Education needed | Western Union program
Not so long ago, it was a major news story if the loonie gained or lost half of a cent in a day relative to the U.S. dollar.
But these days, financial reporters and bankers barely blink when the loonie moves a cent in a day, says a currency risk manager.
“We used to get excited about 20 to 30 basis point moves in day,” said Mark Kelly, Western Union Business Solutions’ senior business development executive for Manitoba.
“Now, a 100 point move is not uncommon and in some conditions you will see 200 to 300 point swings in the market.”
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Consequently, Canadian farmers have become much more vulnerable to currency fluctuations, which is why Western Union and Keystone Agricultural Producers have teamed up to create a foreign exchange risk program in Manitoba.
“Grain farmers have not had the same level of foreign exchange risk as other commodities, like pork,” said KAP president Doug Chorney.
“However, this is changing as more and more special crops are sold into the U.S. and the changes with the CWB may further accelerate the need on some grain operations to be more cognizant (of currency risk).”
Kelly said Western Union already works with Canadian agricultural clients on foreign exchange risk, but most producers aren’t managing their currency risk.
“What we discovered, in dealing with some of the larger corporate in the ag business, is that it’s a very underserved market in terms of your regular producer,” he said.
“So we approached KAP and showed them what it is we can do…. Now we’re going to roll this program out. The core of the program is education. The next steps are to put on a series of webinars or town halls.”
Western Union Business Solutions will waive its foreign exchange transaction fees for the first three months so that KAP members can test out the potential benefits of currency risk management.
The KAP program, which will be offered to farmers as part of its member benefits, is the first arrangement between Western Union and an agricultural producer group in Canada, Kelly said. However, the company is working on similar programs with other producer groups.
“We’re in discussions with people that represent two other (ag) groups in Western Canada,” he said.
“The KAP program is going to be the cornerstone and we’re going to learn from that.”
Western Union will host its first webinar for the program April 12. Contact KAP for more information.
