Alberta wheat growers are worried Western Canada’s revamped wheat class system could result in lower prices for farmers growing certain varieties.
Their concerns were raised at the Prairie Grain Development Committee’s (PGDC) annual meeting here Feb. 24.
Two popular wheats in Alberta — Harvest, a Canada Western Red Spring (CWRS) wheat and AC Formost, in the Canada Prairie Spring Red (CPSR) class — will move to the new Canada Northern Harvest Red (CNHR) milling class Aug. 1, 2018.
(I)f they (farmers) are still growing AC Formost in 2018 and it’s in the Canada Northern Hard Red class there is really an excellent chance that it will be discounted,” Tom Steve, general manager of the Alberta Wheat Commission told reporters attending the meeting.
Meanwhile, exporters say they can’t get enough CPSR to meet demand, he added.
“If farmers haven’t made the switch over to the newer (CPSR) varieties, we will have a further shortage of CPS red for the marketplace or we’ll have a discounted price or both.”
In 2015, AC Formost, at 364,666 acres, accounted for a little over 50 per cent of Alberta’s total CPSR acres, according to Alberta crop insurance figures.
Harvest, which accounted for 12 per cent of Alberta’s 3.8 million CWRS acres in 2015, will also likely be discounted when moved, Alberta Wheat Commission director Henry Vos said.
The changes to the CWRS and CPSR classes were sparked by customer complaints that CWRS gluten strength had fallen, said David Hatcher, the Canadian Grain Commission’s (CGC) program manager for Asian Products and Wheat Enzymes.
To address the complaints, quality standards for CWRS, Canada’s premier milling wheat class, are being tightened. That means 25 weaker gluten strength CWRS wheats, including Harvest, will move to the CNHR class Aug. 1, 2018.
Four lower milling quality CPSR wheats, including AC Formost, will move to the CNHR class at the same time.
Steve questions whether moving Harvest and 24 other CWRS wheats is necessary, noting their low gluten strength could be due to wetter growing conditions rather than poor genetics. He added those wheats were originally deemed to meet CWRS quality standards.
But in an interview, Hatcher said gluten strength requirements are being raised to meet customer concerns; the wheats being moved out don’t meet the new CWRS standard.
“We’ve heard repeatedly from our international and domestic customers that everybody likes this concept of improving the consistency,” he said. “It’s not that CWRS had any problems with quality. It is very happy with the quality. It’s the consistency and we are tightening up the consistency package and that will make them happier.”
The CGC delayed moving the varieties until 2018 to give farmers and the grain industry time to adjust, Hatcher said.
Steve said he doesn’t know why the CPSR quality standards are being tightened when customers haven’t complained — a point backed up by John Peterson, Richardson International’s assistant vice-president of wheat marketing and hedging.
“I actually had this conversation with our colleagues about two weeks ago,” Peterson told the meeting. “We said we’re not sure where the impetus to remove Formost came from because we had not any comments from our customers on CPS quality.”
Hatcher said the grain industry said it wanted to make CPSR a better milling wheat class.
“Water absorption is one of the key aspects,” he said.
AC Formost is popular with farmers because it yields well, Hatcher added.
“The dilemma is making sure that class has the package for the customer.”
During his speech, Peterson endorsed the CGC’s plan to tighten CWRS standards.
“As a company we are very supportive of what is happening to improve the varieties because what millers want, like David (Hatcher) said earlier… consistency,” Peterson said. “And without that consistency from my perspective merchandising and exporting wheat becomes far more challenging.
“In terms of cleansing the CWRS class… making sure that it’s consistent — I think that’s a very good initiative and I think we need to strive so that the CWRS class maintains its high-class, prestigious standard.”
More market research needed
Although Steve expects CNHR will sell for less than CWRS and CPSR, no one will know until sales are made. That’s why there should have been more market research before the changes, he said.
The new CNHR class will have good milling quality and water absorption, but lower gluten than CWRS and CPSR and a wide span of protein, Hatcher said.
The Prairie Recommending Committee for Wheat, Rye and Triticale’s quality team agreed on the quality standards for the CNHR class here last week. Among other things it agreed Carberry will be the check for the top end of gluten strength. The CGC will fine tune the standards and announce them before the start of the new crop year Aug. 1, Hatcher said.
CNHR now includes three high-yielding American Dark Northern Spring milling wheats — Faller, Prosper and Elgin ND.
CNHR was created to allow farmers to grow high-yielding wheats, while not undermining the quality of the CWRS class, Hatcher said.
Those wheats at times sell for almost as much as CWRS varieties, especially when supplies of high-protein wheat are plentiful. But the class could change when the rejected CWRS and CPSR wheats are added, Steve noted.
However, in an open market, farmers can negotiate prices with buyers based on specifications making class designation less relevant.
“There could be potential large markets (for CNHR) in places now taking Black Sea wheats or are looking for low-cost wheats,” Hatcher said. “West Africa is a potential area where people are looking for all the extras that Canadian wheat brings to them. They may not be able to afford a CWRS but this works in their budget. I think there is the potential for a large number of markets.”
Wheats moving to Canada Northern Hard Red class Aug. 1, 2018
The following varieties will be moved from the CWRS and CPSR classes to the CNHR class Aug. 1, 2018.
CWRS: AC Abbey, AC Cora, AC Eatonia, AC Majestic, AC Michael, AC Minto, Alvena, Alikat, CDC Makwa, CDC Osler, Columbus, Conway, Harvest, Kane, Katepwa, Leader, Lillian, McKenzie, Neepawa, Park, Pasqua, Pembina, Thatcher, Unity and 5603HR.
CPSR: AC Formost, AC Taber, Conquer and Oslo.