The cheques will be in the mail next winter for farmers whose grain is shipped through Churchill, Man.
The Canadian Wheat Board announced last week that freight rebate cheques will be sent to farmers following the end of the shipping season at the Hudson Bay port.
Based on the average volume of wheat shipped through the port in the last five years, the net rebates should be in the range of $11.40 a tonne at The Pas, Man., $5.31 at Tisdale, Sask., and $3.02 at Wadena, Sask.
The idea behind the new program is to pass the port’s freight rate advantage directly to the farmers who use it, say board officials.
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The head of a group that promotes the use of the northern export route welcomed the new policy, saying it could lead to greater volumes of grain moving through the port.
“I think now farmers will clamor for increasing opportunity to use Churchill because that’s the way they can see more money in their pockets,” said Arnold Grambo, president of the Hudson Bay Route Association.
“What we’ve wanted all along is simply a transparent system where farmers can see exactly where the costs are and where the savings can be. I can’t emphasize strongly enough that we’re very pleased with this.”
All wheat included
Farmers in the Churchill catchment area now receive a freight rate adjustment that is applied to all wheat shipped out of the area, including that which goes to Vancouver or Thunder Bay, thus diluting the effect of the benefit.
A discussion paper prepared by the board in May acknowledged that a change was in order, citing benefits both to farmers and to the port itself.
“Applying the region’s freight advantage more closely to grain shipped to Churchill could increase the size of the catchment area and the market sustainable freight advantage,” according to the board’s analysis.
The board prepared three policy alternatives for discussion with the HBRA. One would have seen farmers sign special delivery contracts for Churchill that would provide for a lower freight deduction, another would have reduced Churchill freight rates for a specific period to reflect the port’s shipping season and the third provided for the year-end rebate.
The analysis indicated the third option would be the simplest to administer, have no negative impact on the handling system, link the rebates most closely to grain movement and provide the greatest freight saving to farmers.
Under the new system, if one million tonnes of Canada Western red spring wheat are delivered to elevators in the catchment area, and the CWB ships 350,000 tonnes through Churchill, farmers will get a rebate on 35 percent of their CWRS deliveries.
The rebate will be issued in two instalments, with the first going out in December or January, following the close of the shipping season, and the remainder sent out at the end of the crop year.
Grambo said while he’s pleased with the new freight rebate policy, it’s only a “middle step” in allowing Churchill to realize its potential.
What’s needed next, he said, is for farmers in the Churchill catchment area to be paid on-farm storage to hold their grain until the port’s shipping season opens.
Because most of the crop is sold earlier in the crop year, much of the grain from the port’s catchment area has been shipped elsewhere by the time the port opens in July.
Grambo said if the board knows grain is going to a customer that can be served out of Churchill, it should use the transportation savings to pay on-farm storage.
