ROBLIN, Man. – Brad McDonald is among the prairie farmers hoping that a change in government will bring about a change in sentiment about initial payments on Canadian Wheat Board grain.
In recent years, the federal government held initial payments at levels many farmers considered too low. If the new Conservative government is sincere about helping farmers, it will look at boosting the initials, said McDonald, a grain and livestock producer at Strathclair, Man.
“It would certainly help coming into the new crop year where the price of canola is poor, the price of flax isn’t great, and the price of peas is in the tank. Anything that would improve my income would help.”
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At a recent meeting with farmers in Roblin, CWB director Bill Nicholson said concerns about low initial payments have been mentioned to federal agriculture and wheat board minister Chuck Strahl, but no detailed discussions have begun.
The federal government guarantees prices set out in the Pool Return Outlook and has been cautious about where the initial payments are set ever since it had to cover an $80 million deficit in the 2002-03 wheat pool account.
“There was a clear scaling back from traditional levels and that’s been very detrimental to farmers’ cash flow and calls into question the value of the guarantee,” said Nicholson in a later interview.
“If there’s virtually no risk at all being shouldered by the government, then it’s hard to call it a guarantee.”
Historically, initial payments tended to be set at about 75 percent of the pool return outlook, or PRO. However, in recent years, the federal Liberal government preferred to maintain its guarantee at around 65 percent of the anticipated final price.
Once freight and handling are tallied in, the actual initial payment to farmers is even less.
“That means a very low initial payment at the farmgate,” Nicholson said, “and it leads to a good deal of frustration on the part of farmers.”
He said deficits in the wheat pool account have been rare and always due to extraordinary circumstances.
“In 1990-91, it was the American export enhancement program. In ’02-’03, it was a sudden appreciation in the Canadian dollar at the same time the market price collapsed with exporters like Russia, Ukraine and Kazakhstan being in the market in a much bigger way than anybody anticipated.”
Nicholson said he would like the federal government to guarantee initial prices at 75 percent of the PRO.
McDonald said change is more likely if farm groups back the wheat board on that issue.
“The board has probably done what it can as far as pressuring the government. It’s actually up to some of the farm organizations to put more heat on.”
