Canadian flour millers face uncertainty over supply and pricing as the Canadian Wheat Board loses its marketing monopoly for milling wheat, says a Canadian milling industry leader.
However, Derek Jamieson, president of P&H Milling Group in Cambridge, Ont., and chair of the Canadian Millers’ Association, said the industry will adjust.
“There will be uncertainty but I believe it will settle out pretty quick,” he said in a late November interview after a speech at an Ottawa grain industry symposium.
“Is it insurmountable? No, it’s no different than the Ontario situation, just on a bigger scale.”
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The Ontario Wheat Board lost its monopoly power almost a decade ago and millers had to scramble to adjust because most of the province’s crop was soft white wheat destined for the pastry market.
However, Jamieson said the loss of the CWB as a supplier will be a much bigger adjustment.
“There will be no supply assurance and there will not be the assurance of grades and protein content that were part of contracts with the board.”
He said the milling industry also benefits from the CWB’s transparency in daily forward contracting.
Securing supplies at guaranteed quality, protein and price will soon be riskier and more time consuming, said the Ontario miller.
“That area clearly will require more work on our part,” said Jamieson.
“We have worked with security of supply and quality. In future, wheat will go to the best market, and if the best market has taken all the supply by April and you don’t have a placeholder there, you have a problem.”
He said the transition from monopoly to an open market over the next seven months will be difficult because of market uncertainty.
Farmers will be able to contract wheat sales to the private sector for delivery once Bill C-18 becomes law by mid-December.
They will have to deliver milling wheat through the CWB single desk until July 31, but there is no way to know how much wheat the board will have available to sell and how much farmers will withhold until the open market begins.
“Certainly on supply, there will be challenges,” he said.
As well, millers expect another learning curve as Canadian wheat grades move away from current Canadian Grain Commission rules toward buyer specifications.
Jamieson said P&H has started to discuss contracts and pricing for after Aug. 1.
“We will be competing for supplies and price,” he said. “It will be a new experience.”
