Major Market Initiatives

RE: Market Alignment of Canadian Wheat Grading Guides

Jim Smolik
Acting Chief Commissioner
Canadian Grain Commission
600-303 Main Street
Winnipeg, Manitoba R3C 3G8

November 14, 2016

RE: Market Alignment of Canadian Wheat Grading Guides

The Alberta Wheat Commission (AWC) advocates for free market access to maximize the long-term profitability for wheat farmers in Alberta. AWC believes aligning Canadian wheat grading guides with market demands is necessary to ensure Alberta’s farmers receive fair market value for the quality of wheat they produce.

In international markets Canadian wheat is a brand name and is known around the world for consistency between shipments, cleanliness, gluten strength and functionality. The Canadian Grain Commission (CGC) has been an integral component in maintaining the quality standards that enable the Canadian wheat brand today.

In recent years, the Canadian wheat industry has witnessed major investments in grain handling infrastructure, wheat breeding and on-farm technology to capture value along the supply chain. These investments are market-driven and a result of industry alignment with the needs of international customers. During this time, we have also observed an evolution in the way wheat is marketed to Canada’s customers.

When comparing quality in the international marketplace, importers review specifications that are universally measured. These quality specifications allow buyers to assess wheat quality that is purchased from multiple countries. Since Canadian farmers do not sell directly to international buyers, they rely on the systems in place that ensure quality in Canada aligns with the quality needs of our customers. In a year of good quality, current grading guides are an effective method to grade wheat, but in years of variable quality our grading system downgrades farmers’ wheat that is often considered good quality around the world.

It has become apparent that the three grading factors below have caused significant discounts to farmers where good quality wheat is being downgraded or classified feed even though it is acceptable for milling markets. When wheat is being downgraded to feed and then sold for human consumption, questions are raised about the effectiveness of our grading system.

  • Sprouted Kernels
  • Fusarium Damaged Kernels (FDK)
  • Mildew

Falling Number (FN)
Many farmers across Alberta and the prairies have put forward complaints and questioned the effectiveness of our current grading system this year.  Of most recent note, we have been advised of company bids to purchase feed wheat with a minimum FN and discounts if the FN falls below that level. This indicates that feed wheat is being purchased to be later sold into the milling market even though under a CGC grade, it is feed wheat quality. 

Sprout Damage can be assessed both visually and by a FN test. AWC is aware of many instances where farmers have been downgraded for sprout damage and yet received FN results that indicate good quality and thus better value.

In the past, FN tests were considered to be slow and expensive but it has become apparent that many companies now test for FN at local facilities to ensure the wheat they are exporting is acceptable in foreign markets. Therefore, AWC believes the time has come for  Canada to include FN within the Canadian grading system and move away from the visual assessment of sprout damage as a key factor to assess wheat quality.  

FDK
With similar considerations to FN, Fusarium Head Blight (FHB) is assessed by CGC guides on a visual basis. However, the visual inspection may not represent Deoxynivalenol (DON), commonly referred to as vomitoxin levels in wheat. Internationally, DON is measured in parts per million (ppm) as an assessment for wheat quality. This illustrates another shortcoming in the Canadian system. Visual inspection of FDK allows grain buyers to purchase downgraded wheat even though DON levels may indicate good quality wheat.

AWC recommends that the CGC move towards DON testing for Fusarium infected wheat but understands that this test is less readily available. It is our recommendation that both methods of grading be accepted measures for quality assessment in Western Canada. For example, if a sample is downgraded by visual inspection, the CGC will recognize a vomitoxin test as a quality factor to quantify levels of DON in wheat since the relationship between DON and FHB can vary.

Mildew
AWC approves of recent changes to Mildew guides for a market based approach.  Concerns remain over whether or not buyers and wheat grading professionals have changed their approach to grading. We understand that farmers can challenge their grade but doing so will often result in a damaged commercial relationship with a buyer. We ask that the CGC ensures buyers have changed their grading methodology to replicate the new mildew guides. Although these changes should have an immediate positive impact to growers, AWC strongly recommends that the CGC evaluate and align Canada’s mildew guides with United States (US) standards. 

AWC advocates for grade and price transparency within the local marketplace. Aligning Canadian wheat grading standards to international specifications is a must to allow wheat producers to remain profitable. We encourage the CGC to move quickly in finding solutions to the aforementioned downgrading factors as farmers’ wheat quality is currently being undervalued and causing financial harm in an already stressful harvest environment.

Sincerely,

Kevin Auch
Chairman, Alberta Wheat Commission


CC:
Murdoch MacKay, Commissioner, Canadian Grain Commission
Lawrence MacAulay, Minister of Agriculture and Agri-Food
Tom Steve, General Manager, Alberta Wheat Commission
Kevin Bender, Vice Chairman, Alberta Wheat Commission