CHATHAM, Ont. – The federal government has been assured it will not be on the hook for a multi-million dollar bail-out of the Ontario Wheat Board pool this year, despite the fusarium disaster which has sharply reduced value of the crop.
“The pool will not be in a deficit,” said Ontario Wheat Producers’ Marketing Board secretary manager William McClounie.
“Strong feed prices mean we are able to cover the initial prices we are paying.”
Two weeks ago the leadership of the board traveled to Ottawa to give agriculture minister Ralph Goodale the same message.
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“They appear confident of their financial position,” Goodale said in a later interview. “For us, that’s a very important assurance. I’m pleased to have that statement but we will be watching very carefully.”
Like the Canadian Wheat Board, the Ontario board pays farmers an initial price when they deliver their grain. That initial price is guaranteed by the federal government.
This year, it is set at $180 per tonne.
Despite widespread fusarium infection which cut the size of the crop and reduced most of it to feed quality, strong market feed prices have kept board returns above $180. The estimated September price for feed is between $180 and $185.
“We might even have a small final payment,” said McClounie.
Federal government caution is a major reason a pool deficit has been averted. Last spring when board officials met with Agriculture Canada commodity specialists and economists to review price, production and sales prospects for the new year, the prospects were good and the board recommended a higher initial price.
Federal officials took a more cautious approach, wary of risking a pool deficit and a financial obligation for the deficit-conscious finance department.
Over board objections, Ottawa announced a $180 initial price. “That caution looks pretty good right now,” said McClounie.
The fusarium disaster has made the board’s life more complicated in other ways. A shortage of milling wheat forced the board to buy out several sales contracts for product it cannot supply. Penalties of several million dollars were paid.
It also had to try to find markets for 350,000 tonnes of feed grade wheat, much more than normal and twice the volume of milling-grade wheat available for sale.
