Winter wheat producers in the eastern Prairies will notice a change in their rail freight bills in the 2009-10 crop year.
The Canadian Wheat Board will implement a separate freight adjustment factor for winter wheat beginning Aug. 1.
Previously, winter wheat had been lumped with all other wheat in calculating the FAF.
The winter wheat FAF is expected to be $15 to $20 per tonne, compared with the all wheat FAF of $8.30 in 2008-09.
The change is designed to reflect the freight costs associated with moving winter wheat to export position.
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Brian Morris, the CWB’s policy manager for logistics, said three factors were behind the change.
n The amount of red winter grown in Western Canada has increased significantly in recent years.
n An increasing proportion of the CWRW crop is produced in the eastern Prairies, compared with other wheat classes.
n A greater percentage of winter wheat markets is serviced through West Coast ports, compared with other wheats.
All that indicated the need for a separate FAF, said Morris.
“The idea is this will better reflect price signals to farmers, better reflect the value of the red winter wheat to farmers and just better reflect everything that’s going on,” he said.
The eastern and western catchment areas for CWRW will be defined by the FAF line, the point at which the freight rate to Vancouver equals the freight rate to Thunder Bay plus the FAF.
That will be roughly halfway between Virden and Brandon in Manitoba, although the exact point will depend on the final value of the FAF, which has yet to be determined.
On the east side of that dividing point, farmers will pay the freight rate to Thunder Bay plus the FAF. On the west side, they will pay the freight rate to Vancouver.
A farmer on the FAF line has the highest freight deduction on the Prairies because he or she is at the farthest distance from port.
(For other wheat, the FAF will be somewhere east of Regina.)
Morris acknowledged the FAF is somewhat complicated, but said the board has been working for the past 18 months to publicize the coming changes for winter wheat.
“Producers should be aware of this,” he said. “I should hope no one gets caught by surprise.”
Winter wheat growers in Alberta or western Saskatchewan won’t notice a difference in their freight bill, while those in the eastern Prairies will see some difference, depending on location.
