Canada: Why is canola winning acres and not wheat?

By Allan Dawson

Wheat needs more research money to compete with crops like canola.

That’s the message organizers delivered at the first consultation meeting on two new proposed royalty options in Winnipeg Nov. 16.

“Cereals are necessary in crop rotations to prevent pest and disease pressures from emerging,” a government slide presentation said. “However, due to declining profitability relative to other crop types, acreage for wheat and barley has been declining in favour of other crops — e.g. canola.”

Only eight per cent of the money invested in Canadian cereal variety development is from private companies. The rest comes from tax dollars and farmer contributions.

In contrast private companies cover 90 per cent of the variety development costs for corn, soybeans and canola.

“Private sector activity in cereals research and variety development… has been minimal due to high rates of farm-saved seed,” the presentation said.

Why it matters: Lack of investment has long been blamed for falling wheat acreage but the productivity growth numbers don’t paint a picture of a failing crop.

When farmers save seed they are not paying royalties to breeders. Less money, means fewer new varieties are developed.

Most corn and canola is hybridized, forcing growers to buy new seed every time they plant and earning seed companies more money.

One farmer said a lack of private investment in wheat has resulted in poorer genetics making the crop less profitable for farmers to grow.

But several other farmers challenged that. One said wheat was one of the most profitable crops on his farm, accounting for a third of his seeded acreage.

That farmer also said he sows certified wheat seed every year, paying a $3-a-bushel royalty.

“I don’t mind paying that because of the results I’ve seen on my farm,” he said. “It has driven my profitability.

“I’m willing to pay to play.

“If you love growing wheat like I do… what can it hurt sitting at a table and making a deal (with seed companies)… and saying I am going to get a return, you’re going to get a return. Let’s just make sure we’re both in check.”

Boissevain farmer Mitch Janssens said average canola yields on his farm over the last 20 years jumped 64 per cent, but the percentage increase has been even higher for wheat.

That fits with crop insurance yield data from the Manitoba Agricultural Services Corporation.

Over the most recent 10 years, 2017 to 2008, spring wheat yields for varieties in the top milling quality Canada Western Red Spring class averaged 51.3 bushels an acre, up 28.6 per cent from the 2007-1998 average of 39.9.

During the same time periods canola averaged 37.8 and 30.2 bushels an acre, respectively, for a 25.2 per cent average yield increase.

Statistically both crops have seen yields increase by similar percentages.

Some of it is believed to have come from improved agronomy.

During those two 10-year periods wheat plantings in Manitoba declined 7.5 per cent, while canola jumped 39.6 per cent.

Stonewall farmer Bill Matheson suggested canola is more profitable because there’s more demand for it than wheat.

Garth Patterson, executive director of the Western Grains Research Foundation, made the same point during a panel discussion on attracting more investment to wheat Nov. 23, 2016 during the 3rd Canadian Wheat Symposium in Ottawa.

“The markets aren’t treating wheat as favourably as some of the other crops,” he said, alluding to the impact of supply and demand.

He said a Food and Agriculture Organization (FAO) report on demand for commodities such as corn, vegetable oil and sugar are driven by a growing world population and poor people earning better incomes, but wheat demand is driven only by population growth.

Between 2002 and 2004 world food prices were up an average of 73 per cent. Meat (much of it produced by feeding corn and soybean meal) went up 63 per cent, while vegetable oil and sugar jumped 68 and 215 per cent, respectively. Cereal prices, up 43 per cent, were well below the average, Patterson noted.

Average annual world corn consumption was up three per cent the last five years, but wheat consumption rose 1.8 per cent a year, International Grains Council figures showed. It projected in the next five years corn consumption will see an average increase of 1.8 per cent a year — almost double wheat’s expected one per cent annual rise.

“It makes sense because as people upgrade their diets they usually lower consumption of cereals for the other foods,” Patterson said in an interview Dec. 8, 2016. “The point I was making was, we shouldn’t expect high growth rates in cereal consumption.”

Farmers respond to market signals, Patterson said. They plant what they think will make them the most profit.

But that doesn’t mean investing in wheat innovation is a waste. Increasing wheat productivity through improved varieties and agronomic practices is what farmers need to make growing the crop more profitable, Patterson said.

Canadian Seed Trade Association president Todd Hyra made the same point in response to Matheson’s comments.

Canadian wheat yields have been rising slightly faster than the world average, Agriculture and Agri-Food winter wheat breeder Rob Graf said during that panel discussion two years ago. Between 1991 and 2012 they rose an average of 0.7 per cent a year, even though wheat hasn’t been genetically modified to resist herbicides or insect pests.

In 2016, 95 per cent of the Canada Western Red Spring wheat grown in the West were public varieties.

“From the standpoint of… yield increases, largely from the public sector, I would say we have done a really good job,” Graf said.

On-farm increases were double that due to improved agronomy.

“Long-term, stable, well-funded programs have been an effective strategy… (due to) WGRF (Western Grain Research Foundation) funding… ” Graf added.

Most of the foundation’s money came from farmers through provincial wheat checkoffs.

There are the equivalent of 11 publicly funded wheat breeders in Canada and four with private companies — one breeder for about every two million acres of wheat, Graf said.

“So I would say there is ample room for the private sector,” he added.

“My question would be… how long patience lasts in the private sector if there is no product?

Graf bred wheat for Saskatchewan Wheat Pool until it pulled out after several years.

A Bayer Crop Science official said at that same meeting five years ago Bayer decided to invest $1.9 billion into worldwide wheat over 10 years.