WESTERN CANADA’S PASTA PROBLEM
Low demand, Italy restrictions frustrate durum wheat farmers
WINNIPEG On Gerrid Gust’s farm in Saskatchewan, favourable weather this year brought a bumper crop of high-protein durum wheat, the best in the past few years.
The grain used to make spaghetti isn’t fetching the usual premium price, though. It’s stuck in storage because of restrictions on pasta by Italy, the world’s top consumer, and popular diets that avoid carbohydrates.
“We’ve got lots of high-quality durum in the bins,” around 80,000 bushels, said Gust, 42. The 3,000 acres he plants in Davidson, Sask., may be idle next year if the market doesn’t improve.
“There’s no use trying to grow more of something the world doesn’t need,” he said.
Canada’s durum exports have tumbled 22 per cent in the season that started Aug. 1 after Italy implemented country-of-origin regulations on pasta, restricting Canadian wheat shipments.
Prices of the grain have also plunged to the lowest in at least three years because demand dropped as low-carbohydrate and gluten-free diets became the rage, said Neil Townsend, a senior analyst at FarmLink in Winnipeg.
“It’s a difficult spot for durum producers to be in,” said Cam Dahl, president of Winnipeg-based Cereals Canada. “We’re not seeing a lot of durum move.”
Some of Canada’s crops have suffered from adverse weather this season. A drought that scorched parts of the Prairies was followed later in the year by rain and snow that stalled harvests. Most of the nation’s durum was collected before the wet weather, Dahl said, and that leaves farmers with an estimated crop of 5.7 million tonnes, up 15 per cent from 2017.
Italy implemented new label rules for pasta sold domestically that identifies wheat from abroad, a move that effectively damped imports. Canada’s other export destinations, including the U.S., reaped their own ample harvest, eroding demand, Farmlink’s Townsend said.
Global durum output in 2018 may rise 1.3 per cent to 37.5 million tonnes amid gains in North America, according to data from Agriculture Canada. Canada has shipped 663,200 tonnes since Aug. 1, the start of the crop year, down from 855,400 tonnes a year earlier, Canadian Grain Commission figures show.
Durum prices have plunged 20 per cent this year to $212.35 a tonne, the lowest since at least 2015, according to data from Farmers Advanced Risk Management Co.
The slump may prompt farmers to swap acres for other wheat varieties in 2019, Townsend said. Barring a crop failure in other key growing areas, the “durum problem” will persist because the market is too small to absorb additional bushels, and “there’s nowhere for that durum to go,” he said.
“There’s no growing demand” for the grain, Townsend said.
“Particularly in North America and Europe, there is a lot more consciousness about eating ” less gluten, he said.
Growers are stuck with storing durum on farms in anticipation that sales may rebound, Levi Wood, president of the Western Canadian Wheat Growers, said in a phone interview. The main crop area for the grain includes swaths of pulse crops, and those prices have slumped as demand declined amid tariffs imposed by India, the world’s top consumer, Wood said.
Even spaghetti lovers won’t catch a break. While durum is the primary input cost for pasta manufacturers, cost increases in other areas, including transportation, warehousing and eggs, have wiped out any potential saving, Alexandra Smith Ozerkis, a spokeswoman for the Washington-based National Pasta Association, said in an email.
“It’s a little bit frustrating,” said Wood, who hasn’t sold much from the 3,000 acres of durum he harvested this year.
“If prices are where they are, I’m not going to grow as much durum as I did. I’m going to switch to spring wheat.”