Put just 33 million people in the second largest land area of any country in the world and it’s hardly surprising that you end up with one of the world’s largest grain exporters. Canada can produce far more grain than it’s ever likely to consume.

According to the International Grains Council (IGC), total Canadian grain production will be 47.3 million tonnes in 2010-11, compared with 48.9 million in 2009-10. Of that total, it will export 20.7 million tonnes in 2010-11, down from 21 million.

Canadian wheat production will be 24 million tonnes, down from 26.5 million. The corn (maize) crop will be 10.5 million tonnes, up from 9.6 million. Wheat exports in 2010-11 will be 17.1 million tonnes, down from 17.5 million. Corn exports will be 200,000 tonnes, down from 500,000.

Barley production in 2010 is put at 9 million tonnes, down from 9.5 million. Barley exports are slated to be an unchanged 1.5 million tonnes. Production of oats is predicted to be 3.4 million tonnes, up from 2.8 million, with exports of oats at 1.85 million tonnes, up from 1.75 million.

GOVERNMENT MARKETING AGENCIES

Perhaps the most unusual aspect of Canada’s grain industry is the existence of two government mandated grain marketing agencies, the Canadian Wheat Board, which is the only marketer of wheat grown in western Canada, and the Ontario Wheat Producers Marketing Board, which has relinquished its status as a single desk marketing monopoly in the Province of Ontario and amalgamated in January with the Ontario Corn Producers Association and the Ontario Soybean Growers to establish Grain Farmers of Ontario (GFO).

"The Canadian Wheat Board represents market stability for 75,000 farmers in the Canadian prairies," its spokesman, John Lyons, told World Grain. "Last year we did $8 billion in sales." That makes CWB, as he explained, one of the biggest grain marketing organizations in the world. "We’re certainly among the largest," he said. "Most years we’d be marketing 22 to 24 million tonnes." That means exporting to, and competing with, the whole world. "The U.S. can be a competitor," said Lyons. "Australia can be a big competitor."

The CWB even finds itself coming up against competition from Europe and the former-Soviet Union countries.

The CWB has gone through a decade of change, starting in 1999 when farmers first took over its board of directors. On May 14 of this year, the Canadian Agriculture and Agri-Food Minister announced that the Government of Canada had introduced the Canadian Wheat Board Payments and Election Reform Act to strengthen the farmers’ voice within the CWB and streamline the process required to deliver payments to producers.

Under this legislation, board members have to be elected by farmers who produce at least 40 tonnes of wheat, or who are entitled to 40 tonnes under a crop-share arrangement.

Grain Farmers of Ontario, formed only last year, represents Ontario’s 28,000 growers of corn, soybeans and wheat. GFO economist Seamus Hoban explained the organization’s position in the market. "We tend to have niche opportunities," he said "A lot of the baking and processing happens in Ontario."

The area also profited from its proximity to some of the big U.S. markets. "We send a lot of wheat across the border," he said. GFO has looked further afield, capitalizing, for example, on a market for identity-preserved soybeans, especially in Japan. It’s not just about non-GM. "We are getting more toward stacked traits," he said. "We obviously grow those, and we found some good niche markets."

Ever tougher competition in bulk markets means that Ontario has to compete on its quality. "We have an oversupply usually, but it’s getting difficult to send it on to bulk export markets," he said. "There’s more Russian competition. We have generally been able to compete on quality. The Russians are getting better."

GFO is lobbying for a risk management plan for farmers which would help them deal with volatile markets, although it would have to comply with international trade obligations.

TOO LITTLE ETHANOL PRODUCTION

According to the International Grains Council (IGC), there are currently 15 operating ethanol plants in Canada with a combined capacity of around 1.4 billion liters, including 1 billion using corn and 400 million using wheat. "This would not be sufficient to comply with proposed federal regulations, due to come into force in September 2010, that require 5% bioethanol content in gasoline, equivalent to about 2 billion liters," the IGC said in its Grain Market Report in May. "However, new maize-based plants and expansions are set to increase capacity to around this level by the end of 2011."

The IGC also pointed out that a 2% requirement for renewable fuel in diesel is not going to be enforced until the feasibility of using biodiesel in Canada’s cold winters has been demonstrated. The IGC predicts use of grain for ethanol in 2010-11 at 2.7 million tonnes, including 2.1 million tonnes of maize and 600,000 tonnes of wheat.

STATE-OF-THE-ART MILLS

According to the Canadian National Millers Association, Canada has 55 commercial wheat and oat mills in eight of its 13 provinces and territories from Pacific to Atlantic, using state-of-the-art milling technology. It puts capital investment in Canadian grain milling facilities at about $1.5 billion, with 20% of Canadian mills being less than 15 years old.

The majority of wheat milling capacity is close to the population centers of the east, while the majority of the oat milling capacity is close to the Prairie Provinces.

According to the association, the industry processes around 3.1 million tonnes of wheat a year, producing about 2.4 million tonnes of flour and other milled products for human consumption. The IGC expects Canada to export 250,000 tonnes of wheat flour in 2009-10.

The North American Free Trade Agreement gives Canada’s millers access to markets in the U.S., and the association notes that there is a steadily growing volume of two-way trade.

Canadian oat mills process approximately 600,000 tonnes of milling quality oats annually. According to the millers’ association, this part of the Canadian industry "relies heavily on the United States market and holds a disproportionate share of total North American oat milling capacity, having expanded considerably in the past 15 years."

According to the Canola Council of Canada, canola, bred from rapeseed, although the council insists the two are not the same, is often Canada’s most valuable crop with annual exports valued at over $3 billion.

"The canola we know today was developed in the early 1970s using traditional plant breeding techniques as a result of Canadian plant breeders’ efforts to remove the anti-nutritional components — erucic acid and glucosinolates — from rapeseed so that it would be absolutely safe for human and animal consumption," the council explains on its website. "The plant also produced seeds with a very low level of saturated fat — 7% or below."

"This new oilseed was christened ‘canola,’ and there is a strict internationally regulated definition of canola that differentiates it from rapeseed, based upon it having less than 2% erucic acid and less than 30 umoles glucosinolates," it says.

According to the U.S. Department of Agriculture, 2010-11 canola plantings in Canada come to 6.9 million tonnes, giving a crop forecast, assuming normal yields, of 11.9 million tonnes. Exports in 2009-10 are expected to total 7 million tonnes, but increased crush capacity, which will keep more canola in Canada, is likely to mean a fall to 6.6 million tonnes in 2010-11. The crush is forecast to rise from 4.5 million tonnes in 2009-10 to 5.2 million in 2010-11.

The Canola Council of Canada says that there are 13 canola processing plants in five provinces. As well as the oil, which has a growing but still small share of the U.S. market, more than 60% of the canola meal produced in Canada regularly goes to the U.S. In Japan, more than 50% of the vegetable oil consumed is produced from canola seed, the council says. Consumption in Mexico is increasing, while the industry is focusing on growing the market in China.