Farmers are jumping into the new, improved Canadian Wheat Board cash-pricing program.
“When you get out in the country now there’s a lot more interest in it,” said Alberta Agriculture analyst Charlie Pearson about the CWB Producer Payments Option Program.
“People are looking at it.”
With almost three months to go before the program ends for the year on July 31, more than 7,300 farmers have already applied for producer identification numbers.
That’s far more than the 4,200 farmers who participated in the entire, though limited, 2000-01 program. Last year farmers signed only 215 contracts for 30,368 tonnes of grain.
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This year 546 farmers have signed contracts to sell 106,017 tonnes through the program.
Pearson said some farmers like the look of this year’s program because it lets them price their crop well ahead and gives them much needed cash soon after the harvest season.
For farmers who want to guarantee they surpass break-even levels, locking in the price now can be a sensible option.
“It just allows a person to plan a bit better,” said Pearson.
Last year’s program had a narrower scope. Only three grades of wheat were included and producers were limited to signing onto the PRO price. They could only take advantage of the program for the five days after a pool return outlook was released.
This year producers can contract for all classes and grades of wheat, except for durum, sample grades and mixed grains. Feed wheat is included, but at a discount. Feed barley is also included.
Daily pricing is also offered any time up until July 31.
Errol Anderson, analyst with Pro Market Wire Report, said a number of farmers have told him they like the program. He said there are two main reasons: “Freedom and cash.”
Anderson said the program helps farmers by getting them all their money when they deliver.
“I’m a big believer in getting cash in,” said Anderson.
Producers who sell grain through the program get paid the full price when they deliver, based on Minneapolis futures minus charges for risk, interest and administration.
They don’t receive an initial payment, followed months later by interim and final payments.
The program also minimizes the risk of a falling market, without eliminating the potential of a rising market.
“They can fix a price with the board and get cash in, and use their trading account to open the ceiling on wheat, if they choose to do so,” said Anderson.
The program also allows the farmer to catch rallies in the wheat markets and gives him more control over how much he gets for his grain.
“It gives a grower a little more control of their destiny,” said Anderson.
He thinks that’s why so many growers are signing up for producer identification numbers, even if all aren’t signing contracts.
Wheat board spokesperson Jim Pietryk said he expects more farmers will join the program over the next couple of years.
Pietryk doubts the cash pricing program will replace the board’s traditional pooling approach.
“We still think most farmers will use the pooling mechanism for their risk management,” said Pietryk. “But farmers can do both.”
Pearson said he is encouraged by this year’s program.
“It’s a good first step and obviously everyone is learning as they observe,” he said.
Anderson thinks farmers who want more market control of their crops want to embrace the program so they can benefit from free market returns while encouraging the board to continue offering market flexibility.
“I’ve got good vibes about it.”
