CashPlus hasn’t taken the barley world by storm, but it has not disappeared from the scene.
The barley marketing program, unveiled at the beginning of the year by the Canadian Wheat Board, has been rejected by the major maltsters and grain companies.
Several smaller companies are offering CashPlus contracts and the board says the response from farmers has been positive.
“We have received literally several hundred calls and e-mails from farmers asking how they can participate,” said CWB spokesperson Maureen Fitzhenry.
While declining to release specific numbers, she added the board has made “significant” forward sales of new-crop malting barley, with 40 percent of those sales being made under CashPlus and 60 percent through the pooling system.
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But several smaller companies and a few hundred farmers are not what the board envisioned for CashPlus.
“It obviously falls short of what we want,” said Fitzhenry.
“We want it to be the (main) program for malting barley.”
CashPlus contracts provide a guaranteed minimum cash price, reflecting the price at which the board is selling to domestic and international buyers. Farmers and selectors are free to negotiate premiums and discounts.
Any revenue in excess of the contracted price is returned to contract holders at the end of the marketing year.
The major maltsters and grain companies say that last feature is the big sticking point with CashPlus.
“Our bottom line is that the board needs to be willing to pay farmers 100 percent of market value up front and not hold anything back,” said Wade Sobkowich, executive director of the Western Grain Elevators Association.
Under CashPlus, with the board paying 90 percent of the sale price to farmers up front and putting the rest into a pool for distribution months later, farmers or companies are not aware of what the marketplace is doing, he said.
“That’s the No. 1 thing that has to be removed before going ahead with any other discussions,” he said, adding his organization’s members will never compromise that position.
He said if the board was to agree, the industry would then be willing to discuss operational details of the program and conceivably reach an agreement with the board.
Fitzhenry said the board is continuing to hold discussions with individual companies about what kinds of changes are required to make CashPlus more commercially acceptable.
The legislation before Parliament to end the board’s monopoly over barley is making things difficult, she added.
Most of the comments from non-participating companies indicate they want the open market, or for the wheat board to create a program that would be the same as the open market, she said.
“No one has any significant criticisms of it other than it’s not the open market they crave.”
The major companies also want to be able to negotiate prices directly with individual farmers, rather than the board negotiating prices on behalf of all farmers.
“Even if farmers wanted that, which we doubt is the case, it couldn’t be done under current legislation,” said Fitzhenry.
The CWB Act mandates a single desk selling system for barley and wheat.
The board also believes such a system would result in lower prices for farmers.
Sobkowich rejected the suggestion that maltsters and grain companies want nothing less than an open market.
“We’ve put our stakes in the ground and if the board is prepared to meet them, then we have something to talk about,” he said.
Both sides agree that the current uncertainty is bad for everybody in the industry.
