The Canadian Wheat Board won’t ship more grain than it has to under
commercial tenders next year.
The board is required to tender at least 50 percent of its grain
shipments in the crop year beginning Aug. 1.
Some in the grain industry have called on the agency to aim higher.
Officials from Saskatchewan Wheat Pool and Cargill Ltd. say they’d like
to see the board shoot for 100 percent tendering in the coming year.
But a senior wheat board official said in an interview last week that’s
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not going to happen.
“As we get into the year I guess we’ll have a better idea, but I would
not see us going beyond 50 percent,” said Adrian Measner, the board’s
executive vice-president for marketing. “That is our plan at this time.”
Full tendering would be a “radical” change that might benefit grain
handlers, but wouldn’t necessarily be good for farmers or the board’s
ability to serve customers, he said.
“Everything has to be taken into account with this, particularly the
farmers’ side, to make sure farmers are comfortable with the changes
and still feel they’re getting proper service.”
In calling for 100 percent tendering, Sask Pool said such a move would
“maximize savings for farmers,” thus lessening the impact of drought
and low prices.
It is estimated that tendering has saved farmers approximately $20
million in the fist nine months of the current crop year by creating
competition among grain shippers for CWB business.
The board has stated that savings from various changes to the system
total $30 million, but won’t say how much is directly attributable to
tendering.
Will Hill, the pool’s senior vice-president for grain handling and
marketing, said increased tendering would make grain companies more
“disciplined” in managing their operations and promote greater use of
high throughput elevators shipping 100-car trains.
“This generates true savings for the producer,” he said.
Cargill spokesperson Angela Dowd said full tendering would create
“efficiencies and flexibilities” for grain handlers and farmers.
Measner acknowledged tendering produces some financial savings for
grain companies and farmers, but he said other factors must be
considered.
“There are two parts to the equation,” he said. “There’s what tendering
can do, and there’s farmer service.”
For the non-tendered portion of the board’s business, rail cars are
allocated based on a grain company’s receipts over the previous weeks
and the balance of farm contracts yet to be delivered.
Measner said that gives farmers some influence over where cars are
directed and helps keep down their grain trucking costs.
“We’re looking for a balance here and we believe that the tendering and
car awards together give us that balance.”
He said 100 percent tendering would direct most grain deliveries to
large, high throughput facilities.
“I don’t think that’s an environment we ever wanted to get into and
one that I’m sure farmers will not want to get into,” he said. “It
would be a radical change.”
Under a memorandum of understanding signed between the CWB and the
federal government in 2000, the board had to tender at least 25 percent
of its shipments in the 2000-01 and 2001-02 crop years and at least 50
percent in 2002-03.
The first year was a disaster, as the major grain handlers refused to
bid on tenders in a spat with the board over the rules.
In the crop year now coming to a close, slightly more than 25 percent
of its eligible shipments will be moved through tenders.
As of July 15, it had awarded tenders for 39,210 rail cars, which works
out to roughly 3.44 million tonnes of grain.
