Wheat growers can receive an extra $10 to $15 a tonne, and guaranteed delivery, if they’re willing to hold back high quality wheat for delivery next crop year.
Sign-up began last week for the Canadian Wheat Board’s wheat storage program, which was introduced last year.
The board wants as much as 150,000 tonnes of top quality 2007 wheat held back to ensure it can supply premium customers next year if the new crop is of poor quality.
In return for holding on to their wheat, participating farmers will be paid an extra $15 a tonne for No. 1 CWRS wheat with 15 percent or higher protein and $10 a tonne for 14.5 to 14.9 percent protein. They will also receive storage payments of $1 per tonne per month and be guaranteed delivery during 2008-09.
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They will also have the opportunity to deliver an equal tonnage of any other wheat or durum from their 2008 crop, a feature designed to ease concerns about cash flow, and can choose whether to price their contracted grain in the current or the 2008-09 pool.
CWB chief executive officer Greg Arason said setting aside high quality wheat allows the board to guarantee it can serve top-paying customers regardless of the quality of the 2008 crop.
“Farmers can help ensure that a supply of Western Canada’s highest quality wheat is preserved for their best customers in valuable, long-term markets,” he said.
The 150,000 tonne figure is the approximate demand from the board’s premium customers.
The board offered the program for the first time last year, and spokesperson Maureen Fitzhenry said the response was less than expected, partly because it was new.
The program will face a couple of challenges this year, she added:
- The smaller 2007 crop may limit available supplies.
- With wheat prices as high as they are, producers looking for cash flow may be anxious to deliver their wheat sooner rather than later, even with the prospect of a $15 premium.
In fact, the board has been urging farmers to sign up for the Series B contract to ensure their grain is sold into the current strong markets.
Fitzhenry said the board may increase the premium to attract more grain to the program. Last year it bumped up the payments by $2 a tonne during the course of the year. Farmers who sign up early will receive any later increase in the premium, she added.
The board will make its decision whether to call the contracted grain forward once the 2008 harvest is complete and its quality is known.
Last year, the board cancelled the storage contracts because the new crop was of good quality. As well, it was limited to 28 specified locations across the Prairies, selected for their ability to provide the desired quality of wheat and to load 50-car blocks, a portion of which was reserved for producer cars.
This year the program is extended to all delivery points capable of providing the right quality and loading at least 25 car blocks.
If the 2008 wheat crop is high quality and the contracted grain is not needed, the contracts will be cancelled and participating farmers will receive special authorization to immediately deliver contracted grain and receive the premium.
