Organic Wheat Tough To Move, Says CWB Marketer

Canadian organic wheat farmers have effectively been shut out of the European market due to lower-priced competition from Kazakhstan.

After the meteoric rise of organic wheat to $30 per bushel in the spring of 2008 that ended in the global economic recession that began later that fall, food manufacturers started looking elsewhere for raw materials.

They discovered cheaper products from Kazakhstan, a central Asian nation with more arable land than Saskatchewan, and a similar climate that makes it possible to grow good, high-protein wheat.

After the collapse of the Soviet Union, much of its acres were left fallow for years, making them easy to certify for organic production, according to Donna Youngdahl, an organic wheat marketer for the Canadian Wheat Board.

Even though shipping infrastructure in the former Soviet republi c is poor, Canadian exporters are unable to compete on price in the important European market. That left Canadian organic growers trapped in the slumping North Amer ican market, and in some cases with up to two years of wheat still in their bins.

“I think that if you grow wheat and continue to have wheat in storage, you’ll want to continue to call your traditional buyers, but you might find that it’s hard to move wheat right now,” said Youngdahl, in a presentation at Ag Days.

She advised farmers to consider alternative specialty grains such as spelt in the short term.

European manufacturers are also buying more wheat from Poland, Hungary and Turkey, and using improved technologies to turn the lower-protein varieties into baking products.

“Also, the grow-local movement is everywhere, and providing additional incentives to choose local alternatives over the traditional favoured organic high-protein wheat,” she said.

The recession in North America has prompted manufacturers to balk at introducing new organic lines and consumers to curtail spending, causing retail organic sales to plummet, she said.

As a result, organic premiums over conventional are shrinking and in some cases lower than the price offered for conventional forward contracting by the CWB.

To make it worse, Canadian organic farmers increased plantings in 2009 to 40,000 in the wake of the high prices of 2008, setting the stage for a “perfect storm” of increased supply, more competition, reduced demand and lower prices.

“Many farmers still say they have two years of wheat in their bins,” said Youngdahl. “Is there a silver lining?”

Prices have since moved back up to levels seen in

2005, durum has been hitting $10 per bushel, and the USDA has reported a “comeback” in the organic retail sector of around eight per cent annual growth in that country’s $23-billion market, outstripping conventional food categories.

More grounds for optimism can be seen in the fact that mainstream retailers have begun offering organic products, and growing interest in local food and farmers’ markets, she added.

John Hollinger, an organic specialist with MAFRI, said that a “plug” has appeared in the system after years of strong growth, but that it likely will work its way through as the economy in the United States improves.

“It depends on the quality and the grade. If it’s No. 1 and it fulfills all the qualities for milling and baking for a certain customer, then it moves quickly. But if it’s not, then a farmer could sit on it for a while,” said Hollinger.

Recent conversations with organic growers have suggested that wheat is in the $10-$12 range for top quality, he added.

“It’s not great, but it’s still a premium over conventional.”

Wheat is a foundation crop for Prairie organic growers, but if markets look weak, some may seed more promising alternatives such as hemp, quinoa and spelt, he said. daniel. [email protected]

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Iwouldsaylooktootherspecialtycropslike speltintheshorttermandnotrelysoheavily onwheatbecausethereisanexcessofsupply.”

– donna youngdahl

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