Mike von Massow
Can Canada Make Up the Gap in Ukrainian Wheat Production?
We are hearing a lot about the impact of Russia's invasion of Ukraine and the impact on world wheat markets. Ukraine is a significant producer and exporter of wheat. Both production and distribution are being disrupted by the are. While the degree and length of disruption is not yet clear, there is worry and this is reflected in the rapid increase in wheat prices. Given Canada is a large producer of wheat, many are asking whether Canadian farmers can make up the gap in wheat production. Canada may be able to ramp up wheat production somewhat but there are several factors that will limit the degree to which Canada can contribute to the shortfall.
There is not significant unused land capacity in Canada that could suddenly be brought into production. In some factories, if demand is increased dramatically they can add another shift (assuming they can get the labour) and increase production. Canada does not have a large area of idle land (in fact we are losing prime agricultural land to development in some regions) so increasing production of one crop means decreasing that of another. Prices are high for many commodities and, as such, the incentive to grow more wheat might not be as strong as one might think when just looking at wheat prices. There are crop rotations that farmers follow to maintain soil health and good weed control which also impact the flexibility to respond to these spikes in demand. While we can make adjustments at the margins, we can't simply increase production without some tradeoffs.
Wheat production in Western Canada begins in the spring. There may be an opportunity to make some adjustments to plans within the context of the points made above. In Ontario, most wheat is winter wheat that is planted in the fall. Any adjustments in Ontario will not reach the market until the summer of 2023.
Western North American experienced a significant drought in 2021. Wheat yields were down as much as 30%. Some areas in Western Canada have had little snow and conditions remain dry. If there is no rain, Canada will be hard pressed to produce our regular planned output of wheat, let alone the increased demand due to the loss of Ukrainian production.
In an ideal world, Canada could make up the gap caused by the Ukrainian crisis. In reality, however, we will not be able to make up for that gap in the short or the long run. Small increases in wheat production will help but there will remain shortages and high prices across the world and a significant increase in food insecurity in some parts of the developing world.
#agriculture #wheat #food #foodproduction #trade #foodsecurity #resilience #supplychain #ukraine
Recommended citation format: von Massow, Michael. "Can Canada Make Up the Gap in Ukrainian Wheat Production?". Food Focus Guelph (125), Department of Food, Agricultural and Resource Economics, University of Guelph, March 15, 2022.