ROSETOWN, Sask. – Canada will have to offer more credit if it is to continue selling wheat into financially troubled Asian markets, says a Canadian Wheat Board commissioner.
Gordon Machej said last week that the board has talked to the federal government about extending credit to major customers like Indonesia.
“It looks as though credits will be required and the government is fully aware of that,” he said in an interview. “I would hope it would be forthcoming.”
The board has already extended $35 million (U.S.) in credit to South Korea for milling wheat, following the lead of the U.S., which offered $1 billion, and Australia’s $36 million. The U.S. has offered another $1 billion to other Asian countries.
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Machej said it’s crucial that the board remain competitive with other exporters in the region.
“If we found ourselves in a position where three of four competitors were offering credit, the one would lose out,” he said. “We don’t want to be in that position.”
Machej said the board has not lost any sales as a result of the financial woes that have shaken the region in the last few months, but is concerned about future sales prospects.
“As we look ahead the crisis doesn’t seem to be abating,” he said. “But at the moment our shipments have been moving according to the usual schedule.”
Concern is strongest over the situation in Indonesia, which buys about four million tonnes of wheat a year. Last year Canada shipped 1.5 million tonnes.
At a Grain Days meeting here Jan. 28, Machej assured farmers that they are not about to lose Indonesia as a customer.
Indonesia produces no wheat and wheat-based foodstuffs like noodles have become a staple part of the diet, he said. Wheat is probably the last thing that would get cut in the event Indonesia did have to scale back its imports.
