Farmers who grow extra strong wheat this year will see a $6.60 per tonne benefit from a lower freight adjustment factor.
The Canadian Wheat Board recommended to the federal government last week that extra strong be given a separate, lower freight adjustment factor from other wheats.
Lawrence Klusa, of the board’s corporate policy group, said freight adjustment factors came into being when the east coast pooling point was shifted farther east from Thunder Bay to the St. Lawrence.
The adjustments are calculated by looking at the board’s sales projections, rail costs and the amount of grain expected to be delivered in various areas.
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The board has markets for extra strong wheat in southeast Asia, but those countries will not pay as much for the grain as American millers.
“In a lot of cases it’s used as a filler wheat on par with something like No. 3 CWRS, whereas in the U.S., they tend not to want to substitute.
“In short, CWES has a higher value going east than it does going west, relative to CWRS.”
More to growers
The new freight adjustment factor reflects that higher return to producers.
“And it should provide an incentive to have the grain grown in the area where you’d expect it to be grown, closer to the market,” Klusa said.
The board has recommended a freight adjustment factor for 1997-98 of $6.75 per tonne for extra strong compared to wheat at $13.35, durum at 63 cents a tonne, feed barley at $19.81 and designated barley at 25 cents a tonne.
These values are added to the Vancouver or Thunder Bay freight rate, depending on the location of the farmer’s delivery point.
