The Canadian Wheat Board has asked the federal government to approve another big increase in initial payments.
It would be the fourth adjustment in the initials so far in 2007-08, a reflection of rapidly rising grain markets.
The board has recommended adjustment payments of $34 to $53 a tonne for spring wheat (depending on type, grade and protein level), $80 a tonne for milling quality durum and $65 a tonne for Pool B feed barley.
That would boost the initials to the following levels:
- $324.87 a tonne ($8.84 a bushel) for 1 CWRS 13.5 percent wheat, representing 84 percent of the Pool Return Outlook of $388 a tonne at port.
- $484.30 a tonne ($13.18) for 1 CWAD 14.5 percent durum, representing 93 percent of the PRO.
- $222.50 a tonne ($4.84) for Pool B 1 CW feed barley, representing 81 percent of the PRO.
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As the crop year winds down, the board gains more confidence about the final prices for the year, thus allowing for higher initial payments without a significant increase in risk.
“The whole objective of adjustment payments is to get more money into farmers’ hands as soon as we have more confidence in what the final levels are going to be,” said spokesperson Maureen Fitzhenry.
“That confidence obviously increases as the year goes on.”
She said there will almost certainly be further adjustment payments between now and the final payments that are made in January.
“There is still a gap of 15 to 20 percent between the initials and the PROs on the wheat side, so I would expect adjustments will continue provided the markets don’t change from current expectations,” she said.
It generally takes six to eight weeks for the federal government to approve an increase after receiving the board’s recommendation, which in this case was submitted March 14.
Last year the board formally requested the federal government to allow the board to assume the risk for adjustment payments (the government would still guarantee the initial payment).
“That would make the turnaround time so much faster,” said Fitzhenry. “We could probably do it in a week.”
The board would also likely have higher risk tolerance levels than the federal government, meaning a larger percentage of the PRO would get into farmers’ hands more quickly.
While former CWB minister Chuck Strahl responded favourably to the board’s initial proposal, that’s the last the board has heard on the subject.
“We haven’t heard of any desire from the government to pursue that at the moment,” she said.
So far this crop year, initial payments were increased in October, November and February.
