Global wheat prices skyrocketed last year when Russia, the world's leading producer, announced it was ceasing all exports of that crop. This was prompted by a poor Russian harvest brought about by drought and extreme heat. In January, the Russian government announced it was extending its export ban to this summer.  

The global nature of our markets means that fallout from disaster in one part of the world can be felt in another. For example, some experts are placing at least part of the blame for the populist uprisings in Tunisia and Egypt on rising food costs as a result of the wheat shortages. And continued high prices and tight supply is leading to stockpiling - some call it hoarding - in nations like Bangladesh.

In the longer term, there's a growing global population that will need to be fed. According to a recent market analysis by U.S. Wheat Associates, global wheat trade should double to 250 million metric tons (MMT) by 2050 as population growth has the potential to strain food supplies in many countries.

In the U.S., wheat acres are dropping in comparison to production of soybeans and corn, which are fuelled in part by growing bioproduct industries. In Canada, canola production is expanding rapidly. For farmers on both sides of the border, these crops have offered more profitability per acre than wheat. This means declining wheat production overall, on the heels of a year that saw a significant area in Western Canada go unplanted due to massive flooding.

The combination of increasing demand and declining supply points to a clear, strong future for wheat, says Rob Hannam, President of Synthesis Agri-Food Network.

"The next frontier for crop agriculture is clearly wheat. It's an old staple we've long taken for granted, but it can present tremendous opportunities for Canadian agri-food to address global food pressures," he says.

For Canada, wheat is a major export crop. In 2009, $4.5 billion of the country's $39 billion agri-food exports came from wheat. And yet Canada ranks only eighth amongst top wheat producing nations, far behind leaders Russia, India and the European Union. This means there is room for growth, especially given the fluctuations increasingly occurring in global wheat producing regions.

Research and innovation is one key to this growth, according to Hannam, who says that wheat has not seen the same level of investment in research and technology as some other grain and oilseed crops.

"Wheat as a crop is ripe for innovation and development," he says. "For farmers to go back to increasing their wheat acres, the crop has to be as profitable for them as the alternatives and to do that, we need to value-add."

The value-adding could stem from production-enhancing traits, such as increasing drought or flood tolerance, or disease and herbicide resistance. It could also come from a variety of end-use characteristics, such as adding health benefits, improving bread making abilities or addressing dietary issues like gluten allergies that are affecting a growing number of consumers. For any of this to happen, though, Hannam believes there needs to be an increase in wheat-focused research.  

How this innovation will evolve is yet unknown, but according to Hannam, it will likely involve a combination of both private and public research, together with traditional and modern plant breeding techniques.  The wheat supply chain, from seed through to grain handling and milling, may also have to adjust to accommodate new technologies and new customers.

Insights - what does this mean to the Canadian agri-food sector?

Wheat is the next frontier - Wheat in Canada is entering a new stage of development...the next frontier. There is room for Canada to expand its production, both to feed people in other countries, and to bring new niche products to the domestic market. But to capture these opportunities, our current system will need to undergo changes. From research, seed genetics and crop production, to grain handling and milling, both change and opportunity are on the horizon.

Commitment to innovation is key - The lack of private investment in wheat research and feared reductions in public research have been the story recently. The future must include a healthy combination of public and private research working together efficiently to meet customer needs and make wheat more competitive with other crops.  

Global changes will have an impact - Wheat is one of the most globally interconnected crops we produce. Canada's customers are diverse - we ship wheat to over 60 different countries. Global production is also spread across many different regions, including Russia, China, India, the European Union and the United States. As seen with the Russian wheat export ban, any global change can cause a shift the wheat market dynamics.