After some tinkering, the Canadian Wheat Board believes it has come up with a new pricing option that will appease the organic community.
Building on the daily price contract that was unveiled in February, the agency has devised an organic spread contract it feels should simplify what until now has been a convoluted marketing process for organic wheat and durum growers.
The new pricing option allows farmers and grain companies to settle the buy-back process on the spot rather than waiting for final pool returns to come in at the end of the marketing year.
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“It will make life simpler for organic producers across the Prairies,” said wheat board director and organic grower Rod Flaman during an April 15 conference call with reporters.
In the past, producers who wanted to market their own wheat had to pay the spread between the producer direct sale, or buy-back price, and the CWB’s initial payment. Then they had to wait for pool returns to be finalized to determine their final settlement.
With the new contract, producers pay one flat spread on the day they arrange a direct sale and that is it. In an example provided by the CWB, it amounted to $5 per tonne on No.1 CWRS 12 percent protein wheat.
“Since the total spread is fixed at the time of sale the uncertainty associated with direct selling through the producer direct sale is eliminated. The organic spread contract will result in more predictable returns to the farm,” said Flaman.
But not every organic grower is enamoured with the new program.
“It is still selling to the wheat board and buying it back and that’s not what the organic industry needs,” said John Husband, spokesperson for the Organic Special Products Group, an association of 160 farmers seeking marketing choice.
Last fall the group sent a letter to the CWB, which predicted the agency would “fabricate a scheme” similar to the fixed price option designed to improve its public image while maintaining a hold on organic farmers.
Husband said the agency’s reputation was damaged by a case made public last year where a Beaubier, Sask., producer was blind sided with a $4,630.13 bill from the board. The producer sold his wheat during a price peak and the board overestimated what his interim and final payments would be.
“It was a public relations disaster for them,” said Husband.
CWB organic marketing manager Donna Youngdahl said it is not surprising Husband’s group knew something was coming because the board had indicated it was trying to resolve criticism of its buyback program. Portraying the announcement as nothing but a public relations gimmick is disingenuous, she said.
“If it improves our public image that is because it is better meeting producer needs.”
Farmers will be able to sign up tonnage for the new program from June 1 to July 22. There is no limit to how much wheat and durum can be signed up.
Producers have until Oct. 31 to reduce their tonnage commitment by up to 40 percent without penalty, a special condition that “recognizes the vagaries” of organic production, said CWB chief operating officer Ward Weisensel.
In the 2003-04 crop year 47,000 tonnes of organic wheat and 7,000 tonnes of organic durum moved through CWB marketing channels. Producers using the buy-back program marketed approximately one-third of that total outside the pool.
Weisensel doesn’t know whether the new contract will entice more farmers into using the buy-back system.
“Not all farmers are going to use this option. There are many farmers who are more interested in using the pooling option,” he said.
Assiniboia, Sask., producer Dwayne Woolhouse is curious to see what the spread is going to be on durum because in the past it has been prohibitive.
Like many farmers he wants to see the program in action before determining whether it is an improvement but he remains skeptical of the
process.
“I don’t care if they do streamline it. If they don’t change it so that they’re paying you as much for the wheat as you have to pay them, it doesn’t work.”
