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The Americans Are Giving Us Advice On Wheat Yields?

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Last month, U.S. Wheat Associates vice-president Vince Peterson told the annual meeting of the Canada Grains Council in Winnipeg that genetically modified wheat is inevitable. The theory is that higher yields are needed for a hungry world, and to make wheat competitive with corn and soybeans. USWA wants all exporters to agree to simultaneous introduction of GM wheat so that none will be able to take advantage by offering non-GM.

GM wheat is one of those hot-button topics in which opinions become so polarized that attention is drawn from the real issues.

For instance, how the heck do the Americans get off telling anybody how to improve wheat yields? The U.S. does many things better than anyone else, but growing wheat is not one of them.

The U.S. four-year average yield of all wheat from 2007 to 2010 was 44 bushels per acre, not exactly coffee shop bragging material. Western Canada’s four-year average was 38 bushels, and most of that is spring wheat grown in moisture-limited regions of the Prairies.

Consider that 70 per cent of the U.S. crop is winter wheat with an inherent 30 per cent yield advantage over spring wheat, and it’s mostly grown in the warm, moist and long-season southern Plains. Those are conditions similar to the European Union, where the average yield is 79 bushels for all 27 countries, including new entrants. French wheat yields are more like 110 bushels per acre. Ukraine matches the U.S. average of 44 bushels, and Uzbekistan beats it handily with 68.

It seems U.S. wheat growers have some agronomic problems (continuous wheat, for example) which they might try fixing before GM varieties come along.

Export gets what’s left

Nor are their problems limited to agronomy. The U.S. has some serious export-marketing challenges.

The U.S. has a massive commercial storage system, mainly funded by Uncle Sam to store surplus grain during the 1970s and 1980s. Domestic millers, who use more than half the crop and control most of the elevators, can pick through those stocks and select the best for themselves. The residual goes to export. There’s no wheat board allocating quality equitably among customers.

Despite all that storage, the U.S. is not particularly efficient at segregating by quality. A few years ago, state wheat commissions funded a study into whether it would be possible for elevators to segregate wheat by class. Not grade,class.

Poor quality control has meant that the U.S. has always been out-hustled for the top end of the market by Canada and Australia. Now it’s being out-hustled for the bottom end by former customers Russia, Ukraine and Kazakhstan.

This doesn’t look good on USWA. While it’s well funded – $17 million a year from government grants and producer checkoffs – it’s never sold a bushel of wheat. Its representatives can travel the world and promote U.S. wheat, but they can’t sell it. That’s left to the Glencores and Cargills of the world, who have no particular allegiance to U.S. wheat – they sell everybody’s.

Desperate, or smart?

With U.S. market share headed further into the tank and the government looking to save money and cut the deficit, USWA may have trouble defending its existence. So it’s either desperate or smart. For the desperate explanation, consider this excerpt from a recent USDA publication about the growth in Russian wheat production.

“[T]he U.S. share of world wheat exports could drop from an average of 24 per cent in 2001-09 to an estimated 16 per cent by 2019, with the annual volume of U.S. wheat exports declining from 27.5 mmt during the 2000s to 24.5 mmt in 2019. The European Union, Canada, and Argentina also will lose shares of world wheat exports, while Australia will likely maintain its share.”

Is the solution to this GM varieties that will providemorewheat that the U.S. can’t sell? GM technology would also be available to all those U.S. competitors, who (see above) seem to be better at adopting the latest agronomic techniques.

If we assume USWA is smart, then it sees the writing on the wall and wants to ensure that U.S. market share won’t be even further eroded by anyone claiming a quality advantage. Hence its visits to the Western Canadian Wheat Growers and the Grain Growers of Canada, knowing they are longtime allies against the Canadian Wheat Board. They’ve signed on to USWA’s “simultaneous introduction” idea.

Those organizations, and everyone else in the Canadian wheat business, need to step back from distracting side issues such as GM and the CWB and take a look at the big picture. The USWA vision is based on a future of exploding wheat demand, and customers desperate to buy from anywhere, GM or otherwise.

That’s not a vision. It’s wishful thinking from a failed organization representing a country that is not particularly good at growingorsellingwheat. TheUSDA ’s projection of declining market share, including for Canada, is more likely correct. What does that mean for the Canadian wheat industry? It needs to have that discussion.

One thing is for sure. More production, GM or otherwise, is not the solution.

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“[T]heU.S.shareof worldwheatexports coulddropfroman averageof24percentin 2001-09toanestimated 16percentby2019.”

USDA

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