Statement of Reasons—Initiation of investigation: Wheat Gluten 2 (WG2 2026 IN)

Definition

[10] For the purpose of this investigation, subject goods are defined as:

Additional product information^{Footnote 2}

[11] Wheat gluten is the natural protein found in wheat. “Gluten” consists of two main protein groups, gliadins and glutenins in approximately equal proportions. Wheat gluten is also sometimes referred to in the market as simply “gluten” or “wheat protein”.

[12] Generally, wheat gluten is used by a wide range of food producers to:

• provide water absorption and structure building in breads
• enhance the structure of cereals and snacks
• provide texture and toughening for pastas and noodles
• provide strength and film forming in frozen foods and
• provide binding and emulsification in processed meat and in vegetarian meat applications

[13] Wheat gluten is generally sold as a fine powder with a cream colour. For grades used in most food (including baking) applications, wheat gluten contains between 75 – 80% protein by weight on a dry basis using a Jones factor of 5.7, with the remainder of the weight being attributable to fiber, starch, fat and ash. Wheat gluten products with a wheat protein concentration in the range of 80% or more are often used to enhance whole-grain baked goods, noodles and pastas, pizza crusts and vegetarian products. Some wheat gluten grades that are used as a filler binder for processed meat products contain a lower percentage of protein by weight on a dry basis and are usually blended with a larger amount of wheat flour to obtain a lower percentage of protein. Wheat gluten is also sold to animal feed and pet food manufacturers as a source of protein.

Production process^{Footnote 3}

[14] Wheat gluten is typically co-produced with starch from milled wheat flour. As milled, wheat flour generally contains approximately 10-15% protein by weight on a dry basis, the remainder being starch, fiber, and ash. Wheat varieties that contain more protein by weight are generally referred to as “hard” wheats, and conversely, wheat varieties that contain less protein by weight are referred to as “soft” wheat.

[15] Wheat gluten is produced by separating it from the starch in flour through a “washing” process involving water; the wheat gluten is subsequently dried, sifted and purified; and ground into a fine powder before being packaged and sold.

[16] The first step involves adding water to the flour in a dough mixer to activate the wheat gluten. The hydrated mass then rests in a maturation tank until fully hydrated before being moved to a dilution tank where additional water is added. The mixture then passes through a series of rotative screens and hydro cyclones, where the hydrophilic starch and water are effectively washed away from the viscoelastic glob of hydrated gluten.

[17] Hydrated globs of gluten are then dried through a screen, press, and dryer, before passing through a series of sifters, grinders, and magnets, to remove impurities and any foreign metal objects that may have been introduced through the manufacturing process. During the sifting and grinding process, the gluten is also passed through an “Entoteler” machine which uses centrifugal force to kill any insect eggs and remove other debris, which are rejected from the mill flow by aspiration.

[18] The sifted and dry wheat gluten is then packaged in bags and totes to be stored and shipped to customers. Common bag and tote sizes for wheat gluten range from 25KG to 750KG bags.

Classification of imports

[19] The allegedly dumped goods are normally imported under the following tariff classification numbers:

1. 1109.00.10.00
2. 1109.00.20.00

[20] The listing of tariff classification numbers is for convenience of reference only. The tariff classification numbers include non subject goods. Also, subject goods may fall under tariff classification numbers that are not listed. Refer to the product definition for authoritative details regarding the subject goods.

Like goods and class of goods^{Footnote 4}

[21] Subsection 2(1) of SIMA defines “like goods” in relation to any other goods as “… (a) goods that are identical in all respects to the other goods, or (b) in the absence of any such goods, goods the uses and other characteristics of which closely resemble those of the other goods.” In considering the issue of like goods, the Canadian International Trade Tribunal (CITT) typically looks at a number of factors, including the physical characteristics of the goods, their market characteristics, and whether the domestic goods fulfill the same customer needs as the subject goods.

[22] The complainant states that domestically produced wheat gluten is like goods and in relation to the subject goods as they are both commodity products that compete directly with each other in the Canadian market. The complainant states that the goods are fundamentally the same goods that are produced using identical or nearly identical production processes, are fully interchangeable, and are sold to the same end users or channels of distribution.

[23] Additionally, the complainant notes that with respect to the Wheat Gluten 1 injury inquiry, the CITT found that domestically produced wheat gluten constitutes like goods in relation to the subject goods, and further concluded there was a single class of goods.

[24] After considering questions of use, characteristics and all other relevant factors, the CBSA is of the opinion that the domestically produced wheat gluten, that is of the same description as the subject goods, is like goods to the subject goods and further, that the subject goods and like goods constitute only one class of goods.

