Wheat committed to CWB pools is moving through the commercial grain handling system as expected, CWB officials said last week.
However, some elevator companies in Western Canada are still not taking delivery of new crop CWB grain at certain locations, they added, stressing that delivery opportunities will improve as the marketing year progresses.
“(Grain) companies are competing for CWB business,” said Gord Flaten, CWB vice-president of grain procurement.
“Having said that, we know that some farmers may have been told by grain companies, so far, that they cannot accept (CWB) deliveries yet or don’t know what the deductions are going to be for freight and handling.”
He said that’s normal.
“Some of these companies have joined our programs just recently so my message on that is for farmers to keep on checking with (different) companies as they work out all the details.”
In a Sept. 7 conference call with prairie farmers, Flaten and CWB president Ian White told farmers grain is being delivered against new CWB contracts.
They said CWB grain is moving despite delivery glitches, and producer interest in its early delivery and harvest pools looks promising.
Flaten said CWB grain handling agreements stipulate that grain companies must handle specific volumes of CWB grain each month.
Failure to meet those contractual obligations will result in penalties, he added.
In addition, farmers who participate in CWB pools can deliver grain to any elevator company, which will spur competition among handlers.
“We’ve designed our contracts so farmers have total flexibility,” Flaten said.”No matter where they sign their (CWB) contracts … they can take that contract and shop it around, so what we would suggest for farmers is to ask several different companies what sort of deal (they) can get on freight and handling charges and delivery opportunities and then go where it best suits (their) business needs.”
In the months leading up to Aug. 1, supporters of single-desk marketing argued that converting the CWB to a voluntary marketing board would put it at a competitive disadvantage to private sector grain companies.
Without its own elevator system, the voluntary CWB would depend on competing companies to move pooled grain, they said.
CWB officials last week said growers should not read too much into the fact that wheat board grain is not being accepted at all locations.
The grain industry is adjusting to the new marketing environment and demand for elevator space is particularly high at harvest time, when many growers are looking to sell grain directly off the combine.
“There are companies that aren’t ready yet, at some of their stations, to confirm to farmers what the deductions will be because they just haven’t communicated that completely through their companies,” Flaten said.
“We have some companies too, where they’re still clearing out old crop … and they’re waiting until that’s done before they start taking new crop deliveries, but there’s no company that is saying to us that they’re not going to take CWB deliveries. It’s just a matter of timing, really, at this stage.”
Last year’s grain can be delivered against 2011-12 contracts until Sept 14. Flaten also reminded farmers that sign-up deadlines are approaching for 2012-13 pools.
The deadline for the early delivery pool is Sept. 28 or until the program is fully subscribed. The deadline for the harvest pool is Oct. 31.
Space in voluntary pools is limited and there is no guarantee farmers will be able to sign up production after sign-up deadlines have passed.
Producers in some areas have been reluctant to commit production to CWB pools because crop development is behind schedule and the threat of frost could significantly affect yield and crop quality.
Flaten said producers who enter CWB contracts are protected by an act of God clause that limits liability if growers are unable to deliver contracted tonnage.
In addition, producers who commit to the pools will not be penalized for specifying incorrect grades or protein levels, as long as they amend their contracts before the pool sign-up deadlines.
“If you make a contract with us, then we ask you to give us an indication of what the grade and protein is that you expect,” Flaten said. “Then, you have the chance to confirm that (information) or change it for free up until the pool sign-up deadlines.… Even after that, we will be as flexible as we can to make changes.”
Unlike the old CWB system, which used contract calls and gave all producers an equal opportunity to make deliveries, the new system puts a greater onus on individual growers to discuss CWB delivery opportunities with grain handling companies.
Flaten said some producers have already finished delivering grain against their CWB contracts.
“We’ve had some farmers who have negotiated those deals already and some have actually delivered their entire contracts for the early delivery pools already at this early stage.”
Limited elevator capacity means not all farmers will have an opportunity to deliver grain off the combine, he added.
“The system just can’t accommodate it all.”
The Western Producer is seeking feedback from farmers about their experiences in signing grain contracts and delivering CWB grain.
Please post your comment below.