PUERTO VALLARTA, Mexico – Maybe it was the hot Mexican sun or maybe too much fiesta at the previous night’s banquet. Whatever the reason, canola industry participants unloaded at their recent annual meeting in Puerto Vallarta.
The hot topics session at the Canola Council of Canada meeting saw a spirited debate on a number of pressing issues.
Bruce Dalgarno, marketing chair of the Manitoba Canola Growers Association, kicked it off by saying it’s time to throw out the canola futures contract because it isn’t working.
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The basis, or difference between cash and futures prices, used to range between $15 and $20 per tonne for canola but this fall it reached as high as $56 where Dalgarno farms near Newdale, Man.
Contract prices were telling farmers the future was bright, but their cash price was being reduced by a basis three times the normal level.
“I think that is way out of line,” Dalgarno said. He suggested turfing the contract and moving to a system based strictly on cash prices.
Mike Gagne of the Winnipeg Commodity Exchange discouraged that suggestion, saying there is a need for a canola contract and that the exchange is willing to work with producers to revamp it.
Saskatchewan Wheat Pool vice-president and session chair Richard Wansbutter said exporters need some sort of hedging mechanism to protect themselves from market swings.
He said he WCE is exploring the idea of an indexed futures contract, which should help alleviate concerns of growers like Dalgarno.
Another hot topic was the idea of moving canola to a component pricing system similar to Australia’s, in which producers are rewarded for growing canola that meets certain high oil content parameters.
Fred Meister of the Saskatchewan Canola Development Commission said it’s time to move toward different classifications of the oilseed.
“If wheat can do it, we can do it,” he said.
Canola Council chair Lach Coburn said there are no signs the market would pay premiums for canola with certain functionality or quality characteristics. Even if importers were forced to pay premiums they could counter by raising tariffs.
Council president Barbara Isman said the industry is moving toward an identity preservation system over the next 10 to 15 years, but she wondered how finely they can “carve up” what she hopes will be a 20 million acre crop by that time into different classes.
