The Canadian Wheat Board’s plan to market malting barley through CashPlus contracts for the remainder of 2008-09 has hit a small bump.
However, a CWB official doesn’t expect it will create a problem in moving ahead with the plan.
The Western Grain Elevator Association said its members won’t bid on CashPlus tenders unless changes are made to the program’s tender document.
Following a meeting last week, the association sent the CWB five proposed amendments to the tender pro forma for CashPlus contracts, along with two questions for clarification.
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“We’re saying this is what we need to make it work,” association executive director Wade Sobkowich said Feb. 5.
“If the board goes along with that, my members will find it acceptable and they’ll tender. If the board doesn’t, then my members won’t participate in this program.”
The tender pro forma is a legal document containing the conditions associated with a tender offer, including quality specifications, shipping period, prices, method of payment and penalties for non-performance.
Sobkowich declined to identify specific areas in which the association wants changes.
“We’re not trying to be obstinate,” he said. “We want to handle this barley. We just need to make sure it’s a commercially viable contract.”
CWB spokesperson Maureen Fitzhenry said the association’s concerns seem minor and the agency doesn’t foresee problems moving ahead.
“From what we’ve seen at this point, we’re perfectly willing to adopt the changes,” said Fitzhenry.
She said they seem to involve issues over legal terminology, not the contracts themselves.
Meanwhile, the Western Barley Growers Association last week issued a news release criticizing the board for effectively closing the malting barley pool in favour of CashPlus.
“The CWB has blind-sided producers with uncontracted malt barley,” said acting president Brian Otto of Warner, Alta.
He said there are many unanswered questions about the board’s decision, calling it a “dramatic example” of the pooling system working for some producers, but not those who were waiting until later in the year for malt selection.
“In a market choice environment, these producers would have had the opportunity to market their barley earlier, when malt prices were higher.”
Fitzhenry said the board did the right thing given the unique circumstances of this year’s malting barley market, with a big spread between cash and pooled prices developing over a short period of time.
“As always, our goal is to get the highest possible return for the most number of farmers,” she said.
Switching to CashPlus enables the board to protect the high pooled price, based on sales earlier in the year, and at the same time provide farmers with price certainty as they consider their barley marketing options over the remainder of the crop year.
She added that with a high quality malting barley crop of more than 12 million tonnes and a malting barley market of about two million tonnes, there are bound to be producers with good quality barley that won’t get selected.
“Yes, there are some producers disappointed they didn’t get into the pool, but this is a good news story, with record prices and record bulk exports for malt barley.”
