REGINA — The CWB has reached grain handling agreements with six more grain handling companies, including the country’s largest, Viterra.
The new agreements, announced June 21 in Regina, mean western Canadian grain farmers who sell wheat or barley through CWB pools will now be able to deliver grain to roughly 100 additional delivery points across the West.
The Viterra deal will also give the CWB commercial access to Viterra’s export terminal facilities and will not be affected by the proposed takeover of Viterra assets by Swiss commodities trader Glencore International.
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Earlier this year, the CWB reached similar grain handling agreements with Cargill, which operates 30 primary elevators in Western Canada, and the South West Terminal, located near Antelope, Sask.
Last week’s announcement, which also included deals with Mission Terminal, West Coast Road and Rail, Delmar Commodities, Linear Grain, Agro Source and the CMI Terminal near Naicam, Sask., brings the total number of eligible delivery points for CWB customers to nearly 130 in Manitoba, Saskatchewan, Alberta and British Columbia.
The CWB is continuing to negotiate with other grain handling companies and will soon have nearly all of the primary elevator points available to take delivery of contracted grain, said CWB president Ian White.
Agreements have yet to be finalized with four of Western Canada’s top six grain handlers: Louis Dreyfus, Parrish & Heimbecker, Paterson Grain and Richardson International.
Richardson, Western Canada’s second largest handler, operates more than 50 country elevators and boasts a total storage capacity of nearly one million tonnes.
White said negotiations with Viterra and other grain companies took longer than expected because of the complexity of agreements, which include transportation, handling and delivery arrangements.
Some observers had suggested that prolonged negotiations would put more pressure on the CWB and would benefit grain handling companies by improving their bargaining positions.
However, White said he didn’t feel grain companies were deliberately delaying the process.
“I can say that all the grain companies have been fairly forthcoming in their negotiations … acting in good faith with us,” he said.
White said the CWB will compete directly with grain handling companies, but those companies need the volumes of grain that the CWB can attract through its pooling systems and other contracts.
Farmer confidence in CWB contracts will increase as more grain companies agree to receive wheat and barley from the board, he added.
Kevin Bender, president of the Western Canadian Wheat Growers Association, said the CWB-Viterra agreement comes as welcome news to grain farmers, particularly those who have limited delivery options.
With close to 100 delivery points across Western Canada, Viterra is ideally positioned to accommodate CWB business.
Bender said growers in northern B.C. and Alberta’s Peace River region were particularly concerned about the lack of delivery options.
Until last week’s announcement, farmers in those regions had only one delivery option — a Cargill facility located near Rycroft, Alta., 530 kilometres northwest of Edmonton.
“I think the agreement will come as comforting news to a lot of farmers,” said Bender. “The timing might be a bit late, but late is better than never.”
In Manitoba, grain farmer Doug Chorney also welcomed news of the Viterra agreement but suggested the timing of the announcement came far too late in the crop year.
Chorney, president of Keystone Agricultural Producers, said farmers in his area were contracting grain early this year and were eager to take advantage of strong wheat prices.
Many producers would have been willing to commit a portion of their crop to CWB pools, but the lack of handling agreements and limited delivery options convinced them to deal elsewhere, he said.
“We’re operating in a pretty time sensitive environment,” said Chorney. “It (the Viterra agreement) is a good development for farmers, but it’s a little late for many and unfortunately, I think it’s probably going to affect the CWB’s operations this year because of the time that it’s taken.”
Gord Flaten, the CWB’s vice-president of grain procurement, said farmers are choosing CWB pools for a large portion of their cereals.
He said favourable contract terms, such as the act of God clauses, and flexible payment arrangements are designed to minimize producer risk.
“Farmers aren’t taking any risks by electing to use (CWB) contracts, and that is appealing,” White said.
Producers need to act soon if they want to be involved in the pool because many contracts are filling up and they are on a first-come basis.
Initial payments will likely be above the typical 65 percent because of strong marketing by the board, government guarantees and the potential backing of other financial parties, he added.
