New payment options
New payment options under the Canadian Wheat Board will probably be a big issue this summer.
The options will be presented to farmers for discussion in coming weeks. The board will consult focus groups of farmers and conduct a survey.
The consultations will be used to determine whether to proceed with one or more options.
The board said in a news release that implementation of new payment options would not affect the foundations of the board – single desk selling, price pooling and the relationship with the federal government.
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The current system of price pooling would still be available.
The fixed-price contract would allow farmers to lock in a full and final price before the beginning of the crop year.
The fixed price would be announced at the same time as the board’s pool return outlooks in March through June before the beginning of the crop year and farmers would have one week to sign up.
The price would reflect the PRO with deductions for risk, the time value of money and administration, plus the usual elevation and freight deductions. Full payment would be made at the time of delivery
The early pool cashout would allow farmers to cash out of the pool during the latter part of the crop year on any portion or all of their deliveries.
The cashout price would be announced at the same time as the March and June estimated pool return for the current crop year. Farmers would have a week to sign up.
It would reflect the estimated additional and final payments, minus discounts for risk, the time value of money and administration.
The pool equity loan program would allow farmers to borrow against the estimated additional payments. The loan value would be announced along with the March and June estimated pool returns. Farmers would have four weeks to sign up.
The loan and interest would be repaid from subsequent board payments.
If, after the loan is paid off, there is money still in the pool account, it would be paid to the farmer. If there was a deficit, it would be made up through a payment from the farmer or deductions from future CWB payments.
This final option would require changes to the Canadian Wheat Board Act.
The board would also have to create a contingency fund to cover the risk associated with running the more flexible payment system.
