For durum growers signing delivery contracts with the Canadian Wheat Board this fall, honesty will definitely be the best policy.
Anyone thinking of fudging the numbers to try to get additional delivery opportunity will risk getting caught by a new bin audit program announced by the board last week.
It’s the first time the board has felt it necessary to include audits as part of a contracting program, and it’s doing so at the urging of farmers who are abiding by the rules.
Board officials say their analysis indicates some producers have been overstating their production when they take out contracts in order to gain additional delivery opportunities.
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“We have been noticing that the tonnage commitments coming through our contracts are not truly reflecting what is actually being harvested by farmers,” said Gary Pichlyk, the board’s senior manager for farmers’ services.
He said the problem is partly due to the fact that big crops in the past couple of years have prevented the board from taking 100 percent delivery on durum contracts.
That has apparently prompted a few producers to juggle the numbers. For example, they might sign up for 1,500 tonnes when they harvested only 1,000 tonnes. By doing so, a 70 percent call would allow them to deliver their entire crop and boost their cash flow.
“Two or three years ago we heard about it a little bit, but now we hear it consistently,” said Pichlyk.
As a result, producers offering durum on 2006-07 CWB delivery contracts could be subject to a bin audit to verify stocks. There will be random audits, and some producers may be targeted if information they submit looks dubious.
Audits will be done by provincial crop insurance employees.
CWB director Larry Hill, whose district includes major durum-growing areas in southwestern Saskatchewan, said growers attending the board’s annual round of spring meetings voiced concerns that some farmers were cheating on their contracts and urged the board to do something. He said the decision to implement bin audits is a direct response to those concerns.
“Most producers are honest when they report their production when they contract,” he said. “But there are a few people, not many, who try to gain an advantage.”
The board also announced several other changes to the durum contracts for 2006-07.
There will now be just two delivery contracts instead of three, with signup deadlines of Oct. 31 for Series A and April 30 for Series B. The Series C, which had a deadline of May 31, has been eliminated.
Assuming normal grade patterns, the board will take No. 4 and 5 durum solely through guaranteed delivery certificates.
In the event of an atypical grade pattern, the board will provide a CWAD Select contract that will provide a premium price and storage payments to ensure the availability of high quality grain for premium markets.
