Wheat—the tradition is going strong

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Excerpts from Canadian agriculture at a glance 1999
Wheat—the tradition is going strong
by Rick Burroughs, Statistics Canada
The tradition of growing wheat began with the arrival of European settlers in eastern Canada in the 17th century. Indeed, flour mills were often the first local industries in these early communities. The cultivation of wheat for export was the commercial incentive that opened the Prairies in the latter half of the 19th century. Although production varies with the cycles in the world grain market, wheat remains economically the most important crop in Canada.
Coast to coast

Wheat is grown commercially in all provinces except Newfoundland, with most of the production concentrated in the Prairie provinces and Ontario. In 1996, production was just short of 30 million t (tonne).

There are four major types of wheat grown in Canada, each with its own use. The most important is prairie spring-sown wheat. This grain is a hard-kernelled, high-protein type used to make bread. This high quality wheat captures a premium price for the Canadian Wheat Board selling Canada's wheat abroad. The Prairies also produce a spring durum wheat used to make pasta. Ontario produces about a million tonnes a year of soft, fall-sown wheat that is milled into pastry flour. The lower grades of these three types plus some production of specifically bred feed varieties provide a supply of wheat to feed livestock.
Not all wheat is exported

The domestic use of the wheat crop totals about 8 million t per year. More than half (4.4 million t) is used to feed livestock. Another 2.4 million t is acquired by the milling industry, ground into flour for the baking industry, and eventually placed on supermarket shelves as bread. The remaining 1.1 million t is retained by the agriculture industry for seeding next year's crop.

The rest—about 19 million t depending on the current year's production—is exported, almost all of it as grain. Only about 1% is exported as flour.
Exports circle the globe

Exports of Canadian-grown wheat are shipped around the world. As the century closes, the largest market is in Asia (China, Bangladesh and Japan). Other important destinations are South America, the Middle East, and the United States.

The changes in the pattern of export destinations in the past decade reflect some of the major political events over the period. Exports of wheat to the former U.S.S.R. have shrunk to almost nothing since the breakup of that country. The largest importer in the Middle East is now Iran, replacing Iraq, which has been subjected to trade embargoes since the 1991 Gulf War.
We're not number 1

Although Canada produces and exports a large volume of wheat, it rivals Australia and the European Union only for second place among the world's exporting nations. The perennial leader is the United States, although Argentina is a serious competitor on the world wheat market.

Canadian trade in wheat at the world level is relatively small compared with global production. World wheat production and consumption are between 500 million and 600 million t annually, while the volume traded is a remarkably steady 100 million t. These numbers change little from year to year, which would imply a relatively stable trading market. However, few growers or traders would describe the trading environment that way. Small surpluses or shortages arising from differences in world production and consumption result in disproportionately large variations in prices. For example, in the second of two consecutive years of reduced supplies, the price producers got for top quality prairie wheat including storage and transportation costs exceeded $270 per tonne in the 1995/96 crop year. Two consecutive years of record production in 1997 and 1998 saw western growers looking at prices around $206 per tonne. In the 1998 crop year, prices fell further to under $175 per tonne as production in the major wheat-producing countries increased.
With prices at this level, many growers around the world will look for more profitable alternatives to wheat. World production may decline and jolt prices out of their lethargy. On the other hand, a poor crop in one of the major producing countries would send shock waves through the market with an immediate price response. To Canadian growers, a little bad news is not always unwelcome.


Data for this article came from Field Crop Reporting Series, Statistics Canada Catalogue no. 22-002-XPB; and Cereals and Oilseeds Review, Statistics Canada Catalogue no. 22-007-XPB.
"Source: Statistics Canada, www.statcan.ca, and date of extraction" or, in the case of material obtained from free publications: "Source (or "Adapted from", if appropriate): Statistics Canada, title of publication, catalogue, volume and issue numbers, and reference period."

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