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June 19th, 2024
In this article, we will review the main elements of the Ontario organic wheat market section of the report “Corn and Grain Value Chain Report” developed by the Organic Grain Hub at the request of the Organic Council of Ontario (see below for the official report link).
Canadian Organic Wheat Market
Wheat stands as Canada’s largest organic field crop, ahead of oats and barley, covering 311,162 acres in 2022. In 2022, organic wheat production was grown on a third (31%) fewer acres than it was at its peak of 450,266 acres in 2020. This is largely due to organic farm losses in the Prairie region where most of the wheat is grown on large acreages.
The country's organic wheat production is spread across various wheat classes including Canadian Western Red Spring (hard red spring), Canadian Western Amber Durum (Durum), Eastern Soft Red Winter (soft red winter), and Eastern Hard Red Winter (hard red winter). Hard red spring is used for bread making, Durum is used primarily for pasta, and soft wheats are used by bakers for cakes, pastry, cereal, crackers, and biscuits.
Over 80% of all organic wheat produced in Canada is grown in the Prairie region and almost all spring and Durum wheats are produced in this region, with Saskatchewan as the dominant player. Very little organic winter wheat is produced in the Prairie; what little there is tends to be hard red winter varieties. Almost all organic winter wheat is grown in Ontario and Quebec and the majority of this is soft red winter.
Ontario’s acreage makes up only 4% of Canada’s wheat, but 7% of its volume due to the high-yielding soft wheats that dominate production. Ontario produces 57% of Canada’s winter wheat (by volume).
Ontario wheat farms location and acreage
In 2023, wheat was Ontario’s third-largest organic field crop by area, cultivated on 253 farms. Organic wheat production is predominantly found in southwestern Ontario, concentrated in the southwest part of the province, with smaller numbers spread along the north shore of Lake Ontario and the St. Lawrence River to the Quebec border.
Seventy-eight percent of Ontario’s organic wheat producers were dedicated field crop producers in 2023. The most common other crops grown along with wheat were corn, soybeans, oats, spelt and buckwheat. The number of wheat producers with livestock was considerably lower than it was in 2022, but we did not quantify this.
The organic wheat traders we spoke with estimated that CESRW makes up at least 90% of the total volume of organic wheat grown in Ontario. We estimated average yields of CESRW to be 2 MT/ac (73.49 bu/ac) with 12,000 acres seeded in 2022.
Figure 1 shows the total acreage of organic wheat produced in Ontario for each of the past five years. Acreage peaked in 2021 at just over 18,000 acres and has since dropped back closer to the five-year average (12,064 ac in 2022). We estimate the volume of wheat production in 2022 was about 23,000 MT of organic wheat.
Key informants commented that wheat acreage varies each year due to soil moisture levels in the fall or at seeding time. A wet fall or a delayed soybean harvest can cause farmers to change up their rotation. If this happens, they will eventually bring their rotations back in line. Acreage in Figure 1 includes all wheat classes, excluding spelt. Spelt was grown on 5,299 acres in 2022.
Farm gate value of wheat
As shown in the figure below, from 2017 to early 2022, organic farmers in Ontario received stable prices for soft red winter wheat, ranging between $12.5 and $14 per bushel. However, by summer 2022, possibly in reaction to the global turmoil caused by the war in Ukraine, market prices had risen by 35%. Before the war, Ukraine produced an outsized share of the globe’s organic field crops. Prices began to contract the following spring and have been declining ever since (Fig. 2). The latest contraction may be the result of global inflation which is eating into the consumer grocery budget and causing many to rethink organic food purchases.
Domestic production of organic wheat put $13.7 million into the pockets of Ontario organic producers in 2022
There are 8 main market channels for organic wheat in Ontario, and we estimated the price per metric ton, volume and farmgate value for all of them in table 5. Across all market channels and averaged over 2022, the unit price of organic wheat was $15.25/bu ($560.34/MT).
