 1996 by record cattle and hog numbers. Many producers turned to barley because feed wheat supplies were limited and of poor quality, while strong export demand for oats and domestic maize production shortfalls restricted availability of those feeds.
The hog processing industry is rapidly becoming modernized, and major pork packers are investing in new facilities in Manitoba and possibly in Alberta and Saskatchewan. Production is likely to keep pace with processing capacity, and total pork output was expected to reach 1.2 million tonnes in 1997.
Poultry consumption between 1993 and 1997 grew by 16%, and in 1996 poultry accounted for 34.5% of all meat consumed by Canadians. In 1997, poultry consumption surpassed beef and veal consumption for the first time. Even though demand for beef continues to expand, the growth in beef consumption has lagged that of poultry in recent years.
Trade. Canada's government wants to build a $14.1 billion agricultural export market by 2000; it almost reached that level in 1996 with total agriculture exports of $14.0 billion. Government target areas for export promotion include Japan, the European Union, China/Hong Kong, South Korea, Taiwan, Mexico, Brazil and the U.S.
The country continues to phase out tariffs under the U.S./Canadian Free Trade Agreement and the North American Free Trade Agreement, and tariffs on most agricultural products imported from the United States were to have been eliminated by 1998. The shift, combined with the depreciation of the Canadian dollar, spurred the growth of wheat flour, wheat gluten, wheat starch and pasta exports.
Canadian wheat exports to the U.S. at times have exceeded 2 million tonnes annually. The exports have prompted complaints from U.S. producers, resulting in separate wheat trade agreements.
The World Trade Organization's Agreement on Agriculture led to the elimination of import licensing requirements on wheat and wheat products in 1991; Canada implemented tariff rate quotas for those products in 1997.
Fluctuating wheat supplies and transportation difficulties have hurt exports in recent years, and the C.W.B. says shipping delays in 1997 resulted in a $45.8 million loss in revenue. A complaint filed by the board against two railroads serving western Canada will be investigated this year.