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Filling a niche of our own

Our grain industry is evolving into a collection of small buyers, each looking for a specific product that will meet their specialized needs

We grow fall rye on our farm, which is not a common crop in our area. To make things even more interesting, we grow older varieties that are long-legged and prone to lodging and probably aren’t as high yielding as the newer semi-dwarf varieties.

Are we ill-informed? Stuck in our ways? Suckers for punishment? Hopefully not, but we do have a buyer with very specific crop and variety requirements. We export certified rye seed for cover crops in South Korea. The customer does not want “semi-dwarf” varieties, as they want as much vegetative growth as possible. There are very few Canadian rye varieties registered in Korea, and to meet their import requirements we have to supply one of the varieties already on an approved list.

Despite the fact that rye isn’t typically a high-grossing crop and we’re choosing varieties with agronomic challenges, this has been a profitable crop because we sell at a premium price into a market that is demanding that specific product.

Our rye business is just one example of farmers growing a specialised crop for a niche market. There are those who think that the Canadian grain industry should begin looking at the world as a collection of niche markets rather than a generic catch-all for our grain.

Getting premium prices

Greg Porozni farms at Mundare and is a director on the Alberta Wheat Commission (AWC) and the chairman of Cereals Canada, a new organization with representation from across the cereal grain supply chain. He believes farmers in Canada should work towards extracting premium prices from niche markets by providing highly specified products.

“Each customer might have different wants and needs and we need to grow exactly what they want and need.”

On one end this would mean trade missions and discussions with end users about their needs; the other end of this process is developing grain varieties to meet those needs. The Canadian International Grains Institute (Cigi) has worked with international customers for 40 years. Cigi staff travel abroad to promote the value of Canadian grains, oilseeds and pulses and they also invite food processors from around the world to their Winnipeg food lab where they can use their customers recipes to demonstrate the capabilities of Canadian grains for making foods like steamed buns, noodles and bread.

In late 2013, Cigi spearheaded several new crop trade missions around the world, with farmer directors from AWC joining the delegations. While Porozni didn’t travel with Cigi this year, he sees these missions as an opportunity to tell buyers about the specific quality characteristics of the current year’s crop and to gain information about the characteristics that are important to end-users.

“We need to determine each individual country needs and then talk to our [plant] breeders and ask, ‘Can this be done?’ and then get on it,” said Porozni. “Even if I have to sacrifice some yield, I’d rather grow what the buyer demands.”

Porozni’s words echo the sentiments I heard at some meetings I attended this winter. Terms like “market-driven variety development” are in vogue right now, especially in the post-single-desk era. Those who were none too sad to see the end of the Canadian Wheat Board monopoly days argue that all the CWB did was promote the development of high protein hard red spring varieties because that was the easiest class to market at a premium price.

Now some industry players are encouraging diversification in wheat variety development, a loosening of the registration process to streamline commercialization of varieties and perhaps even variety development targeted towards specific end users.

Meeting market needs

Talking with a plant breeder brings some nuance to the discussion. Dr. Robert Graf is a wheat breeder at Agriculture and Agri-Food Canada’s Lethbridge Research Centre. As he pointed out, variety development is a lengthy process that takes at least eight to 10 years from the time of making the cross to when a variety is put into the commercial farmers hands. A lot can happen during that time.

“We already have substantial product differentiation as represented by the various wheat classes. The difficulty with addressing specific niche markets is that they’re notoriously fickle,” said Graf. “They might be around for a number of years, and then disappear. Plant breeding takes time. Unless you can identify something that’s already in the pipeline, the time involved is prohibitive because the market will have found another supplier or the need may no longer exist.”

Graf pointed out that market signals have always guided plant breeders and while the conduit for transmitting those signals is evolving post-CWB, so far there hasn’t been a dramatic change in messaging.

“The market signals are really not any different than what they were before,” said Graf. “That tells us we’re on track.”

While Canadian plant breeding programs may not be able to develop varieties for every need, there is certainly opportunity for plant breeders to get feedback on the needs of world customers and search among their existing genetic lines for potential lines that meet those needs.

One example is Warburtons bakery in the U.K. which sources identity preserved varieties of CWRS wheat from Canadian farmers. As Graf explained, the company tests various lines during their development in Canada and chooses the ones that work best for its specific baking methodology.

In some crops, Prairie farmers are used to picking varieties based on requirements from end users. In the malt industry, for example, a list of recommended varieties guides producers’ choices. I asked Graf if he thought someday farmers would choose which wheat varieties to grow based on a list of recommended varieties for various export markets.

“The current class system and variety designations already acts as a recommending list,” said Graf. He pointed out that the Canadian Grain Commission’s variety designation lists for each class reflect the market signals that are received during the development and registration process; varieties that don’t meet the quality parameters of a given wheat class don’t make it through variety registration.

“People have to remember that not every line entered into the registration system is going to be recommended for registration. You might have a line that’s great from an agronomic standpoint but doesn’t have the appropriate end-use quality, so it’s cut. Canada relies on export markets and so our reputation as a supplier of consistent quality is vital.”

Gary Stanford, one of Porozni’s fellow AWC directors and the president of Grain Growers of Canada, returned from Asia late in 2013 touting the high quality of Canadian milling wheat as our main selling advantage.

“The one thing I heard in all eight countries I went to was that Canada has to keep its quality up,” said Stanford. “I know that a lot of the farmers here who say we don’t get paid for quality but we really do.”

Stanford said he talked to a miller in Jakata, Indonesia, who said he can get lower quality wheat delivered to his mill for $250 per metric tonne from India, which he blends with higher quality Canadian wheat that costs $350 per metric tonne.

“Part of that is freight,” Stanford said, “but you can see the difference in the price. If our grain was the same quality as India’s grain they would have no reason to buy Canadian grain.” He believes a strong registration system will maintain the highest quality export wheat.

There are many questions being asked about the Canadian wheat variety development system (not least of which is how to pay for the darn thing). Should we have such a strict variety registration process? Should we loosen the quality parameters associated with the various wheat classes? Should we focus on less premium classes than gold standard CWRS? I certainly don’t have all the answers.

I do think there is room in our system to look beyond what varieties yield the best or what are the easiest to grow and find some niche marketing opportunities. That being said, the fairly narrow quality tolerances in our main exporting classes of wheat protect both the farmer — by ensuring that there is a reliable demand from global buyers — and our customers — by ensuring that every load of CWRS, CPS or CWAD will function much like the one before it. But there may be room for a more “enlightened approach,” as Dr. Graf puts it, for commercializing a variety that perhaps doesn’t fit into any of the current classes, but still has market demand. He cautions, however, that starting breeding programs to address those needs must be done with a great deal of forethought.

This is a multi-faceted discussion that involves all levels of the value chain, from farmers to exporters to plant breeders. It’s worth paying attention to these higher-level policy discussions as they may directly impact your variety selection choices in the years and decades to come.

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Sarah Weigum

Sarah Weigum grows pedigreed seed and writes at Three Hills, Alta.

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