The Canadian Wheat Board has asked the federal government to approve an adjustment to initial payments to get money into farmers’ pockets.
If approved, it would help narrow the unusually large spread between the Pool Return Outlook and the initial payment.
Wheat board spokesperson Rheal Cenerini said the board has made the request, but does not know how much the federal government will approve or when.
“It’s not our process. We can’t say whether it will be three weeks or three months,” said Cenerini.
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But he sounded optimistic about the government agreeing to some level of adjustment.
“Given the spread that exists currently, I think it’s reasonable to assume that there is going to be an adjustment payment,” he said.
The current PRO for No. 1 CW hard red spring wheat, 12.5 percent protein, is $190 per tonne before deductions. The initial payment is $130 per tonne.
The federal government has to approve adjustment payments just as it has to approve initial prices. That’s because the government is responsible for shortfalls if the wheat board is wrong about the final pool returns surpassing initial, adjustment and interim prices.
Last year, world wheat prices rose dramatically at harvest time and into the fall, leading the wheat board to ask for and receive two adjustments in September and November from the initial prices that were based on the June PRO.
But then prices began falling and final pool returns are now widely expected to be below the amount farmers have already been paid. The wheat board has not publicly acknowledged that pool accounts are in deficit, something it has said will be clear in December when it releases its official numbers for the 2002-03 crop year.
This year’s initial payments fell well below the percentage of the June PRO that producers usually receive. Instead of getting about 75 percent of the PRO, the federal government approved initial prices that generally fell below 70 percent.
For No. 1 CWRS wheat it paid less than 65 percent.
The PROs for wheat have not changed much since summer, because the rising world price for wheat in U.S. dollars is almost exactly offset by the rise in the value of the Canadian dollar.
Other board grains have risen, especially feed barley, where the PRO has climbed from $123 per tonne in June to $153 today.
Cenerini said now that the board has made some sales and the PRO is fairly stable, the board believes the government can safely approve an adjustment.
“We’re always going to have some risk factor and the risk factor is always larger at the beginning of the crop year and gets smaller as the crop year evolves,” Cenerini said.
