Grain firms refuse delivery of CWB contracts | CWB encourages farmers to shop for best basis
CWB officials are encouraging farmers to commit wheat, durum, barley and canola to its 2012-13 harvest pool by the Oct. 31 sign-up deadline.
CWB officials held a conference call with western Canadian farmers last week to promote the pool as a marketing option with flexible delivery terms allowing farmers to manage market risk.
However, farmers in some parts of Western Canada said they are still having difficulty delivering grain to CWB contracts, an issue that was not entirely unexpected, according to CWB officials.
With major grain companies still refusing to accept CWB grain in some areas, producers said delivery delays are hurting their decision to participate in CWB pools.
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“I’ve got three elevators within a couple of hours of me … and every one of them has told me that they have no plans to take any wheat board grain at all,” said a farmer from Youngstown, Alta., one of 3,000 prairie growers who participated in the Oct. 17 conference call with CWB executives.
“It would be nice to have some insurance that you could deliver this grain before you sign a contract.”
Gord Flaten, CWB vice-president of grain procurement, said board officials are aware of delivery concerns and are working with grain companies to resolve issues.
He also stressed that CWB and grain handling companies are operating in a new environment.
“There certainly were issues earlier on when they (elevator companies) were trying to clear out old crop supplies,” Flaten said.
“They also, quite rightly, are saying that they don’t want to bring in grain well before they know they’re going to move it, and that’s certainly fair.”
Flaten said CWB is in constant contact with grain companies, many of which are still getting up to speed on handling CWB grain in the new, deregulated grain marketing environment.
Farmers say grain buyers in various locations offer a range of reasons for their inability to handle CWB grain.
Some elevators say they are busy filling non-board sales contracts. Others say they don’t have rail cars to accommodate CWB deliveries.
“They’re all saying the same thing,” the Alberta grower said.
“‘We’ve got lots of sales for our own grain so why would we take wheat board grain in when we don’t have any rail cars for it right now.’ (They’re) not going to plug up (their) elevators with wheat board grain when (they) can buy straight off-board grain and it’s gone.”
Other producers raised similar delivery concerns, suggesting local elevators have yet to determine handling and transportation costs for CWB grain, a cost commonly referred to as basis.
Flaten said concerns pertaining to basis costs are also being addressed.
“We’ve heard that comment about basis several times from a number of local elevator staff, and I think that’s one of the challenges that the (elevator) companies are having, getting information out to the country level,” he said.
“The fact is that the CWB does not set the basis.… The companies themselves decide what those charges are going to be. Many of these facilities have really just recently gotten up to speed on how to deal with these contracts.”
Flaten and CWB president Ian White stressed that CWB pools represent a flexible and attractive marketing option in terms of delivery opportunities, the quality and grade of grain being delivered, protein payments and the producer’s ability to alter the terms of a contract without financial penalty.
Farmers who sign CWB contracts can deliver their grain to any of the major elevator companies operating in Western Canada.
If producers have trouble making delivery arrangements with one company, they should contact another company and compare delivery opportunities and basis costs.
“I would encourage (farmers) to just keep going back to those companies or checking with some others to see what sort … of deal they are willing to do,” said Flaten.
“(The other thing) that I do want to stress is that just like every other year in the past, we can’t move the entire crop right after harvest so not everybody is going to be able to deliver in September or October.”
Flaten said local CWB farm business representatives can provide updated details on what types of grain are moving and where.
Despite concerns over movement of wheat board grain, CWB sales have been strong and deliveries are occurring at a reasonably good pace, Flaten said.
“We have a very good sales book right now all the way through Christmas and beyond so we are going to be moving a lot of grain,” he said.
“We’ve moved almost 25 percent of the early delivery pool (tonnage) already so I would encourage (farmers) to stay in touch with all (grain handling companies) … because there are going to be delivery opportunities coming up for sure.”
CWB officials will be meeting with grain handling partners regularly to look at ways to improve CWB delivery opportunities and streamline grain movement.
