The Canadian Wheat Board says it has saved farmers $16.8 million in transportation costs in the first six months of the crop year.
It says the savings were possible only because of the single desk marketing system.
“Those savings were achievable specifically because farmers are able to leverage the collective volume of prairie farmers’ wheat,” said CWB spokesperson Maureen Fitzhenry.
The savings are returned to farmers through the pool accounts.
Fitzhenry said the board is able to use its market power to negotiate for a significant slice of the margins that would otherwise go as profits to other players in the handling and transportation system.
Read Also
Agriculture ministers commit to enhancing competitiveness
Canadian ag ministers said they want to ensure farmers, ranchers and processors are competitive through ongoing regulatory reform and business risk management programs that work.
“It simply wouldn’t happen in an open market,” she said. “There is no question.”
The savings came in three areas: tendering grain shipments to handling companies; freight and terminal rebates and financial penalties levied against grain handling companies and railways for failing to meet performance targets.
The board declined to say how much was saved in each area. The numbers are incorporated into the board’s internal corporate performance measure.
Transportation savings can vary from year to year, depending on grain volume and other factors. Savings totalled $35.2 million in 2006-07 and $22.7 million in 2005-06.
Another factor in the board’s ability to negotiate savings is the degree of competition in the grain handling and transportation system.
As the system becomes more consolidated, as with the merger of Saskatchewan Wheat Pool and Agricore United into Viterra, the board’s ability to exercise leverage to gain savings for farmers is reduced.
Also, the better the railways and grain handlers perform, the less the board collects in penalties. However that better performance still results in financial benefits for farmers.