Domestic producers

[25] The complaint includes data on domestic production and on domestic sales of wheat gluten, by the complainant and estimate of Permolex Ltd.’s total Canadian production.^{Footnote 5}

[26] The complaint contains a letter of support from Permolex Ltd.^{Footnote 6}

[27] The complainant and the supporting producer account for all known production of like goods.

Standing

[28] Pursuant to subsection 31(2) of SIMA, the following conditions must be met in order for an investigation to be initiated:

1. the complaint is supported by domestic producers whose production represents more than 50% of the total production of like goods by those domestic producers who express either support for or opposition to the complaint and
2. the production of the domestic producers who support the complaint represents 25% or more of the total production of like goods by the domestic industry

[29] Based on an analysis of information provided in the complaint, as well as the information gathered by the CBSA, the CBSA is satisfied that the standing requirements of subsection 31(2) of SIMA have been met.

The Canadian market

[30] The complainant, using Statistics Canada data, estimated the total volume of imports of wheat gluten originating from all sources for the period of 2023 through February, 2026. The tariff classification numbers for wheat gluten include both subject and non subject goods. As such, the complainant made adjustments in an effort to remove non subject wheat gluten, including certain imports of certified organic wheat gluten. The complainant has also made a number of adjustments to the import data to adjust for entries they describe as anomalous.^{Footnote 7}

[31] The CBSA conducted an analysis of imports of wheat gluten based on commercial intelligence provided by the complainant and CBSA’s import documentation.

[32] Detailed information regarding the volume and value of imports of wheat gluten and domestic production cannot be divulged for confidentiality reasons. The CBSA, however, has prepared the following table to show the import share of wheat gluten in Canada, as estimated by the CBSA.

[33] The CBSA will continue to gather and analyze information on the volume of imports during the period of investigation (POI) of May 1, 2025, to April 30, 2026, as part of the preliminary phase of the dumping investigation and will refine these estimates.

Normal value

Complainant’s estimates of normal value

Section 15

[38] The complaint did not include estimates of normal values pursuant to section 15 of SIMA. The complainant explained that sufficient information was not available to estimate normal values pursuant to section 15 of SIMA.^{Footnote 8}

Section 19

[39] The complainant estimated normal values using a constructed cost approach based on the methodology in paragraph 19(b) of SIMA, calculated based on the aggregate of estimates of the cost of production of the subject goods, a reasonable amount for administrative, selling and other costs (GS&A) and a reasonable amount for profits. The complainant based these estimates on own costs of production of a company located in Europe as well as public financial information available with respect to each of the named countries.^{Footnote 9} One normal value was estimated per quarter for the period of Q1 2025 to Q1 2026 for wheat gluten from each of the named countries.

[40] According to the complainant, wheat gluten producers do not maintain separate costs for the various co-products produced along with, and including, wheat gluten. As such, under both methodologies, the complainant has allocated costs to wheat gluten using a revenue-based methodology, using the average proportion of revenue represented by wheat gluten over a five-year period as the basis for allocating costs.^{Footnote 10}

[41] Material costs were estimated based on the material costs of the company located in Europe. According to the complainant, the main raw material is flour. The complainant states that the price of flour generally follows the price of wheat, which in Europe is driven by a futures exchange for milling wheat prices.^{Footnote 11}

[42] Labour costs were estimated based on the allocated labour costs associated with the production of wheat gluten, incurred by a company located in Europe, adjusted to reflect labour costs in the named countries. This adjustment was applied to the costs based on publicly available information reported by the International Labour Organization (ILO).^{Footnote 12}

[43] Overhead costs were based on the allocated overhead costs of the company located in Europe with an adjustment applied to the portion of overhead relating to indirect labour, calculated on a quarterly basis for each named country.^{Footnote 13}

[44] The complainant estimated the amounts for GS&A and financial expenses, as well as the amounts for profit, based on the available financial reports of wheat gluten producers in the respective subject countries, where available.^{Footnote 14}

[45] For Italy, the complainant used the weighted average GS&A, financial expense and profit ratios reported by Sedamyl S.p.A. and Sacchetto S.p.A., two Italian producers of wheat gluten.^{Footnote 15} For GS&A and financial expenses for Poland, the complainant used publicly available financial results from Cargill Poland Sp.zo.o. However, as the company’s reported profit was less than 0.01%, the complainant submitted this is not a reasonable amount, and as a result used the weighted average profit amounts of all other named country producers reporting a profit, as the amount for profit for Poland.^{Footnote 16} The complainant estimated GS&A, financial expenses and a reasonable amount for profit for the United Kingdom based on financial statements from one wheat gluten producer in the United Kingdom, Sedamyl UK Limited.^{Footnote 17}

CBSA’s estimates

[46] For the purposes of initiation, the CBSA estimated normal values using a constructed cost approach based on the methodology in paragraph 19(b) of SIMA, calculated based on the aggregate of an estimate of the cost of production of the subject goods, an estimate for a reasonable amount for administrative selling and other costs and an estimate for a reasonable amount for profits.

