Wheat is a dietary staple that many Canadians grow up eating. But it is also increasingly valued abroad, as global demand for the product is rising.
Canada is one of the largest exporters of wheat in the world. In 2013-2014 we exported 17.3228 million metric tons of wheat and that places us among the top seven producers in the world, according to the Canadian Grain Commission.
Other large producers include the European Union, China, India, the United States and Russia.
“There are a few key economic drivers creating demand for wheat such as economic development, population growth and food security,” says Earl Geddes, president of Progression Consulting and formerly the chief executive officer of the Canadian International Grains Institute.
“Indonesia and Bangladesh are examples of two economies demanding wheat,” says Mr. Geddes. “Both economies are improving fairly drastically and that is causing dietary shifts within the countries to more wheat-based foods. There is more fast food available, similar to here in North America, and that equals higher wheat consumption due to items such as buns and breaded meat.”
He adds that population growth in places like sub-Saharan Africa is causing countries such as Nigeria, Cameroon, Ghana to become increasingly interested in wheat-based products, and not necessarily for human consumption.
“There is meat consumption in these countries. They eat a lot of chicken. And where do chickens get their energy from? Usually from some form of wheat.”
J.P. Gervais, chief agricultural economist at Farm Credit Canada, agrees that there are opportunities overseas.
“The demand for Canadian commodities such as wheat is strong,” Mr. Gervais says. “For many years we were in an environment where demand outpaced supply and now we have the pendulum swinging back to the other side.”
Due to the stiff competition, Mr. Gervais says that in terms of pricing, producers may get less right now than they did historically.
“One thing that does help wheat growers is the value of the Canadian dollar. It is low right now and that makes our products more competitive from the buyer’s standpoint. For example, if I’m an Asian buyer, Canadian wheat is cheaper than American wheat and that gives us a competitive edge,” Mr. Gervais says.
But there is also growing opportunity, as well as competition.
“Take India for example,” Mr. Geddes says. “They are among the top wheat producers in the world and they have a tremendous ability to produce wheat domestically.”
Regardless, it will be difficult for India to supply wheat to a population that is expected to reach about 1.4 billion in 2025 and surpass China as the most populous country in the world by 2028, according to the United Nations’s report World Population Prospects.
India faces a few hurdles. Mr. Geddes says that they lose almost 25 per cent of the wheat that they produce to inadequate storage facilities, weather and rodents. One of their top priorities is trying to keep the wheat that they produce from disappearing.
Next, they are battling climate change. “The temperature is warming at night and when that happens the total production of wheat goes down,” Mr. Geddes says. “In that case farmers won’t be able to meet domestic wheat needs and they’ll have to try and find a new variety of wheat that can tolerate warmer temperatures at night.” If that does not happen it will be up to countries like ours to increase wheat exports.
Traditionally, it is challenging for Canadian farmers to gain entry and traction in international marketplaces. “It takes a great deal of work and commitment,” Mr. Geddes says. “Suppliers have to convince the grain company that they will be more successful in an international marketplace.”
However, this may be getting easier considering the $250-million April, 2015, deal between the Canadian Wheat Board (CWB) and Global Grain Group (G3), a joint venture between food company Bunge Ltd. and a unit of Saudi Agricultural and Livestock Investment Co., known as SALIC Canada Ltd.
G3 owns a 50.1-per-cent stake in CWB. This marks the first time that the CWB will essentially be foreign owned – Bunge is a U.S. agrifood company and SALIC is backed by an investment fund owned by Saudi Arabia.
“Business persons in Asia, Africa and the Middle East see this deal and they want something similar,” says Mr Geddes. “Countries want connections with Canadian suppliers. We have well-designed classes of wheat that can meet any end-use requirement in any country in the world.”
Mr. Gervais says, “The one advantage that Canadian suppliers have is our country’s world-class brand.
“People want to do business with Canadians.”
Editors note: In 2013-2014 Canada exported 17.3228 million metric tons of wheat, according to the Canadian Grain Commission, not 17,322.8 metric tons, as a previous version of this article stated.Report Typo/Error
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