Canada is one of the world’s most important grain producers and exporters, supplying grain quality that is important to processors in many countries. It does it in a climate that is often difficult and across a vast area that creates logistical problems. Canada is closely linked to the U.S. through geography and the NAFTA trade agreement.
The International Grains Council’s (IGC) projection for Canada’s wheat crop in 2014-15 shows a sharp fall, to 29 million tonnes from 37.5 million in 2013-14.
“Farmers in Canada are expected to reduce the area of all varieties due to high carryover stocks and lower domestic prices, with total plantings seen some 5% lower, at about 10.1 million hectares,” the IGC said. “The spring planting season is being delayed by unseasonably cold and showery weather in western regions, notably in Manitoba, Alberta and Saskatchewan. In contrast, warmer and drier conditions favored the development of the winter wheat in the east. Assuming normal abandonment and yields returning to average after the previous season’s record, production is forecast 23% lower year on year.”
The IGC puts Canada’s total 2014-15 grains crop at 52.9 million tonnes, down from 66.2 million the year before. As well as the wheat, its maize crop is projected to fall to 12.5 million tonnes from 14.2 million, while barley production is set to fall to 7.7 million tonnes from 10.2 million. Canada is also expected to produce 3.3 million tonnes of oats, down from 3.9 million.
Canada is one of the world’s largest exporters, with total grains exports forecast by the IGC at 27.1 million tonnes in 2014-15, up from 26.4 million in 2013-14. Wheat exports are predicted to rise to 22.6 million tonnes from 22.3 million. Maize exports are seen down at 1.2 million tonnes, from 1.3 million, while barley exports are set to rise to 1.5 million tonnes from 1.2 million.
The IGC projects Canada’s 2014-15 crop of durum at 5 million tonnes, down from 6.5 million the year before. It projects Canada’s 2014-15 durum exports at 4.6 million, up from 4.4 million in 2013-14.
Canada is also an important oilseeds producer. IGC estimates its 2013-14 crop at 5.2 million tonnes, up from 5.1 million the year before, with exports at an unchanged 200,000 tonnes. The IGC puts Canada’s 2013-14 rapeseed (canola) production at 18 million tonnes, up from 13.9 million tonnes, with exports at 8.5 million tonnes, up from 6.7 million.
Grain logistics problems
Recent months have seen a struggle for the Canadian industry to get grains moved, particularly to export ports. The government’s response is the Fair Rail for Grain Farmers Act. It includes a provision requiring rail companies to move 1 million tonnes of grain every week through to Aug. 3, 2014.
“At 76 million tonnes, this year’s Western Canadian crop is 50% higher than the 10-year average,” the Canadian government said as part of a statement announcing the act’s passage into law on May 30. “This volume is putting significant pressure on Western Canada’s grain handling and transportation system. As the government continues to work with farmers to invest in research and innovation, higher yields will continue to be the new reality across Canada.”
For many years Canada operated a single desk system for exporting grains, but that system was abolished a few years ago.
“Marketing freedom came into force on Aug. 1, 2012, as a result of Bill C-18, the Marketing Freedom for Grain Farmers Act, and gives Western Canadian grain producers the freedom to market their wheat and barley to the buyer of their choice,” as the Farm ministry, Agriculture and Agri-Food Canada explains on its website.
“Western agribusinesses have seen a positive impact from being able to market their wheat and barley independent of the former Canadian Wheat Board. A study conducted by the Canadian Federation of Independent Business found that the vast majority of agribusinesses (81%) were positively impacted by marketing freedom. More than three-quarters said they had greater control of the decision-making for their products and two-thirds said marketing freedom has delivered better market signals, better access to competitive prices and increased cash flow.”
200 years of milling
The Canadian National Millers Association (CNMA) points out on its website that commercial grain mills have operated in Canada for over 200 years.
“Canada is a young country, founded as a federation of provinces in 1867,” the association explains. “Flour mills were operating in Canada more than 100 years earlier.
“The grandfather of all Canadian milling wheats was introduced to Canada in 1851. Some of Canada’s largest modern grain mills are operating at or near locations where mills have operated for more than 100 years.”
Canada has approximately 55 commercial wheat and oat mills situated from Pacific to Atlantic coasts, CNMA said. “Commercial scale wheat and oat mills operate in 8 of Canada’s 13 provinces and territories,” it said. “Total milling capacity is shared about equally between eastern and western Canada. The majority of wheat milling capacity is in the east in close proximity to larger urban centers. The majority of oat milling capacity is situated in the Prairie provinces.”
Canadian mills grind over 3.5 million tonnes of wheat, oats and barley each year.
“Canadian mills export wheat flour, semolina and other milled grain products to over 30 countries,” CNMA said. “Canadian milling companies have free trade access to all of Canada, the United States and Mexico under the terms of the North American Free Trade Agreement. Although the United States is Canada’s largest export market for milled grain products, over 30 countries import wheat flour and other milled grain products from Canada each year.
Canadian mills use state-of-the-art milling methods and technology.
“Capital investment in Canadian grain milling facilities is approximately $1.5 billion. Twenty percent of Canada’s grain mills are less than 15 years old,” the association said.
Gordon Harrison, president of the Canadian National Millers’ Association, explained to World Grain the issues that face the industry, stressing that the association works with other industry bodies, in Canada and across North America, to get its point across.
“Like the milling association in the U.S., we are dealing on both sides of the border with new food safety legislation and regulation,” he said. “In Canada we have something that was passed about a year ago called the Safe Food for Canadians act. It is really food inspection legislation.”
Work into turning the act into workable rules is ongoing. “The inspectors are worried about the management of contaminants in grains, specifically mycotoxins,” he said. “Mycotoxins are an issue that is important to millers globally and in the E.U. in particular.”
