As a director of the Canadian Wheat Board, Larry Hill wasn’t allowed to take part in new pricing options offered this year because of conflict-of-interest rules.
But Hill, a farmer from Swift Current, Sask., said he’s “reasonably happy” with how many farmers picked up on the new programs.
The 300,000 tonnes of feed barley booked met the board’s estimates, said Hill: “That was well within the goals that we had forecast.”
Farmers like to move barley early, he said, and the program gave them the option of getting paid for it quickly. Farmers are also used to comparing the board export price to feed barley bids in the domestic market, said Hill.
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The wheat board didn’t have specific participation targets for the wheat options, he said, although he personally thought they would be more popular.
“We thought we would try them and just see how they worked.”
Hill attributed the lack of interest to low wheat prices.
“I don’t think anyone wanted to fix a low price at the start of the year.”
The programs were designed so their costs would be covered by participants. Hill said they weren’t hugely expensive and he’s confident the barley program will have paid for itself. He wasn’t sure whether the costs of the wheat options were covered by participants, but didn’t anticipate a problem.
“I’m pretty sure the contingency fund won’t run a deficit.”
Despite low participation rates, Hill said the board wants to come up with pricing options farmers find useful. He suspects the programs will be modified if possible.
Charlie Pearson, of Meyers Norris Penny, said he hopes the board carries on with the options despite the poor sign-up numbers.
“It’s a good program. It’s a step in the right direction,” said Pearson.
“I think the industry just needs to get out there and explain the program to farmers.”
He said minimum price contracts and other risk management tools offered by line companies in the past five years have also been slow to take off. But if farmers know their costs and break-even prices, they can use the contracts to make sure they get adequate returns, he said.
