Initial payments boosted | New cash-out option is an attempt to increase cash flow from CWB pools
Farmers who market their crops through the CWB after Aug. 1 will receive a bigger up-front payment for the grain they deliver.
The wheat board announced last week that it will boost initial payments in the 2012-13 crop year and offer farmers a new cash-out option.
The moves are an attempt to improve farmer cash flow from CWB pools and encourage more growers to use wheat board programs.
“We understand the importance of cash flow in grain farming,” CWB president Ian White said in a news release.
“Farmers want more of their pooled returns up front, so we have taken steps to satisfy that need.”
In the past, initial payments for spring and winter wheat, durum and barley were set at around 65 percent of final pool returns.
Beginning next month, it will increase to about 75 percent of final pool returns for wheat.
Initial payments will also increase for barley, although CWB officials declined to say how much they would rise.
The CWB also unveiled the Pool Cashout Option, which allows farmers to choose a fixed and final payment on all grain that has been delivered to CWB pools.
The cash-out option will be offered daily and prices will fluctuate depending on market values.
Daily cash-out values will be posted on the CWB website starting Aug. 1.
Maureen Fitzhenry, media relations manager for the CWB, said the changes were intended to make CWB pools a more attractive option for farmers.
Many producers already view pools as an effective risk management tool, she said. Offering more cash up front should result in greater participation.
“We’re trying to make our programs as attractive as possible for farmers, given that they do have a number of options,” she said.
One of the big questions facing the new CWB is how much grain the voluntary marketing agency will be able to attract in an open market.
Fitzhenry said assessing farmer participation in CWB pools has been difficult because producers in the past haven’t normally been in a hurry to sign CWB delivery contracts.
“The main thing is that farmers do not traditionally sign their contracts this early in the year so we don’t really have a good basis for comparison at this point,” she said.
“We’re trying really hard to encourage earlier sign up … but that’s going to take a while for those behaviours to adjust to the new environment.”
Delays in reaching grain handling agreements with major companies have also “somewhat hampered” farmer sign-up, she said.
The CWB is encouraged by farmer feedback, Fitzhenry added.
Recent surveys suggest that the vast majority of prairie farmers are planning to market at least part of the 2012-13 crop through the CWB.
The board is expecting “significant volumes,” she said.
Earlier this year, White suggested that a voluntary CWB would attract roughly one-third of wheat, durum and barley produced in Western Canada.
Fitzhenry said that still appears to be a reasonable goal.
“There’s no formal target … that we’ve released publicly but I guess when you think about how much wheat … there is out there and the indication that farmers are giving us, it wouldn’t be unreasonable to expect a third.”