As the clock ticks down on the Canadian Wheat Board’s single desk for barley, the chances of the board and the government co-operating on the transition appear to be disappearing just as quickly
Last week, CWB minister Chuck Strahl harshly criticized the marketing agency after it suspended its 2007-08 pool return outlook and producer payment options for barley.
The board said the uncertainty created by the government’s plan to switch to an open market on Aug. 1 has made it impossible to provide an estimate of pool returns next year or to offer pricing options.
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“It would be inappropriate to provide farmers with a price signal that we know is not accurate and have them make decisions based on that,” said Ward Weisensel, chief operating officer for the CWB.
“That would be wrong and would do damage to producers.”
Strahl responded by issuing a strongly worded News release
news questioning the board’s motives.
“These are useful business tools for producers and by suspending them, the CWB seems to be trying to punish producers for preferring to have market choice,” he said.
“It would be better for the CWB to think about how it can work for farmers in a marketing choice environment, not take away valuable services.”
Weisensel said the minister’s comments reflect a misunderstanding of how the grain business functions and the board’s obligations to farmers and customers.
Customers who were active in the 2006-07 barley market are now waiting until Aug. 1, figuring they can get a better price once there are multiple sellers in the marketplace, depriving the board of anticipated sales.
Farmers are uncertain about whether to deliver, making it impossible to estimate the final size of the 2006-07 pool account, and as for the 2007-08 pool account, the board doesn’t even know if there will be one.
The board also has concerns about its ability to meet existing contracts.
As well, the possibility of legal challenges to the government’s plans to end the single desk through regulation, rather than legislation, adds to the uncertainty.
Weisensel said the board hopes Strahl will abandon his plans or at least delay implementing the open market until August 2008.
In his News release
news, Strahl said the CWB is responsible for confusion in the market.
“Producers need and want clarity, but the CWB is injecting uncertainty into the market,” he said, adding the board should work with his officials to bring about the changes farmers want.
Weisensel said it’s absurd to say the board is responsible for the uncertainty.
The CWB isn’t the only organization asking for a delay.
A spokesperson for a major malting company said last week Ottawa should wait until Aug. 1, 2008, to put its new barley marketing regulations into effect to give maltsters time to fill or unwind existing contracts.
Maltsters have made significant sales based on contracts for barley supplies with the CWB beyond Aug. 1, 2007, said Robert Meijer, spokesperson for Prairie Malt Ltd.
“We can push (the date) back, or the wheat board and the government, I suspect, will be held fully accountable for the liability this is going to create in terms of costs,” Meijer said.
Maltsters have told government officials, including Strahl, that the liability would be in the “high tens of millions” of dollars, Meijer said.
Prairie Malt is owned jointly by Saskatchewan Wheat Pool and Cargill Ltd., and is the second-largest of four malting companies in Canada.
– with files from Reuters
