Major grain companies operating in Western Canada’s new marketing environment say they will waste no time rolling out forward contracting opportunities for producers.
Executives with the companies, including Viterra and Richardson International, said they will begin offering forward contracts on wheat, durum and non-feed barley as soon as legislation ending the Canadian Wheat Board’s marketing monopoly receives parliamentary approval.
Federal agriculture minister Gerry Ritz has said the majority Conservative government will ensure that legislation is passed before Jan. 1.
If that happens, grain company contracts for the delivery of board grain after Aug. 1, 2012, could be unveiled later this year or early next.
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“That should be immediate from Viterra’s perspective,” said Fran Malecha, the company’s chief operating officer for grain.
“I think we will be able to give farmers price signals for Aug. 1 and forward as soon as possible. We’re kind of targeting Jan. 1 of the New Year; that’s assuming that legislation is passed in late December.”
Malecha said legislation would allow Viterra to use its assets more efficiently and free up capacity.
“I think we see this as an opportunity to move to the next level of efficiency in moving grain from farmer to end user. We all know that there are times when capacity is constrained … so the more efficiently we can use that capacity, the better for the whole industry” he said.
Jean Marc Ruest, vice-president of Richardson International, offered similar views, saying his company will begin offering contracts for Aug. 1 delivery as soon as legislation receives royal assent.
“This path forward has been made quite clear by the government for some period of time now so we’ve taken the steps required to at least start preparing for that eventuality,” he said.
Eliminating single-desk selling enables grain companies to manage their facilities more efficiently, leading to better service for farmers and end users, he said.
He was surprised the legislation offers government guarantees to a voluntary wheat board for five years.
Richardson anticipated it would offer concessions during the transition period, but the five-year term is longer than expected.
The fact that the voluntary board will be free to deal in both board and non-board crops such as canola compounds those concerns.
“We don’t fear competition from anyone and in fact we’ve welcomed it on the non-board side of things … but we need to understand or be reassured that … we’ll be competing against them on an equal footing in a commercial environment and that we won’t be competing at a disadvantage to this entity,” Ruest said.
Independent grain broker Allan Johnston of Welwyn, Sask., called the proposed legislation a welcome change that will attract more investment in Western Canada’s grain handling, milling and processing.
“I was just delighted to hear it was happening finally,” Johnston said.
If legislation is passed, Johnston predicted there will be a learning curve as farmers become accustomed to the new marketing environment.
“Within six to 12 months, they’ll see it’s not going to be any different than marketing your canola, or your flax, or your oats, or your peas, or anything else,” he said.
Johnston believes the changes will generate more business for his company. He has already been in touch with at least one large American grain broker seeking top quality wheat.
“We will almost certainly grow with this opportunity, but that’s not the reason I’m supporting (the changes),” he said. “I just don’t think it (maintaining the single desk) is the right thing to do.”
He said he has no qualms about the voluntary board or with Ottawa offering financial guarantees.
