Though you d hardly know it, the Canadian grain industry is facing issues other than the Canadian Wheat Board. For example, just what are the long-term prospects for Prairie wheat and barley exports, wheat board or not?
That came to mind last week while reading Reuters reports on production and export activity out of the former Soviet Union. Last year s sharp reduction in production due to a severe drought captured a lot of attention, but less is being paid to the robust recovery this year. The International Grains Council estimates Russian wheat and coarse grain exports this year at 18.1 million tonnes versus just 4.3 last year. Ukraine is expected to ship 20.7 million tonnes (12.2) and Kazakhstan 7.3 million (5.9). For the three, that s a total of 46.1 million tonnes compared to Canada s 20.2 million estimated for this year.
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It wasn t so long ago that these countries were Canada s largest customers,not competitors, for wheat and barley.
There s more to come, at least based on a draft plan by the Russian agriculture ministry. Under the plan, yet to be approved by the full government, Russia, will aim to increase grain output to 125 million tonnes in 2020 from 85-90 million tonnes expected this year. The exportable surplus would rise to 41.5 million tonnes from 20-23 million expected in the current season.
The ministry plans to increase sown area to 50 million hectares from the current 44 million and average yields to 2.5 tonnes per hectare (37 bushels per acre) from 2.0 tonnes. It also plans to build new grain storage capacity and deep sea export terminals on the Azov, Black and Baltic seas and on Russia s Pacific coast.
The latter port area is of particular concern to Canada. Much of Russia s wheat production is hard red spring wheat, and Pacific ports put it much closer than ours to Japan, China and other current Asian customers for our wheat.
As one analyst pointed out, these are just targets. First of all, it is a big question if the desired financing can be found, Andre Sizov of SovEcon agricultural analysts, told Reuters. If he s right and they fall short, that s the good news.
And another issue is that even if these targets are reached, Russia is unlikely to find a market for all these commodities, as the competition is high, Sizov said.
That s the bad news. Despite the repeated exhortations for farmers to grow all they can to meet that surging demand which is always just around the corner, there s no evidence that world demand for wheat and coarse grains will grow at the same rate as the expected production increase in the former Soviet countries.
That Don t worry, the demand will be there mentality needs to be questioned. So does the notion that when the wheat board monopoly ends, private exporters will come up with innovative solutions for Canadian wheat and barley. Remember that the same exporters are also handling grain from other countries, and won t necessarily want to play favourites with any country s grain.
None of these issues even seem to be on the radar in Western Canada. If the wheat board is going to disappear, Prairie farmers need a forum where they can be discussed objectively.
CWB Not A Domestic Issue?
It seems that Australian Trade Minister Dr. Craig Emerson is a trifle selective in his application of of both principles and statistics.
In the press conference following last week s meeting of Cairns Group ministers in Saskatoon, Dr. Emerson was asked about his views on Canada s supply-management system. He declined to reply on the grounds that he was a guest in our country and didn t want to get involved in domestic issues.
Apparently the wheat board is not a domestic issue, judged by his comments to the press about the merits of deregulation, and this paragraph from Canadian the government communiqu:
Following a remarkably smooth transition to an open market, our economy and farming businesses, both large and small, have benefited from an open grain market& For example, in the very first year after deregulation of Australia s single desk, our grain farmers exported to more than double the number of markets.
For the record, from 2003 to 2006, Australian wheat production averaged 24.4 million tonnes. Due to successive droughts, it dropped to 10.2 million tonnes in 2006 and 13.5 million in 2007.
In 2008, the year the Australian wheat export system was deregulated, production recovered to 21.4 million tonnes. Not surprisingly, exports almost doubled the following year.
As for the number of markets, statistics published by the Australian Bureau of Agricultural and Resource Economics and Sciences indicate that Australian wheat was shipped to 19 countries in 2007-08 and 23 countries in 2008-09.
There may or may not be good reasons to change our wheat-marketing system in Canada, but let s hope that the proponents of change are wise enough not to repeat Dr. Emerson s statement as one of them. [email protected]
