Few prairie farmers are using a program that provides them with a $20 per tonne pre-delivery top-up to their cash advance on wheat.
As of last week, fewer than 100 producers had enrolled in the two-year-old program, which has a sign-up deadline of Nov. 30.
That’s a disappointment to board officials and to one farmer who lobbied to bring in the pre-delivery top-up last year.
“It’s very frustrating to hear that the uptake is not good,” said Reston, Man., farmer Murray Downing.
Given the cash squeeze facing so many farmers, he said, the program should be highly popular.
Read Also
Canola support gets mixed response
A series of canola industry support measures announced by the federal government are being met with mixed reviews.
“My fear is if we don’t use it, we’ll lose it,” he said, adding that many farmers seem unfamiliar with the program. “You ask producers about it, they say ‘what are you talking about?’ “
CWB officials say they’re also disappointed by the poor response, which they attribute to factors such as the poor quality crop, the late harvest and the newness of the program.
But they also say they’re not ready to give up on the top-up, which was designed with extensive input from farmers.
“There is certainly potential for value there,” said CWB director Bill Nicholson of Shoal Lake, Man. “Cash flow is always a concern.”
At the same time, he said, the board is not committed to bringing it back next year.
“I’d certainly be inclined to wait and see for another year yet, but that’s a decision we haven’t come to yet,” he said.
Making the program permanent would involve some financial investments in information technology systems, and board management and directors will have to decide if it’s worthwhile.
Under the pre-delivery top-up, farmers who take out an $80 a tonne cash advance on wheat can get another $20 a tonne.
The money is paid directly to the farmer by the board before delivery and is repaid through deductions on adjustment, interim or final payments. Farmers are responsible for interest at prime, administration and risk management costs.
The program applies to all classes of wheat. However, No. 4 Canada Western Red Spring and Canada Western Feed grades are not eligible because the revenue received from sales of those grades may not cover the advance plus top-up. That rules out as much as half the wheat crop, given the low quality of the 2004 harvest.
Board officials cite several possible explanations for the low sign-up.
- The late harvest, which led to the sign-up deadline being extended for one month to Nov. 30, may have had an effect, with many farmers only now figuring out their grade and working out a marketing plan for the year.
- The program is in only its second year. The experience with producer payment options, or PPOs, is that farmers are often slow to adopt new programs, waiting for word-of-mouth from fellow farmers before jumping in.
- Farmers have access to other non-debt programs that can enhance cash flow, like the PPOs. Some may also prefer to take on debt at their local bank or credit union rather than with the board.
Downing suspects that another factor may also be at work, namely reluctance by grain companies to tell farmers about the program.
“We’re finding that elevator agents are not telling people,” he said.
The pre-delivery top-up payment takes the pressure off farmers to deliver, which is counter to the financial interest of grain handlers, he said.
A spokesperson for Saskatchewan Wheat Pool rejected any suggestion that the company is not telling farmers about the top-up.
“Our agents have the information and they do share it with farmers,” said Susan Cline. “They will promote it and they know the guys who will find the most value from it, based on our customer profiles.”
At the same time, she added, the main responsibility for telling farmers about the top-up lies with the CWB.
Nicholson said, “I’m not aware of any problems with grain companies” not explaining the program.
