The study reviewed the trends in global demand for Canadian wheat to examine potential future shifts in consumption and establish how the Canadian wheat industry can better serve its customers.
Global growth in demand
In most regions per capita consumption of durum and common wheat is stagnant with consumption growth driven by population growth. However, because consumption has grown most rapidly in regions which are less well suited to the production of wheat, the trade in wheat has increased slightly more rapidly than production.
For durum wheat, the growth is concentrated almost entirely in North Africa. For common wheat, growth in imports has been particularly impressive in Africa, the Middle East and South East Asia. Taken together, these three regions now account for over half of global imports. Unsurprisingly, these are also the regions with the fastest population growth.
This shifting balance of demand is a concern for Canada, as these are not the markets in which Canadian wheat is currently competitive. By contrast the markets in which Canada is particularly competitive, principally North America and East Asia, are stagnant.
Wheat quality factors
Among all the attributes of wheat, the most important is its protein content and quality. It is the extensibility and elasticity of the gluten in wheat that both sets it apart from other grains and is the single most distinguishing feature in comparing individual classes of wheat. Higher protein wheat is predominantly used for high volume breads and alkaline noodles. As the protein content and quality of the wheat classes decreases they becomes better suited to medium volume breads, non-alkaline noodles, flat bread and finally cakes, biscuits and other confectionary products.
In most cases different classes of wheat from different countries are blended together by millers to achieve a consistent flour profile, at minimal cost, which meets the specific characteristics required by local bakers. Most end users therefore are not usually aware of the origin of the wheat used to produce their flour and the miller is the main customer for wheat.
From a miller’s perspective, outside of the protein content and quality, the test weight, consistency between shipments and cleanliness of the wheat are the defining quality factors. Millers did not anticipate any changes to these requirements, due to shifts in milling or processing technologies.
Characteristics of Canadian wheat
Canadian wheat exports are concentrated in one high protein class of wheat: Canada Western Red Spring (CWRS) accounts for over three quarters of common wheat exports. CWRS possesses superior protein content and quality, consistency and cleanliness compared to wheat from rival origins. Canada is also the main source of high quality durum through exports of Canada Western Amber Durum (CWAD). A detailed grading system, varietal registration system and the assurances provided by the Canadian Grain Commission, who monitor outgoing shipments, ensures that the Canadian brand is highly regarded by millers. These characteristics of Canadian wheat are both a source of strength and weakness for Canada.
CWRS and CWAD are tailored towards the production of specific products in whose use their functional properties give them a competitive advantage. In the case of CWRS, it is used for high volume industrial bread production. In addition, to its protein content and quality, consistency and cleanliness, this use is due to the fact that CWRS has a better balance between gluten extensibility and strength compared to other classes of high protein wheat. In addition, in Japan low extraction CWRS is used in noodle production. CWAD is used in pasta and couscous production whose end-product quality depends greatly on its yellow colour, percent of hard vitreous kernels (HVK) and protein content and quality. Because CWRS and CWAD are very well suited to use in specific products in which they cannot be easily substituted, they can enter markets in which Canada faces a freight disadvantage. In order to preserve these markets, the first priority for Canadian wheat must be to maintain its quality and reputation.
However, because of the dominance of CWRS, Canadian wheat typically services a more limited range of products than its competitors. Most common wheat is used for a wide variety of different products which it makes it impossible to target wheat for narrowly defined segments. This makes stimulating demand in new markets more difficult for CWRS. By contrast, the US exports a full range of protein strength wheat and is therefore able to take advantage of growth in all markets.