In an unprecedented move, the Canadian Wheat Board has made public its initial payment recommendations to the federal government.
In the past, the marketing agency has acknowledged that it has asked for an increase, but has never released the numbers.
But with grain prices at such high levels, the board decided it was time to break new ground, announcing it has asked Ottawa to boost initial payments by the following amounts:
- For milling wheat, $44 to $65 a tonne. The mid-point of that range would boost the initial payment for 1 CWRS 12.5 percent protein to $230.50.
- For milling quality durum, $116 to $131 a tonne. The mid-point would put the initial for 1 CWAD 12.5 percent at $311.
- For feed wheat, an increase of $100 a tonne (Pool A), resulting in an initial for 1 CW of $230.50.
- For malting barley, $50.50 to $61.50 a tonne. Using the mid-point, the new initials would be $254.50 for SS CW two-row and $229.50 for SS CW six-row.
Read Also
Land crash warning rejected
A technical analyst believes that Saskatchewan land values could be due for a correction, but land owners and FCC say supply/demand fundamentals drive land prices – not mathematical models
All prices are basis export position; local freight and handling charges must be deducted.
The board submitted its recommendations to the government Oct. 1.
Based on the traditional six to eight week turnaround, new initial payments could be approved in late November, allowing adjustment payments to be sent out.
CWB chair Ken Ritter said the timing is in the hands of the federal government.
“My understanding is this is coming together pretty quickly and I’m hoping they’ll be coming out as soon as possible,” he said.
“But I’m realistic that the machinery of government takes time.”
The board recommends a price range to the government rather than a specific price, recognizing that the government and taxpayers are responsible for guaranteeing the initial payment.
“We try to ensure there is room for discretion for the government,” he said.
Ritter said the board decided to go public with the numbers to help farmers make more informed marketing decisions.
“Given the size of the potential adjustments, we wanted to ensure there wouldn’t be any commercial mistakes, like taking out fixed price contracts that may not be necessary,” he said. “We want to make sure farmers have as much information as possible in their planning.”
If initial payments are increased to the mid-point of the board’s recommended range, they would represent 78 percent of the expected 2007-08 pool return for wheat, 66 percent for durum and 90 percent for feed and malting barley.
In recent years, initial payments have been kept at around 60 to 70 percent of the expected final price.
An initial payment of 90 percent would suggest the board has priced a large percentage of the barley it expects to sell this year and is confident in its Pool Return Outlook.
A board spokesperson declined to comment.
