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June 19th, 2024
In this article, we will review the main elements of the bakery and milling 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).
Ontario Commercial Bakers and Millers
The Greater Toronto Area (GTA) and its surrounding regions have one of the highest concentrations of organic processors in Canada. Additionally, some of the largest milling and baking facilities are located in Vaughan, Etobicoke, and Toronto. Table 1 showcases the main commercial bakers and processors in Ontario that use wheat as a key food or feed ingredient.
These millers, bakers, and processors are significant drivers of local consumption of organic wheat.
Millers
In 2022, Ontario’s organic mills used 42.8% of the province’s total organic wheat production and most of the spelt. Ontario’s organic milling sector is relatively small. It purchases just under 10,000 MT of organic wheat per year, either directly from Ontario producers or from grain aggregators. The value of organic wheat sales to millers is close to $6 million, making them the largest market for Ontario organic producers. Ontario organic mills also purchase organic hard wheat from out of province, bringing total wheat purchases to just over 12,000 MT annually, with a total estimated value of 8.2 million.
Millers: Demand Concentration and Volume Decline
Most of the organic wheat flour is produced by a single company using steel roller mill technology, but volumes are down by 6,000 MT over the last two years. The mill buys hard red spring and soft wheats from organic grain aggregators, with spring wheat coming by rail from Manitoba.
Aside from this large mill, Ontario's mills are small and mostly artisanal, using stones to grind grains into flour, a method valued by bakers and consumers but less efficient than roller mills. These small mills buy grains directly from organic producers, while larger ones purchase from aggregators who organize transportation from the Prairie region. By-products like wheat middlings are typically sold to organic feed mills.
Ontario's artisanal mills cater to retail bakeries and consumers, who increasingly seek flours from alternative wheat varieties like spelt, emmer, einkorn, and Red Fife. These mills contract directly with farmers for organic winter wheats at higher prices and pay top dollar for small quantities of spring wheats from other provinces.
Artisanal mills are also experiencing a contraction in demand. One experienced a bump in sales during and after COVID and has transitioned from selling flour to bakers to delivering bagged cleaned grains to consumers.
This is a trend observed in organic mills across the country. Demand for organic flour has declined, not because of waning consumer demand, but because retail bakers are struggling to survive in the face of escalating operational costs, in part driven by inflation and labour challenges. Some have been forced to switch to cheaper conventional ingredients.
From an economic perspective, millers not only sustain producers through direct and indirect procurement of grain ingredients but also contribute to the economy by creating jobs and adding value to raw ingredients.
While it is beyond the scope of this project to calculate the economic value of the processed wheat and the other economic impacts, we do know that very little of the organic flour processed in Ontario is sold through grocery channels. Of the organic mills listed in Table 2, only Oak Manor Farms has a presence in the retail market. However, the mill focuses on specialty specialty retailers, not to mainstream grocers.
According to a study published by the Organic Council of Ontario and the Canada Organic Trade Association, retail sales of organic packaged flour in Ontario were worth $5 million in 2021. The flour is sourced almost exclusively from organic mills outside of Ontario. The largest market shares in Ontario mainstream grocery are held by Anita’s Organic Mill in British Columbia, Prairie Flour in Manitoba (Walmart), and Ardent Mills in Saskatchewan (Robin Hood).
Interprovincial Export
The decline in the Ontario domestic organic flour market has been somewhat balanced by growing exports to Quebec. La Meunerie Milanaise, an independent mill based in Saint-Jean-sur-Richelieu Quebec, has stepped up the wheat procured directly from Ontario farmers. This independent company is now the largest organic mill in Canada, buying about 55,000 metric tons (MT) of milling grains annually. This company buys about 6,000 MT of organic winter wheat from Ontario annually, 25.9% of Ontario’s organic wheat production in 2022.
La Milanaise is also influencing a shift in wheat classes by encouraging Ontario farmers to to seed hard winter varieties over soft winter wheats. La Milanaise preferentially purchases from eastern Ontario farms that are closer to their mill in Quebec. These more eastern and northerly farms are also those most able to produce the high-quality hard wheats demanded by the milling industry.
Bakery Sector
Bakers play a crucial role in the wheat supply chain right after millers. They are the main users of organic wheat, which they use to create a variety of products. Commercial bakers sell their goods to retail stores and food services, while retail bakers typically sell directly to consumers. Some of them serve food service channels such as restaurants.
Bakers represent both a direct and an indirect market for farmers. Commercial and larger scale bakers typically purchase mainstream organic flour from P&H Milling Group at wholesale volumes and prices. Since P&H does not process specialty wheats, bakers must acquire these from the smaller flour mills or direct from organic producers.
Some farmers have the capacity to mill organic grains themselves using small-scale mills and there is a growing interest from bakers in purchasing organic grains from farmers. However, the groups face challenges connecting with one another.
In 2022, the organic baking sector in Canada was valued at nearly $600 million. The sector includes products like sweet biscuits, pasta, and noodles, which aren't strictly baked goods but often include wheat as a key ingredient.
Recently, there's been a growing trend towards gluten-free options, which can be made from alternative grains. Gluten-free claims are found on 20% of organic baking products, 2.8% of organic breads, 66.7% of organic cakes, 34% of organic pasta, and almost 35% of sweet biscuits. This shift poses a challenge to wheat producers.
Bread dominates the organic baking sector, accounting for 90% of sales. Organic bread sales peaked at $658 million in Canada during the COVID pandemic in 2020 but have been declining ever since.
The decline in local milling of organic wheat in Ontario reflects a broader trend of decreasing bread and baked goods consumption across Canada since 2020. Nationally, sales of fresh organic baked goods have dropped by $104 million, with fresh organic bread products down by $121 million during the same period. The only other sector using organic wheat that has seen a similar sales decline over the past three years is pasta products.
Dimpflmeier Bakery, a rye bread specialist with at least one bread that includes organic wheat, has the largest Canadian share (15.2% in 2022) of the organic baking sector according to Euromonitor International. Other major commercial bakers include Weston Foods, which has a licensing agreement with US-based Flowers Foods to manufacture and distribute Dave’s Killer Bread in Canada. Ace Bakery, owned by FGF Brands, produces artisanal organic breads distributed through many major retailers.
This report was made possible thanks to the following organizations and government agencies:
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