Using this as the base price, premiums or penalties were estimated for each market channel. For local mills, we assumed an average value of $698 per MT for wheat purchased from Ontario producers by the small mills and $588 per MT for the largest mill. Hard red spring wheat purchased from outside of Ontario used by millers or for export was not included because it did not impact farmgate value, since for the most part, this wheat class was not grown by Ontario producers. However, these wheat imports would have an overall economic impact on the sector since traders and millers each add value to the raw ingredient.
We can see that milling (43% of total farmgate value) was the most important market channel that year, followed by interprovincial exports and feed mills, each at 26% of total farmgate value.
Feed mills overview
Ontario lost over 20% of its organic livestock producers between 2020 and 2022. Even so, this was still the second highest number for all the provinces with 232 operations behind Quebec (272). This creates significant demand for dedicated organic livestock feed mills.
Organic livestock feed can consist of any combination of corn, soybean, wheat, barley, oats, peas, other grains, and vitamins. The volume of each is determined by the dietary needs of the species, the percentage of protein, energy and fat provided by each grain, and the relative price of the grains. Corn and wheat provide similar functionality within the ration. Thus, when the price of corn is low, wheat becomes less competitive and is less likely to be used in feed rations. However, wheat gluten also acts as a binder in pelletizing multiple grains. This ensures that wheat is at least 10% of a pelleted ration even when it loses its competitive edge against other grains.
Most of the wheat grown in Ontario is food grade, produced for the flour milling industry. We could not determine how much feed quality wheat is produced, but feed mills reported purchasing significant volumes of milling quality wheat for livestock feed.
Although few organic wheat growers grow specifically for the feed market, there are several reasons why a feed mill might be an organic wheat grower’s first marketing call. The price differential between milling and feed grade wheat is not huge for soft wheats, the Ontario milling market is not that big, and because of their crop rotations, which typically include corn, soybean, and wheat, many organic farmers already have relationships with feed mills. It simplifies marketing considerably for producers to sell all their grains to a single buyer.
There are two primary organic feed mills: Jones Feed Mills Ltd. and W-S Feed & Supplies Ltd., both located in southwestern Ontario. There are a handful of other smaller businesses in the organic space. Although the two main organic feed mills do serve the hobby livestock industry, there are a few specialized businesses, some of which operate nationally, that produce bagged organic feeds that target this demographic, particularly backyard chicken producers.
Broiler chickens are the key driver for the organic feed industry in Ontario. There are two main processors – Maple Leaf Foods and Yorkshire Valley Farms. Both companies have a similar model. They contract with independent producers directly to raise broilers. Corporate contracts require farmers to use professionally balanced feed rations from specific feed mills that work directly with the processor on quality assurance. This assures that feed is free of mycotoxins such as deoxynivalenol (DON), producing consistent, high-quality feed. Because they are purchasing feed, commercial scale organic poultry producers often do not have any land certified other than the minimum to meet outdoor access requirements in organic standards.
The two major feed mills also supply some, though not all, of the feed rations for Ontario’s 38 organic layer barns. These barns house 600,000 hens, about 6% of Ontario layer production. Ontario organic eggs are marketed through several large processors. The key players are Burnbrae Farms, Yorkshire Valley Farms and Gray Ridge Egg Farms.
The third largest market for organic feed mills comes from the dairy sector, though this is currently much smaller than that for poultry. One of the mills manufactures a robot pellet made from a combination of corn, soy and wheat or wheat shorts (also called middlings) obtained as a by-product from organic flour mills.
The Ontario organic swine industry contracted around 2018 as the major processor, Les Aliments Du Breton built up its hog and feed acres in Quebec. Industry insiders reported the market for products such as organic bacon and sausages to be small, unable to support expansion beyond a single processor. The organic sheep sector in Ontario is vibrant, but so small that it does not represent significant growth for organic feed mills.
Organic beef production has declined over the past two years as the market has contracted. Much of the 20% loss in livestock farms noted above is likely due to the contraction of the organic beef industry. There are now signs that the market is shifting once again as the North American cattle herd has contracted. We may see a resurgence in this market, especially if food inflation abates. If beef numbers come up, the organic feed grain supply will need to grow - primarily on-farm since most beef producers are self-sufficient in feed.
This report was made possible thanks to the following organizations and government agencies:
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