Farmer Jay Schultz unloads wheat into a grain truck during wheat harvest on their farm near Standard, Alberta, October 7, 2014.Todd Korol/The Globe and Mail
Jay Schultz has hauled truckloads of grain from his farm east of Calgary to nearby elevators countless times over the years. Each trip begins and ends pretty much the same – he loads two trailers with 45 tonnes of wheat, makes his way along the dirt roads to the highway that cuts across the prairies before pulling into the grain elevator, where his crop is sampled, graded and then dumped into a pit.
This year has been different. A wet spring slowed the planting season, and a dry summer stressed the plants at key times in the growing cycle. Finally, a heavy wet snowfall in early September flattened thousands of acres of wheat, exposing the kernels to mould and reducing the harvest's size, grain quality and value. Poor growing conditions in much of Western Canada have slashed the overall crop by about 27 per cent.
It's a difference Mr. Schultz notices each time he arrives at the grain elevator. "Last year I'd pull up and you could be waiting two hours. Now it's like 20 minutes or less," he said.
Mr. Schultz, 30, grows hard red spring wheat, a high-protein variety that makes excellent dough and is sought by makers of bread around the world. The United States is the biggest buyer of Canadian wheat and other grains, but Asia and parts of Africa are also big customers. From the elevators near Mr. Schultz's farm, the railway heads across the mountains to the Port of Vancouver, where the wheat is loaded onto a ship bound for overseas millers.
Worldwide demand for wheat has soared amid rising need for food, animal feed and industrial uses, according to the International Grains Council, which says consumption will hit a record 710 million tonnes in 2014/15. Until last year, wheat prices soared as crops in the major producing countries lagged demand.
Aaron Goertzen, an economist with BMO Nesbitt Burns, said Canadian growers of wheat, canola, soy and other grains are experiencing a "double hit" of lower prices and a smaller crop this year, following last year's large harvest. Farmers are facing revenue declines of 9 per cent and profits that are about 20 per cent smaller, Mr. Goertzen said in an interview. By contrast, harvests in many other countries are expected to be large, which is weighing on prices.
Canadian farmers "lose on the price and they lose on the quantity. So obviously, that's going to have a significant impact on farm revenue," Mr. Goertzen said. "It's more an easing from highs as opposed to a collapse into the abyss. … Over all, farms are still going to be profitable this year."
At the grain elevator near Mr. Schultz's farm, a sample of his wheat is examined for mould, frost damage and field debris. Even though moisture and frost damage reduced the value of much of his wheat, the protein levels are high and prices at local elevators are good. Since the Canadian Wheat Board's marketing monopoly was dismantled, he has been able to shop his crop samples around to a handful of nearby grain companies for the best prices. So far, he has been selling his highest grade wheat for $6.70 a bushel, while lower grades are fetching closer to $6 a bushel. That's slightly better than the $5.72 (U.S.) price quoted on the Minneapolis Grain Exchange.
Mr. Schultz will continue making the drive to the elevator, swapping turns with his father and brother-in-law. He figures he'll have all the crop delivered by December.
"Hopefully the roads stay dry and clear and we'll be able to keep moving along," Mr. Schultz said. "But as soon as you start running into a muddy road and foggy conditions or snow, it's really hard to get around yards with the truck when there is snow on the ground. We just don't take the risk."
Between trips, he has been ordering seed for wheat, canola and peas, and will use much of the cash from the harvest to pay for next year's planting. He'll have his soil tested to see what nutrients he needs and by December his storage bins will be full of seed and fertilizers, ready for spring.
"And the cycle begins again," Mr. Schultz said.
Eric Atkins