A farm organization known for its strong support of price pooling doubts the latest pricing option from the Canadian Wheat Board will satisfy the board’s critics.
National Farmers Union president Stewart Wells wonders whether it’s worthwhile for the board to continually look for ways to placate its foes at the risk of weakening its core principles.
“It’s a bit of a double-edged sword,” Wells said.
Beginning next year, the CWB will offer a daily price contract to enable producers to price wheat on any day, based on cash prices at U.S. elevators.
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The board said the new program will enable farmers to be paid sooner for crops delivered to the CWB and provide them with more pricing options.
Pricing flexibility and improved cash flow are laudable goals, said Wells, but he thinks farmers are best served by a strong wheat board that uses single desk selling and price pooling to get the highest returns while minimizing risks and costs for all producers.
“We need a marketing institution that maximizes the amount of money, not just the velocity with which farmers can get it,” he said, adding the board must be careful not to go too far. “We don’t want to trade off the amount for the speed.”
Board officials have issued assurances that the new program won’t undermine or take money out of the pool accounts.
The sign-up deadline is July 22, which is designed to give the board time to assess the amount of grain committed and take the appropriate risk management steps on the futures market.
The agency also has an $18 million contingency fund, separate from the pool accounts, which can be used to cover costs associated with the producer payment options.
CWB director Bill Nicholson said the critical test for any of the pricing options is that they not impose any cost or risk on the pool accounts.
“I’m satisfied that this new pricing option meets that test,” he said.
Wells suspects the changes won’t be enough to satisfy the most committed proponents of a so-called dual market.
“I think the people who have made a career out of trying to destroy the CWB aren’t going to be moved by this proposal,” he said.
Meanwhile, a Saskatoon-based commodity broker said that the new daily price contract won’t satisfy those who have been pushing for an open market, but it’s a step in the right direction.
“You have to take your hats off to them,” said Larry Weber of Weber Commodities Ltd. “They’re trying.”
He expects the board will have no trouble filling the 500,000 tonne limit that has been set on the program for 2005-06.
