Canada has a well-established agriculture and agri-food industry with long-standing success in the global marketplace. Canadian farms provide a diverse range of crops for domestic and international markets. Wheat is Canada’s largest crop and the single biggest export earner of all its agricultural products. Canada is the world’s largest supplier of pulses, with Canadian pulses being exported to 130 countries around the world.
Canada is the largest country in the western hemisphere and second largest country in the world in area after Russia, occupying roughly two-fifths of the continent of North America. Despite Canada’s great size, it is one of the world’s most sparsely populated countries. Canada serves as a global model for stability, sustainable prosperity, and economic inclusion. It is one of the world’s wealthiest nations and has one of the world’s highest qualities of life.
Canada has a thriving free-market economy, with businesses ranging from small owner-managed enterprises to multinational corporations. Canada’s economic development was historically based on the export of agricultural staples, especially grain, and on the production and export of natural resource products, such as minerals, oil and gas, and forest products. However, secondary industry has evolved to the stage where Canada ranks as one of the top manufacturing nations of the world.
WORLD-CLASS GRAIN PRODUCTION
Canada has a well-established agriculture and agri-food industry with long-standing success in the global marketplace. Canada prides itself on its systems and policies that ensure world-class production standards. Canada’s grains industry is composed primarily of wheat, canola, flax, soybeans, pulses, barley, corn and oats. It is a global supplier in the manufacturing of food products for consumer consumption, livestock feed, and in the production of bio-fuels.
The industry’s best practices and well-known reputation for innovative products and high-quality food have consistently positioned it as a cornerstone of the country’s economy and a driving force in international trade. Canada’s agriculture and food system is a leading producer of high-quality, safe products and a key driver of the country’s economic growth. Canadian farms provide a diverse range of crops for domestic and international markets.
Wheat is Canada’s largest crop and the single biggest export earner of all its agricultural products. It is one of the top five wheat exporters on the planet, and the world’s largest producer of high-protein milling wheat. Canada is also leading exporter of malting barley. In 2017, Canada produced more than 27 million tons of wheat (including durum), over seven million tons of barley and nearly four million tons of oats.
Canada’s climate is ideally suited to production of cereal grains across vast regions of the country in 9 of Canada’s 13 provinces and territories. Wheat is Canada’s most important cereal grain crop, oats are also produced in large quantities in both eastern and western Canada. Corn is the most widely grown cereal grain crop in eastern Canadian provinces. According to Statistics Canada, Canada’s major grain crops are wheat, canola, corn, barley, soybeans, lentils, oats, flaxseed, mustard seed, canary seed, chickpeas, sunflower seed and smaller crops such as quinoa, peas and various pulses.
OUTLOOK FOR WHEAT AND OTHER FIELD CROPS
According to Ministry of Agriculture and Agri-Food Canada (AAFC), total crop exports for 2018-2019 are expected to be slightly more-than 46% of total supply and reach about 51.2 million tons (Mt), of which about 90% are grains and oilseeds (G&O) and 10% are pulses and special crops (P&SC). AAFC expects 2018/19 Canadian total wheat exports (including durum) to reach 22.9 Mt, up 5 percent from last year. Compared to 2017-2018, exports of G&O are expected to be 1% higher due to higher exports of wheat, oats and soybeans. On the other hand, exports of P&SC are forecast to be marginally lower due to lower exports of dry peas. Total domestic use is forecast at about 44.7 Mt, slightly less-than 40% of total supply, of which 97% are G&O and 3% are P&SC. Carry-out stocks are forecast to reach 15.3 Mt, about 14% of total supply, which is similar to last year but above the 10-year average.
For 2019-2020, expected prices, input costs, delivery opportunities and moisture conditions are expected to play a crucial role in determining actual seeding decisions in the spring. However, based on current market conditions and historical trends, the area seeded to field crops in Canada is currently forecast by AAFC to increase by 1% compared to the 2018-2019 crop year, mostly due to lower area allocated to summerfallow. The area seeded to G&O is expected to increase by only 2% while the area seeded to P&SC is forecast to decrease by 6%. Averaged over all crops, yields are forecast to increase compared to 2018-2019 because average yields were reduced last year by excessive moisture conditions in some areas. The production of G&O is forecast to increase by 4% to 89.0 Mt while the output of P&SC is expected to decrease by 2% to 6.5 Mt. Total field crop production is expected to increase by 3% to 95.6 Mt. Despite higher exports and domestic use, carry-out stocks are expected to increase by 8% due to higher supply. Grain prices in Canada will continue to be supported by the low value of the Canadian dollar.