[47] In estimating normal values for subject goods from Italy, Poland, and the United Kingdom based on the methodology of paragraph 19(b) of SIMA, the CBSA:

• Used the direct material costs of subject goods as estimated by the complainant
• Estimated direct and indirect labour costs based on information available in the complaint
• Estimated a reasonable amount for GS&A, financial costs, and a reasonable amount of profit based on the financial information provided in the complaint for producers of wheat gluten in the named countries, or proxy country where not available. Adjustments were made to the GS&A costs for Italy, to remove unrelated expenses

Export price

Complainant’s estimates of export price

[48] The export price of goods sold to an importer in Canada is generally determined in accordance with section 24 of SIMA as being an amount equal to the lesser of the exporter’s sale price for the goods and the price at which the importer has purchased or agreed to purchase the goods adjusted by deducting all costs, charges, expenses, and duties and taxes resulting from the exportation of the goods.

[49] The complainant estimated export prices based on importation data available from Statistics Canada for the period of January 1, 2025, to February 28, 2026. For each named country, the complainant estimated one export price per quarter using the total declared value for duty and total declared quantity information for the relevant tariff classification numbers for this period. The complainant made certain adjustments to the import data to adjust for entries that the complainant identified to be anomalous. In addition, with respect to Italy, the complainant removed transactions with an average unit value at or above $5,000 per tonne, to remove suspected imports of organic wheat gluten, which is excluded from the definition of subject goods.^{Footnote 18}

CBSA’s estimates of export price

[50] The CBSA estimated quarterly export prices for wheat gluten for each named country based on the value for duty as declared on the customs entry documentation and in reports generated through E-FIRM of imports of the goods classified under the relevant tariff classification codes during the period of January 1, 2025, to February 28, 2026. In the CBSA’s review of commercial entry information for wheat gluten entering Canada and information gathered through online research, adjustments were made to the FIRM data to correct any errors respecting the quantity and value for duty as necessary.

Estimated margins of dumping

[51] The CBSA estimated the margins of dumping for the named countries by comparing the estimated weighted average normal values with the estimated weighted average export prices. Based on this analysis, it is estimated that wheat gluten imported into Canada from each of the named countries was dumped. The estimated margins of dumping are listed in the table below.

Increase in volume of subject good imports^{Footnote 19}

[55] The complainant states that the volume of subject good imports has increased significantly in recent years in both absolute and relative terms. The complainant provided estimates of the volumes of wheat gluten imports from 2023 to February 2026, noting that imports of subject goods increased by 117% from 3,729 tonnes in 2023 to 8,091 tonnes in 2025.^{Footnote 20} Additionally, the complainant noted the volumes of subject imports also increased on a relative basis when compared to domestic production and domestic sales.^{Footnote 21}

[56] Further, the complainant claimed that source switching followed the CITT’s Wheat Gluten 1 Finding in 2021, with imports of subject goods increasing significantly as imports from countries subject to the Wheat Gluten 1 finding decreased. The complainant submitted that the domestic industry did not gain relief from the Wheat Gluten 1 finding due to the source switching, which also resulted in worse adverse impacts on the industry’s operational and financial performance.^{Footnote 22}

[57] The CBSA’s analysis of import data supports the allegation that the import volumes of the allegedly dumped goods from the named countries have increased significantly since 2023. Based on the CBSA’s estimates of imports, the CBSA finds that the volume of imports increased by 107% from 2023 to 2025.

Price undercutting^{Footnote 23}

[58] The complainant states that the subject goods are a commodity-based product where price is very important. As such, aggressive pricing of dumped wheat gluten has caused significant material adverse effects on domestic pricing. Based on the import data estimates provided by the complainant, it is evident that the prices for wheat gluten from the named countries have been significantly lower than Canadian domestic pricing. To support their claims, the complainant compared domestic industry prices to subject import prices and provided specific examples of price undercutting from subject imports.^{Footnote 24}

[59] Based on the above, and the CBSA’s analysis of the information contained in the complaint, the CBSA finds the claims of price undercutting to be supported and sufficiently linked to the allegedly dumped goods.

Price depression^{Footnote 25}

[60] The complainant submits that the price discrepancies discussed above have resulted in significant price depression in 2024 and 2025. To support their claims, the complainant demonstrated the decline in the domestic industry’s average selling price and provided account specific examples from negotiations where they were forced to decrease prices in order to compete with low priced imports.