He pointed out that grains and grain-derived foods are very low risk. “They typically carry no microbial organisms that are a particular health risk.”
Harrison is also concerned to keep the regulatory environment in Canada and the U.S. reasonably aligned. “We have been in the North American Free Trade Agreement with an open border since the early 1990s, so we have 20 years of free trade experience,” he said. “It has worked and we have unfettered bilateral trade in milled grain products and further processed grain-based foods such as pasta.
“It is vitally important that we try to keep our regulatory environments aligned so that there are no unintended consequences in the form of trade barriers that arise from changes in labeling, approval food additives, mandatory enrichment of wheat flour and that is a general preoccupation. Health Canada, which is our primary food regulator, in the last six years has been inclined to emulate the European Commission,” Harrison said. “The U.S. Food and Drug Administration has for years been less interventionist, leaving it to industry to manage mycotoxins levels in food.”
He is also concerned about consumer’s avoidance of gluten and the industry is working to counter misinformation. “We have an initiative going on in Canada that has been largely funded by the baking industry called the Healthy Grains Institute,” he said. “It has a good website and a very good lady leading it.”
Protecting varieties is also important to Canadian millers.
“We think we have got a pretty good system for the free-market evaluation and registration of wheat and oats varieties,” he said. “It was already liberalized somewhat within the last five years and we believe, as the CNMA, that the variety registration system should not be deregulated a great deal further, that we should continue to respect end-use performance requirements for millers, not just in Canada but internationally, that are looking for end-user performance of Canadian wheat.”
That means protecting major milling classes like Canada Western Red Spring, White Spring and Canada Western Amber Durum. “You need workhorse gold standard classes that have great utility in milling,” he said.
He also expressed concern over Canada’s logistical problems. “This past winter, as a result of a record harvest of wheat and other commodities in Western Canada, we had far more grain to move and we had very severe weather,” he said. “Milling establishments in Canada and parts of the U.S. that rely on Western Canadian grain didn’t get what they needed when they needed it and where they needed it.”
The economy is bigger than it used to be, he said. “Rail freight movement is more economical for certain distances and for certain commodities, and these commodities also tend to be export commodities,” he said.
He noted the temporary measures in the Fair Rail for Grain Farmers Act, and hoped that infrastructure improvements could be got into place.
Population: 34,834,841 (July 2014 est.)
Religions: Catholic 40.5% (includes Roman Catholic 38.7%, Orthodox 1.6%, other Catholic .2%), Protestant 20.3% (includes United Church 6.1%, Anglican 5%, Baptist 1.9%, Lutheran 1.5%, Pentecostal 1.5%, Presbyterian 1.4%, other Protestant 2.9%), other Christian 6.3%, Muslim 3.2%, Hindu 1.5%, Sikh 1.4%, Buddhist 1.1%, Jewish 1%, other 0.6%, none 23.9% (2011 est.).
Location: Northern North America, bordering the North Atlantic Ocean on the east, North Pacific Ocean on the west, and the Arctic Ocean on the north, north of the conterminous U.S.
Government: A parliamentary democracy, a federation, and a constitutional monarchy. Head of state: Queen Elizabeth II (since Feb. 6, 1952); head of government: Prime Minister Stephen Harper (since Feb. 6, 2006).
Economy: As a high-tech industrial society in the trillion-dollar class, Canada resembles the U.S. in its market-oriented economic system, pattern of production, and high living standards. Since World War II, the impressive growth of the manufacturing, mining and service sectors has transformed the nation from a largely rural economy into one primarily industrial and urban. The 1989 US-Canada Free Trade Agreement (FTA) and the 1994 North American Free Trade Agreement (NAFTA), which includes Mexico, touched off a dramatic increase in trade and economic integration with the U.S., its principal trading partner. Canada enjoys a substantial trade surplus with the U.S., which absorbs about three-fourths of Canadian merchandise exports each year. Canada is the U.S.’s largest foreign supplier of energy, including oil, gas, uranium, and electric power. Given its abundant natural resources, highly skilled labor force, and modern capital plant, Canada enjoyed solid economic growth from 1993 through 2007. Buffeted by the global economic crisis, the economy dropped into a sharp recession in the final months of 2008, and Ottawa posted its first fiscal deficit in 2009 after 12 years of surplus. Canada’s major banks, however, emerged from the financial crisis of 2008-09 among the strongest in the world, owing to the financial sector’s tradition of conservative lending practices and strong capitalization. Canada achieved marginal growth in 2010-13 and plans to balance the budget by 2015. In addition, the country’s petroleum sector is rapidly expanding, because Alberta’s oil sands significantly boosted Canada’s proven oil reserves. Canada now ranks third in the world in proved oil reserves behind Saudi Arabia and Venezuela.
GDP per capita: $43,100 (2013 est.); inflation: 1% (2013 est.); unemployment: 7.1% (2013 est.).
Currency: Canadian dollars (CAD): 1.09 Canadian dollars equals 1 U.S. dollar (June 18, 2014).
Exports: $458.7 billion (2013 est.): motor vehicles and parts, industrial machinery, aircraft, telecommunications equipment; chemicals, plastics, fertilizers; wood pulp, timber, crude petroleum, natural gas, electricity, aluminum
Imports: $471 billion (2013 est.): machinery and equipment, motor vehicles and parts, crude oil, chemicals, electricity, durable consumer goods
Major crops/agricultural products: Wheat, barley, oilseed, tobacco, fruits, vegetables; dairy products; fish; forest products
Agriculture: 1.7% of GDP and 2% of the labor force.
Internet: Code: .ca; 8.743 million (2012) hosts and 26.96 million (2009) users.
Source: CIA World Factbook
Chris Lyddon is World Grain’s European editor. He may be contacted at: email@example.com.