The Canadian Wheat Board says federal agriculture minister Chuck Strahl is condoning farmers breaking legally binding barley delivery contracts with the grain marketing agency.
“Given comments that we’ve heard from the minister’s office and from the minister’s public comments this week, it would suggest he considers it to be an acceptable practice if farmers break their contracts,” said Deanna Allen, the CWB’s vice-president of public affairs and farmer relations. “I would say he is counselling farmers to break their contracts. It’s unbelievable.”
In an interview with Canadian Press last week, Strahl was quoted as saying farmers can expect to receive $1 to $1.50 more per bushel if they deliver to the open market after Aug.1 rather than to the CWB now.
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Farmers aren’t delivering to the board because they know they can “make a killing” by waiting, he said.
According to the story, the minister said the CWB will have to “sweeten its offer” to farmers in order to acquire barley, adding, “hallelujah, it’s about time.”
Allen said that while the minister didn’t explicitly state farmers should wait until Aug. 1 to deliver their barley, he is suggesting they would be better off if they did.
“That contributes to the market uncertainty that we’ve talked about and it’s something that is illegal,” she said.
She questioned whether the minister would tell canola farmers who had contracted at $6.50 a bu. to break their contracts when the market moved up to $7.95. She also disputed the minister’s statement that nobody is delivering barley to the board.
There was a drop-off in deliveries immediately after the minister announced March 28 the government’s intention to proceed with changes to the barley marketing system Aug. 1, contrary to the federal task force’s recommendation of a Feb. 1, 2008, implementation date.
Since that initial decline, the situation has improved and farmers are now fulfilling their contractual obligations: “it appears they know the value of a contract even if the minister doesn’t.”
Allen said besides being illegal for farmers to ignore their delivery contracts, it would hurt others who have already delivered into the 2006-07 pool by reducing pool returns and limiting the board’s ability to make sales at current higher prices.
It could also create problems for maltsters who have already bought supplies from the board. If barley isn’t delivered as expected, the board or malting companies will have to acquire it at undoubtedly higher prices.
“I think there’s a real concern about running the breweries out of malt unless they can acquire supplies,” she said