For 2018-2019, total domestic use is forecast to increase on higher feed and industrial use. Exports are forecast to remain strong, although slightly lower than last year, due to strong international demand. Carry-out stocks are forecast to decrease by 28% to 0.9 million tonnes (Mt) that will be a record low level, according to AAFC.
For 2018-2019, imports are expected to increase significantly due to lower corn supply in Eastern Canada and tight barley supply in Western Canada. Total domestic use is forecast to increase to a record of 14.5 Mt due to higher feed, waste and dockage, partly related to the high vomitoxin quality of the crop and trend increases in ethanol production and industrial use. Exports are forecast to decrease slightly due to higher international competition. Carry-out stocks are forecast to decrease by 17% to 2.0 Mt, which is close to the previous five-year average. The 2018-2019 corn price at Chatham is forecast to average $180/t, up 3% from last year, due to higher US corn prices, lower domestic supplies of quality corn and the weak Canadian dollar.
Canada is the world’s largest supplier of pulses, with Canadian pulses being exported to 130 countries around the world. Canada’s land base is well-suited for growing peas, lentils, beans, chickpeas and faba beans. The majority of Canadian pulses are grown in the prairie provinces of Alberta, Saskatchewan and Manitoba, with bean production concentrated in southern Ontario and Quebec.
Pulse production in Canada has grown rapidly in the past decade. Canadian pulse farmers seed an average of 3.5 million hectares of pulses per year. In 2016, Canadian pulse production hit a record high of 8.4 million tonnes. More than 85% of Canada’s pulse production is exported to feed the world.
FOOD PROCESSING INDUSTRY
The food processing industry is one of the largest manufacturing industries in Canada, providing employment for over a quarter of a million Canadians and producing shipments worth $112.6 billion in 2017. It accounts for 17% of total manufacturing shipments and 2% of the national Gross Domestic Product (GDP). The food processing industry is an integral part of the Canadian food supply chain as it purchases about 42% of the Canadian agricultural production and sells over 70% of its output to Canadian retailers and foodservice providers.
The demand for organic, healthy, and natural products market in Canada is growing. There are excellent prospects for products with organic or natural ingredients, consumer-ready processed foods and beverages, and organic, fresh fruits and vegetables. Canadian health-conscious consumer are continuously looking for products that are: all natural; no artificial colors; low sugar/sugar free; no artificial flavors; and low fat/fat free.
CANADA’S GRAIN MILLING INDUSTRY
Flour mills were operating in Canada more than 100 years earlier. The grandfather of all Canadian milling wheats was introduced to Canada in 1851. Some of Canada’s largest modern grain mills are operating at or near locations where mills have operated for more than 100 years. According to the Canadian National Millers Association (CNMA), Canada has approximately 55 commercial wheat and oat mills situated from Pacific to Atlantic coasts.
Commercial scale wheat and oat mills operate in 8 of Canada’s 13 provinces and territories. Total milling capacity is shared about equally between eastern and western Canada. The majority of wheat milling capacity is in the east in close proximity to larger urban centres. The majority of oat milling capacity is situated in the Prairie provinces. Canadian mills grind over 3.5 million tons of wheat, oats and barley each year.
Canadian mills export wheat flour, semolina and other milled grain products to over 30 countries. Canadian milling companies have free trade access to all of Canada, the United States and Mexico under the terms of the North American Free Trade Agreement. Although the United States is Canada’s largest export market for milled grain products, over 30 countries import wheat flour and other milled grain products from Canada each year. Capital investment in Canadian grain milling facilities is approximately $1.5 billion. 20% of Canada’s grain mills are less than 15 years old. Canadian wheat mills process approximately 3.1 million tons of Canadian wheat annually. The majority of eastern Canadian wheat processed is grown in Ontario, but milling wheat is also produced in Quebec and Atlantic provinces.
Total flour and other milled wheat products destined for human consumption are about 2.4 million tons annually. The balance of production is sold as “millfeeds” (by-product) destined for manufacturing of animal feeds and pet foods. Small quantities of wheat flour are used for non-food industrial further processing.
Canadian oat mills process approximately 600,000 tons of milling quality oats annually. This Canadian sub-sector 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.
The Canadian cereal grain milling industry employs approximately 1,400 production workers and an additional 500 persons in other capacities. The milling industry has undergone extensive modernization and significant capacity expansion between the mid1990s and 2018. The capacity expansion has been market-driven, closely tracking population growth. Current replacement cost of all wheat and oat milling establishments is estimated to be between $1.5 billion and $2.0 billion.
Agriculture and Agri-Food Canada
Canadian National Millers Association (CNMA)