The Canadian Wheat Board wants to take over responsibility for guaranteeing and financing adjustment, interim and final payments to farmers.
Under the board’s proposal, the federal government would still be responsible for backstopping the Aug. 1 initial payment.
The marketing agency would use its contingency fund to guarantee any payment increases as the marketing year progressed.
The CWB’s board of directors approved the plan last week, but won’t submit a formal request to Ottawa until it has worked out unresolved details, a process expected to take a couple of weeks.
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The idea is to enable the board to provide farmers with more money sooner during the year.
“Cash flow is the driving concern,” said CWB vice-president Deanna Allen.
Whereas it once took three to six weeks for the government to approve the board’s recommendations for adjustments to the initial price, it now can take anywhere from eight to 12 weeks, she said.
Also, the government has in recent years become extremely conservative in setting the year-opening initials, further squeezing cash flow.
“They have been taking a 35 percent risk factor,” she said, which the board feels is leaving too much money on the table that should be going into farmers’ pockets.
The board plans to ask CWB minister Chuck Strahl to declare the board’s contingency fund sufficient to guarantee adjustment, interim and final payments.
That fund, which is capped at $60 million, is made up of surpluses generated under producer payment option programs and interest earnings from the barley pool.
“We would need that to be expanded to at least $100 million,” said Allen.
Exactly how that would happen is still to be determined.
There are a number of options, such as a one-time transfer of money out of the pool accounts to boost the fund to the required amount, or a one-time payment from the federal government to build up the fund.
Allen said while those details remain to be worked out, “we feel that we would be able to handle the risk associated with taking it over.”
She added the board hopes it can work collaboratively with the government on this issue, noting that Ottawa seems to be “positively predisposed” to the idea.
CWB minister Chuck Strahl declined to make any commitments on the board’s proposal until he has had a chance to review it in more detail.
“The issue is how much exposure there is for the government,” he said in an interview. “If there is a way to handle the liability I will be looking at ways to do it, so I’ll be happy to do what I can do.”
Allen added the directors recognize that some farmers may feel the board is voluntarily giving up some of its value by transferring responsibility for payments from government to farmers.
“But they felt now is the appropriate time to do so, given that with more control, there is an opportunity to put more money into farmers’ hands on a more timely basis,” she said.
