SASKATOON – Farmers missed out on hundreds of millions of dollars of potential income because the Canadian Wheat Board mismanaged its sales program this year, says the Western Canadian Wheat Growers Association.
But the board has rejected the charge, saying it captured “significant premiums” for western farmers during 1995-96 and accusing the wheat growers of not understanding the basics of grain marketing.
In an open letter to CWB chief commissioner Lorne Hehn, wheat growers president Larry Maguire said it appears the board failed to sell much grain when world wheat and durum prices were at their highest last spring.
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The association said carryover stocks at July 31 indicate the board moved less grain than it should have in 1995-96, and recent reductions in the 1995-96 estimated pool return and the 1996-97 pool return outlook suggest the agency didn’t take full advantage of record world prices.
In the letter, Maguire estimated that about $60 million in potential income was lost on wheat carried over into the new year that could have been sold in 1995-96. And he came up with an eye-popping estimate of lost 1996-97 income.
“If even half the Canadian spring wheat crop could have been hedged in the April to June period, or if the CWB had locked in prices on our behalf, we would be putting almost $1 billion more in our pockets relative to current prices,” Maguire said.
Locked in prices
He said under the association’s dual market proposal, last spring farmers could have locked in the prevailing high prices for future delivery.
In reply, the board said it aggressively marketed wheat and durum in 1995-96 and disputed the wheat growers’ interpretation of July 31, 1996 carryover figures. While the crop year officially ends on that date, the pool accounts aren’t closed until new crop is available.
In a press release, the board said the association also ignores the fact that selling grain is a year-round business, and some old crop grain must always be carried over to service customers during August, September and October.
The board said it can’t force farmers to deliver, and many chose to hold grain into the new crop year in anticipation of higher returns: “In the 1995-96 crop year the CWB accepted all of the grain prairie farmers chose to deliver.”
Wheat board information officer Jim Pietryk said while it’s true the price outlook has declined, it is easy to look back now and say what the board should have done with its sales program. And he said the board did make sales throughout the period of highest prices.
As for suggestions the board should have somehow locked in those high prices for delivery this fall or winter, Pietryk said that’s just not feasible given the huge volume of grain involved.
Half the spring wheat crop, as the wheat growers suggested, represents about 10 million tonnes of grain.
“We’re not aware of any commodity market, certainly not Minneapolis, that would be able to take that number of open contracts,” he said.
Hehn’s official reply to Maguire’s letter will be made public, but was not available at press time.
