McLENNAN, Alta. — Canadian farmers will be helped by the drought in the American Midwest, but they shouldn’t assume they can nab lucrative American markets, said the president of Cargill Ltd.
“It won’t be as simple as Canadian grain replacing American grain,” said Len Penner in an interview during the grand opening of a new 28,000 tonne Cargill grain elevator in McLennan.
“It is truly a global picture.”
He said Cargill and other companies regularly move grain from areas with surplus to areas of need.
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The weather patterns that affected U.S. corn and bean production and crops in Russia shift every year and this year Canadian farmers have benefited with high commodity prices.
“As part of that, that does open the door for more Canadian grain to find a home,” said Penner. “It’s a super good news story for Canadian farmers, the shortage of supply against a fixed demand. The world still needs grain.”
Canada exports 70 percent of its grain production, and shortages caused by weather in other parts of the world create market opportunities for Canadian grain producers.
Penner also discussed changes brought about by the end of the Canadian Wheat Board’s export monopoly. Cargill is one of several grain companies with handling agreements with the new CWB.
Penner said he thinks some farmers are still looking for a pooling program to market their wheat.
“Our choice has been to say the wheat board is the best manager of the pool account. They have been doing it for the longest. If a farm customer of ours is looking at that as a marketing option for their wheat, we will direct them to the Canadian Wheat Board.”
Penner said Cargill’s role would be helping farm customers find their way in the new wheat marketing era.
“The biggest challenge is helping farmers understand the complexity of this change and how they will have to evaluate the options that they have. Marketing wheat is more complex than marketing canola.”
Grades, varieties, protein levels and delivery dates all affect wheat price, which add complexity to finding the best grain price.
As one of the world’s largest grain companies, operating in 65 countries, Penner said Cargill is used to working in many different types of marketing environments.
He said Cargill’s international grain customers, including Japanese visitors also at the grand opening of the northern Alberta elevator, raised questions about the new marketing system in Western Canada.
“All of our key global customers have had a similar question. What is this change going to mean to me. They need wheat. They want Canadian wheat.”
The new grain elevator is Cargill’s second major facility in the Peace River area including a large throughput elevator at Rycroft.
Guy Berube, a Falher farmer, said he is pleased Cargill has built another elevator.
“It’ll bring some competition. This is good,” said Berube, who farms 9,000 acres with his brothers just north of Falher.
Eli Wipf of the Twilight Colony at Falher said the increased elevator space will help give farmers more space for their grain straight off the combine.
“Another buyer is always good,” said Wipf.
