Will farmers be willing to deliver into voluntary pools instead of taking all their cash up front at the elevator?
Yes, especially if government guarantees allow for higher initial payments on short-term pools, say monopoly critics.
“If they’re going to run shorter-term pools, then I think the Grain Growers (of Canada) would be happy to lobby with the (Canadian) Wheat Board to consider maybe a higher rate of 75 percent,” said grain growers executive director Richard Phillips.
Farm marketing adviser Brenda Tjaden Lepp said she thinks voluntary pools will work because farmers are comfortable with them and they function well as one part of a comprehensive risk management strategy.
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“I’ve always said an effective, voluntary pool is competitive, compelling (as a means of pricing grain),” said Tjaden Lepp, co-founder of FarmLink Marketing Solutions.
“We are going to be recommending every single year that some portion of the crop be marketed through (voluntary pools), because it’s good risk management to get an average pool price (for some production).”
Many analysts believe crop pricing pools like the wheat board’s current ones would fare poorly compared to open market cash pricing in a post-monopoly world.
Farmers would probably pop into pools whenever the cash-pool price spread was in their favour and out when it wasn’t, and some say that would make the pools perform poorly.
As well, getting 100 percent of the price for grain sold in a cash sale to an elevator is attractive compared to the 65 percent generally offered in initial payments, critics say. As a result, a voluntary pooling system would have trouble attracting much grain.
However, Phillips said short two or three month pools, with high initial payments, should be attractive.