[61] Based on the above, and the CBSA’s analysis of the information contained in the complaint, the CBSA finds the claims of price depression to be supported and sufficiently linked to the allegedly dumped goods.

Price suppression^{Footnote 26}

[62] The complaint states that the low prices of subject imports have forced the domestic industry to lower prices faster than the decrease in cost of production, resulting in margin suppression. The complainant referred to the domestic industry prices, and provided the cost of goods sold to sales ratio, noting it has increased, despite a reduction in costs.^{Footnote 27}

[63] While the information presented by the complainant does indicate an inability to increase average selling prices, the complainant has not demonstrated that the inability to increase prices has coincided with an increase in product costs. Based on the information presented above, as well as the CBSA’s analysis of the information contained in the complaint, the CBSA does not find the claim of price suppression to be an injury factor for the complainant.

Adverse impact on market share and sales volume^{Footnote 28}

[64] The complainant alleges that the increased imports of dumped subject imports caused negative impacts on the domestic market share and sales volume. The complainant provided market data concerning the sales volume of domestically produced goods as well as imports from 2023 to 2025, noting that the subject imports’ market share increased while both the domestic industry’s market share and sales volumes decreased. The complainant further indicated that the market share in 2023 was already depressed from subject goods having entered the market in 2021, replacing volumes from countries subject to the Wheat Gluten 1 finding, which prevented the domestic industry from benefitting from protection resulting from the finding.^{Footnote 29}

[65] The CBSA’s analysis of the Canadian market demonstrates an increase in the market share of the allegedly dumped goods during the period of 2023 to March 2026. Further, the information before the CBSA also demonstrates a decrease in the market share of the domestic industry during this same period.

[66] Based on the CBSA’s analysis of the information contained in the complaint, as well as the CBSA’s market table, the CBSA finds the allegation of adverse impact on market share and sales volume to be sufficiently supported and linked to the allegedly dumped goods.

Adverse impact on inventory^{Footnote 30}

[67] As noted above, as a result of co-production process involving gluten and starch, the complainant (as well as other producers) necessarily produces gluten whenever it produces starch, regardless of demand. As such, a decrease in the sales of wheat gluten compared to sales of starch creates an accumulation of inventories of wheat gluten.

[68] To support this allegation of the adverse impact on inventory, the complainant provided data outlining their inventory volume. The complainant further explains the risk of writing off unsellable product, and details the significant problems experienced as a result.

[69] Based on the CBSA’s analysis of the information contained in the complaint, the CBSA finds the adverse impact on inventories to be an injury factor for the complainant.

Adverse impact on profitability^{Footnote 31}

[70] The complainant alleges that the injurious impact of the dumped goods is demonstrated by worsening financial performance. To support this allegation, the complainant has provided a consolidated income statement for the two domestic producers of wheat gluten for the period of 2023 to Q1 2026, noting the consolidated gross margin and net income as a percentage of sales have eroded between 2023 and 2025. The complainant alleged that the significant undercutting by the subject imports forced decreased pricing in an attempt to defend market share, however, even with reduced prices the domestic industry continued to lose volumes and market share to the subject imports.^{Footnote 32}

[71] Detailed information regarding the revenue and profitability cannot be divulged for confidentiality reasons. However, the CBSA has reviewed the complainant’s financial information concerning wheat gluten and finds that the information in the complaint has sufficiently linked the allegedly dumped goods to the complainant’s impacted financial results.

Adverse impact on investment and ability to raise capital^{Footnote 33}

[72] The complainant alleged imports of subject goods have had an adverse impact on investment and ability to raise capital. The complainant provided information concerning investments and noted that ADM Canada competes with global affiliates for investment dollars within the ADM Group.

[73] Based on the CBSA’s analysis of the information, the CBSA does not find this to be a factor that has caused material injury for the complainant. However, this factor may be considered as a threat of injury if current trends continue.

CBSA's conclusion: Injury

[74] Overall, based on the evidence provided in the complaint, and supplementary data available to the CBSA through its own research and customs documentation, the CBSA finds that the evidence discloses a reasonable indication that the dumping of the subject goods from the named countries has caused injury to the wheat gluten industry in Canada. The nature of the injury is well documented with respect to increased volume of subject goods, price undercutting, price depression, and adverse impacts on market share, sales volume, inventory, and profitability.

Causal link: Dumping and injury

[77] The CBSA finds that the complainant has sufficiently linked the injury it has suffered to the alleged dumping of the subject goods imported into Canada. This injury includes increased volume of subject goods, price undercutting, price depression, and adverse impacts on market share, sales volume, and profitability.

[78] In summary, the CBSA is of the opinion that the information provided in the complaint has disclosed a reasonable indication that the alleged dumping has caused injury to the Canadian domestic industry.