Quality woes demand marketing skills

Farmers told to hone up on quality parameters to reap the best prices possible for specific quality specs

The prairie wheat harvest is shaping up to be a bit of a dog’s breakfast this year.

To avoid getting a bite on the backside, farmers should take a close look into the dog dish and figure out exactly what they’re serving up to Fido.

“I think that’s one thing that all farmers, myself included, need to be better at is knowing what we have to sell and knowing how to sell it,” said Levi Wood, who farms near Pense, Sask., and serves as chair of the Western Canadian Wheat Growers Association.

“Whether that involves sending a sample to a third party grader or taking it right to the Canadian Grain Commission, it’s very important just to provide yourself with an accurate, unbiased analysis of what you’ve actually got.”

With wide variability expected in the quality of this year’s wheat crop, there is a higher likelihood of inaccurate grading or grading disputes at prairie elevators.

The consequences for growers of being complacent or delivering grain hastily could be costly.

For example, the difference in value between a 2CWRS 13 percent protein and a 3CWRS 12.5 could easily exceed $10 per tonne.

That difference translates into big bucks for a farmer who has thousands of tonnes to deliver.

Wood said there are obvious steps growers can take to ensure they’re not giving away value at the elevator.

Paying for a third party evaluation is a good place to start.

“There are costs associated with (third party graders), but those costs can pale in comparison to not knowing what you have.”

Before seeking a third party analysis, farmers should ensure that the sample they submit is representative of the entire lot being tested.

They should be aware of the most common degrading or discounting factors applied by grain buyers.

For example, fusarium affected many spring wheat and durum acres this year.

To minimize the chance of potential discounts, growers should have an accurate understanding of fusarium damaged kernels, vomitoxin levels and DON.

Also, different grain companies will be filling supply contracts to end users with different quality parameters.

Farmers who understand the quality parameters they are marketing are better equipped to avoid price discounts and take advantage of premiums that may be offered for certain quality specs.

Even if growers don’t seek a third party analysis, the simple act of presenting samples to different buyers can have a huge impact on net returns.

“Shopping your samples around to all of your grain buyers is sometimes just as effective as getting a third party to grade your grain,” Wood said.

“As a grower, I don’t necessarily care what they call it in terms of grade, I’m more concerned about what they’re going to pay me for it.”

Growers delivering grain against pre-negotiated contracts can also reduce their price risk by contacting their buyer and discussing tolerances within their contract.

Before they begin delivering, producers should understand the discounts applied to grain that falls outside of contract specs.

“One of the challenges in a lot of grain contracts is that sometimes those downgrading factors aren’t previously priced into those contracts, so in those instances, you can leave yourself quite open (to price discounts),” Wood said. “Certainly, in cases where farmers are delivering grain that doesn’t meet contract specs, they should be made aware of that as soon as possible.”

Wood conceded that farmers who have lots of tough, low-quality wheat might be eager sellers this fall, particularly if they have limited bin space and neither the capacity nor the inclination to manage high-risk inventories on the farm.

Commercial grain drying services are expected to be in high demand, and drying rates will almost certainly reflect the fact that on-farm bin space is already almost full.

Another service available to growers is the Canadian Grain Commission’s Subject to Inspector’s Grade & Dockage Service.

Daryl Beswitherick, quality manager of programs at the CGC, described the service as binding arbitration that can be used by farmers to settle grade disputes that arise at a primary elevator.

Farmers can request the service at a primary elevator for a fee of about $50 and have a sample of their grain sent to a CGC service for a definitive analysis. The service can be used to assess grade, protein, dockage and moisture.

Beswitherick said grading disputes and requests for the Subject to Inspector’s Grade & Dockage Service are more common in a year when there’s a wide variation in grain quality.

“It really depends on the year and the commodity … but in general it (demand for the service) doesn’t fluctuate too much,” Beswitherick said. “Typically, when you have a lot of No. 1 wheat, you’re not going to get as much (demand for the service).”

On average, the grain commission receives about 200 requests a year for the service.

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