SASKATOON – The federal government has increased Canadian Wheat Board initial payments for 1995 feed and malting barley for the second time in less than a month, amid charges by one of its foes that the boost is opportunistic.
The latest increase, which adds $12 per tonne to the initial payment for feed barley and $20 per tonne for designated barley, is effective Nov. 8.
On Oct. 12, initial payments for feed barley prices were boosted by $12 per tonne for feed barley and $30 per tonne for all grades of designated barley.
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Pat Durnin, chair of the Western Canadian Wheat Growers’ Association, said from his Kathyrn, Alta., farm that the timing of the board’s announcement is suspect.
“It seems interesting that these increases are announced at this point in time,” he said, adding that announcements of increases in initial payments usually come later in the calendar year.
Plebiscite has pull
Durnin thinks the impending Alberta plebiscite, where farmers will be asked whether they support the idea of selling their wheat and barley to entities other than the Canadian Wheat Board, has had an effect on the federal government’s willingness to guarantee increases in initial payments.
But wheat board information officer Brian Stacey denied the Alberta plebiscite has had any effect on the increases.
He admitted two back-to-back adjustments are unusual, but said the board has been more responsive to the market since it started releasing pool return outlooks a couple of years ago.
The outlooks have made initials more responsive to changes in commodity markets and influence farmers’ delivery decisions, Stacey said.
The current pool return outlook for No. 1 CW feed barley stands at $167-$177 per tonne, while Special Select two-row designated barley is $230-$240 per tonne, and the same grade six-row designated barley is $212-$222.
However, Durnin said even this latest increase, which adjusted the initial price for No. 1 Canada Western barley to $139 per tonne, likely isn’t enough to get farmers to deliver to the board rather than the domestic feed barley market.
Factors to consider
He said transportation costs and timeliness are factors that make the board’s price less competitive.
In Alberta, the average deduction for freight, elevation and handling on feed barley is $40.54 per tonne.
But Stacey said farmers are missing out on lucrative export markets by not committing enough feed barley to the pool.
For instance, he said the board had to pass on the latest Japanese tender for feed barley because of lack of supplies. The instore, Vancouver price was $235 per tonne.
And last week, Saudi Arabia, one of the world’s largest importers of feed barley, put out the word that it needed nearly a million tonnes of barley for delivery in November and December.
Word from exporters however, was that the board could only supply 30,000-40,000 tonnes of that need.
