Canada is considering changes to its wheat quality control system making it easier for American farmers to ship wheat north of the border after the Canadian Wheat Board loses its monopoly Aug. 1.
"We are working on an initiative that will see the grading systems more in parallel," Agriculture Minister Gerry Ritz told reporters Feb. 24 during a telephone news conference from Washington, D.C.
"Certainly we don’t want to dilute our system but we do want to make it available for some of these new varieties to come up from the U.S. that are giving us millability out of utility wheats."
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That’s raising alarm bells for farmers and industry.
"Absolutely this is the beginning of the end of the Canadian brand," former CWB director Stewart Wells wrote in an email.
Wells, who farms at Swift Current, Sask., predicts the changes will destroy Canada’s reputation for having the best milling wheat in the world. Canada will be just another residual wheat supplier and prices will reflect it, he warned.
Changing those regulations will take time, said Western Grain Elevator Association executive director Wade Sobkowich.
"But in the meantime we can’t have unfettered delivery of (unregistered) U.S. varieties into Canada because under the current classification system it has the potential of seriously devaluing Canadian grain," he said.
Starting Aug. 1, Prairie farmers can truck wheat directly to American elevators. U.S. wheat officials are fine with that, so long as American wheat farmers can deliver wheat to Canadian elevators, Grain Growers of Canada executive director Richard Phillips said in an interview Feb. 23.
Phillips and CWB CEO Ian White joined Ritz last week in talks with U.S. grain officials about the implications of ending the board’s single desk. Both sides want to avoid non-tariff trade barriers, Phillips said.
When a U.S. farmer waits in line at an elevator behind Canadian trucks and then complains to U.S. wheat officials, that official wants to be able to tell the farmer he can truck his wheat to Canada, Phillips said. "You know, fair is fair."
However, he said he doubts farmers will move much wheat either way.
Some Prairie farmers want to be able to grow unregistered U.S. wheats that promise higher yields, he added.
"If they have varieties with milling quality equal to ours then what difference would that make?"
Class standards
The biggest roadblock U.S. farmers face when delivering to western Canadian grain elevators is Canada’s wheat registration and class system.
Western Canada has one general purpose and eight milling wheat classes. Before a new wheat variety, including those developed in the U.S., is registered for commercial production it must meet the agronomic, disease and end-use standards for its class.
When farmers deliver wheat to a Prairie grain elevator they must declare the variety is registered to the class it’s being delivered to, otherwise it receives the lowest grade and price. Farmers who misdeclare are liable for any damages.
Some Americans suspect this is a non-tariff trade barrier, but the regulations apply equally to Canadian farmers.
Few U.S. wheats are registered for commercial production in Western Canada, in part because of the time and cost of the testing and registration process. The main exception is Glenn, which was developed in North Dakota. It was registered in the Canada Western Red Spring wheat class several years ago and is popular with Manitoba farmers.
CDC Falcon, a CW Red Winter wheat developed at the University of Saskatchewan’s Crop Development Centre, is grown in the northern U.S. and therefore could also be delivered by American farmers to Canadian elevators without penalty.
Many American wheats are excellent for milling and baking. They fail to meet Canadian standards, however — not because they’re inferior, but because their milling and baking characteristics aren’t consistent with Canadian wheats.
Canadian millers can import U.S. wheat directly, avoiding the declaration requirements, but seldom do because of the competitive prices, quality and service delivered by the CWB, according to industry officials.
Canada’s wheat class system was developed to meet customer needs and to make for a more efficient grain handling system. Many different wheat varieties, all with similar milling quality, are commingled, yet segregated by class from elevator to ship, allowing customers to buy on grade rather than specifications.
Wheat has been able to flow unfettered, at least on paper, both ways since 1991 when respective Canadian and U.S. wheat subsidies became equivalent.
Canada has dominated, with the CWB exporting around 1.5 million tonnes of wheat and durum to the U.S. annually. Over a dozen trade challenges were launched unsuccessfully from the U.S. against the CWB.
Asked if U.S. officials raised the possibility of trade action if Canadian farmers flood U.S. elevators next fall, Ritz replied: "No… it was not.
"The Americans understand that the border works two ways that this will facilitate trade both southward and northward. They look at it as strengthening of our integrated approach."
— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man. The full version of this article appeared in the March 1 Co-operator, page 13.
