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
and Labrador, with most of the production concentrated in the Prairie
provinces and Ontario. In 1996, production was just short of 30
million tonnes.
There are
four major types of wheat grown in Canada, each with its own use (Figure 1).
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.
[D] Click for larger version, 4 KB Figure 1. There is More Than One Kind of Wheat Produced (average 1990 to 1998)
Not All Wheat is Exported
The domestic use of the wheat crop totals about 8 million tonnes
per year. More than half (4.4 million tonnes) is used to feed livestock.
Another 2.4 million tonnes is acquired by the milling industry,
ground into flour for the baking industry, and eventually arrives
on the supermarket shelves as bread. The remaining 1.1 million tonnes
is retained by the agriculture industry for seeding next year's
crop.
The rest-about 19 million tonnes depending on the current year's
production-is exported, almost all of it as grain. Only about 1%
is exported as flour (Figure 2).
[D] Click for larger version, 5 KB Figure 2. Not All Wheat is Exported (crop year 1996 to 1997)
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 Union of Soviet Socialist Republic 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
(Figure 3). The perennial leader is the United States, although Argentina is
a serious competitor on the world wheat market.
[D] Click for larger version, 6 KB Figure 3. We're Not Number 1
Canadian trade in wheat at the
world level is relatively small compared with global production.
World wheat production and consumption are between 500 and 600 million
tonnes annually, while the volume traded is a remarkably steady
100 million tonnes. 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 CEREALS AND OILSEEDS REVIEW, STATISTICS
CANADA CATALOGUE NO. 22-007-XPB AND FIELD CROP REPORTING SERIES, STATISTICS
CANADA CATALOGUE NO. 22-002B-XP
Buying Wheat from the Board
The Canadian Wheat Board was established in 1935 to serve as the single
agent for selling exports abroad and ensuring a fair return to producers.
Only wheat marketed through the Canadian Wheat Board can be sold
abroad. The Board also guarantees an initial price for wheat at
the beginning of the crop year, based on world prices, and sets
the final price producers will receive at the end of the crop year.
Data
and Mapping Notes provides information regarding the 1996 Census
data presented in the maps and references to mapping techniques
used.
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