The Canadian Wheat Board is launching an organic grain pool, wading into waters where some farmers feel it has no right to swim.
New delivery contracts for organic milling wheat will be unveiled in the 2006-07 crop year. A feed wheat contract may follow depending on how the coming crop turns out.
For the inaugural year of the pilot program, contracts will be available only to members of the Canadian Organic Certification Co-operative, a Saskatchewan-based certification body that has morphed into a marketing group.
It will be a voluntary program available to anyone willing to buy a $100 lifetime membership in the COCC.
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The board chose only one group to be a partner because it wants to minimize its risks by limiting the tonnage sold through the program during its first year, but if it proves successful, the program will expand in subsequent years to include other interested groups.
Producers will be paid the conventional pool initial payment plus a portion of the organic premium upon delivery to Saskatchewan Wheat Pool, the designated handling agent for the program. The remainder will be doled out at the end of the marketing year.
CWB spokesperson Maureen Fitzhenry said the voluntary program offers farmers a guaranteed sale for their grain, timely payments and pooled premiums.
“We think that they can take advantage of our excellent international reputation among customers, our extensive network of international customers and our market development expertise.”
But some farmers are appalled by the prospect of the wheat board taking an active role in marketing organic grain.
Tom Allen, an organic grain grower from Wilcox, Sask., was already miffed about being forced to go through the board’s producer direct sale process to market his grain internationally.
“Now they want to compete against me. The whole thing doesn’t even make sense.”
Allen can’t understand how the board can justify charging him to market his own grain and then take export sales away from him.
“They want all the cake and the icing and everything.”
He challenged the CWB to prove it has a mandate from the organic community to launch such a contentious program.
John Husband, spokesperson for the Organic Special Products Group, a collection of 160 farmers opposed to the board’s involvement in organics, said he doubts the board could achieve such a mandate.
He points to the results of an organic marketing study done by the University of Saskatchewan’s department of agricultural economics.
In its 2005 study, the university found that three-quarters of 58 organic producers randomly picked from across Saskatchewan did not want the board to become more involved in marketing organic grains, results that were mirrored by comments made by marketers and processors.
Fitzhenry said there is plenty of support for an organic pool. It was devised in response to calls from groups like the COCC and a number of individual producers.
But she said the board doesn’t need an official show of support from the organic community because it already has the legal mandate to market all the wheat grown in Western Canada, including organic wheat.
Bill Rosher, secretary of the COCC, said the board has every right to set up an organic pool.
“We asked them to do this for us. What else mandate do they need?”
He said existing marketing channels do not meet the needs of COCC’s 160 members.
“All I’ve been getting lately are calls about how they can’t move their wheat. Their production from last fall is still sitting in the yard and there’s no cash flow. The system is letting them down as far as we’re concerned.”
Rosher expects 60-80 existing members to participate in the board’s organic pool but that number could rise if the group is able to sell new memberships.
CWB marketing manager Donna Youngdahl said Allen’s concerns about increased competition are misplaced because COCC members were already marketing that same grain. Now they have a new agent working on their behalf that should be fully certified by this fall.
And she assured growers that the producer direct sale program doesn’t give the board any intelligence information that could be used against them.
“While we may know that they are going into Europe, we don’t know who their specific buyer is because we don’t require them to divulge that.”
Youngdahl said the new program won’t be much different than the existing practice of selling to an accredited exporter like Growers International Organic Sales Inc. or Sask Pool. Only the premiums will be pooled and the board won’t take a margin on sales, although the agency will collect administrative costs.
The other way organic growers sell their grain internationally is through a broker using the producer direct sale option. The new pool offers certain advantages over that method as well.
“They will have some cash flow benefits compared to if they were selling to a broker and might have to wait a month or two to get paid,” said Youngdahl.
