Farmers who want to wait for next crop year to price their wheat or durum will for the first time have to pay a fee.
Under new rules introduced by the Canadian Wheat Board, producers who want to price their grain in the 2009-10 pool have until June 30 to sign one of the board’s new pool pricing applications.
The application will include a fee of $3.75 a tonne for wheat and $3.25 a tonne for durum.
The board said the new rules are designed to eliminate the uncertainty and risk inherent in switching grain from one year to the next.
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“Switching could create uncertainty and administrative and planning difficulties for the board,” said CWB spokesperson Maureen Fitzhenry.
“Our marketing is based on having a centralized and reliable view of supply, value and destination, and sometimes pool switching would erode that ability.”
Switching results in uncertainty over the size of pools and affects returns in both pools.
Farmers have an incentive to price old crop deliveries in the new year when the Pool Return Outlook for the new crop year is greater than the current year.
The board decided to review the way the program works after more than one million tonnes of wheat and durum were switched from the 2006-07 crop year to the 2007-08 as farmers saw prices rising in the new year.
The net effect of that was to lower pool returns in both years. Wheat and durum sold at lower values in 2006-07 were transferred into the 2007-08 pool, reducing per tonne returns, and returns in 2006-07 were reduced by taking grain out of that pool.
“I guess that was kind of the final straw,” Fitzhenry said.
“It has been a concern for some time but that was the first year it resulted in significant financial damage.”
Fitzhenry said it’s also a matter of fairness and equity because only some farmers are in a financial position to hold grain over until the new year.
It’s not expected there will be much demand to switch grain into the 2009-10 pool, given the current price outlook. PROs for the new crop year are lower by about seven percent for wheat and 19 percent for durum.
