The wheat fields on either side of the Montana-Canadian border don’t look any different, but buyers north of the line say U.S. grain is worth less, which bothers Outlook farmer Gordon Stoner.
In this extreme northeast corner of Montana, farmers grow durum wheat just as farmers do on the Canadian side of the border. The hardest of all wheat varieties, durum is used in pasta and couscous, as well as some heavy, artisan breads.
And durum usually fetches a good price, although trade winds with Canada are blowing against Stoner and his neighbors. Canadian officials are balking at giving top grades to wheat varieties not recognized in their country, essentially denying U.S. farmers a fair price.
“The problem going north right now is the Canadian varietal act. To get a grade, wheat in Canada must be an approved variety. If it’s not, it has to be graded as feed wheat,” Stoner said.
“Feed wheat,” the lowest of low-quality grades fit for cattle, pigs and sheep, is how Canadian officials rate Montana wheat varieties not certified in Canada. That opinion has Montana farmers crying foul because occasionally it would be more profitable to sell wheat over the border. At one point last year, Stoner could have sold his durum crop in Canada for a dollar a bushel more, provided officials there recognized it for the high-quality crop it is.
This comes at a time when Canadians are poised to export more wheat than in the past.
The United States doesn’t have similar restrictions on Canadian grain, which means grain passing through the Port of Raymond just north of Outlook will be nearly all southbound. U.S. Sens. Max Baucus and Jon Tester, D-Mont., have asked the U.S. trade representative and the U.S. Department of Agriculture to get involved, but there's no word yet on whether trade or agriculture officials will respond. The same request was made by former U.S. Rep. Denny Rehberg, R-Mont, last July, but it went nowhere.
The USTR for years has noted the unfairness of Canada’s grading of U.S. grain. Stoner and other farmers could apply with Canada to have their varieties recognized, but the approval process takes three years.
Reuters reported last month that Canadian wheat exports by volume might hit a six-year high in 2013. Until last year, Canadian farmers were required to sell their wheat to the Canadian Wheat Board, but Canada’s federal government ended the board’s monopoly. Now Canadian farmers are free to sell to whomever they want and grow whatever they want.
“The serious issue for U.S. wheat producers is probably going to be that following the demise of the Canadian Wheat Board, the Canadian farmers are probably going to be able to increase their productivity of high-end varieties of wheat,” said economist Vince Smith, Montana State University’s point man on foreign trade.
High-end wheat, dense in protein, is a Montana specialty. If Canadians add a few million metric tons of high-end wheat to the world market, the price farmers are paid for that wheat will decrease. It doesn’t really matter where that wheat enters the market.
It’s understandable that U.S. farmers are upset about Canadian officials stiff-arming U.S. wheat imports while exporting more wheat to the United States, said Gary Brester, an MSU economist.
“Whenever I’m in line at a beet dump or an elevator, I’m always mad at the person in front of me, even if it’s a brother,” Bester said.
In five years, Canadians will probably drop the varietal rules to keep U.S. wheat sharply undervalued in that country, Brester said. Canadian farmers who would like to plant U.S. wheat varieties are also hurt by the regulation. Until then, producers like Stoner remain penalized.