Farmers will have more buyers competing for their wheat and barley this year. And that could put a few more dollars in their pockets.
New rules going into effect Aug. 1 will allow grain merchants that don’t own elevators to become handling agents for the Canadian Wheat Board.
That means those companies will be able to buy CWB grain and truck it directly to destinations in Canada and the United States.
“The bottom line is it will generate more competition,” said Larry Weber, of Johnston’s, a Saskatchewan grain firm that welcomed the new program. “That will lower margins again for grain companies, but it’s good news for the farmer.”
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He expects the greatest interest will be in moving identity-preserved shipments of malting barley from farms directly to maltsters.
“For non-mainstream industry players, it’s really going to help them,” he said.
A number of grain companies that don’t own elevator facilities have been lobbying the board for some time to bring in the changes announced last week. They will now be able to buy barley, wheat or durum directly from farmers, arrange to move the grain from farms to buyers and issue cash tickets.
CWB spokesperson Justin Kohlman said the board identified four potential benefits for farmers.
- Increased convenience, with grain being picked up on the farm.
- Lower costs by avoiding elevator handling fees.
- Alternative marketing opportunities if local elevators are full.
- Better information for farmers who want to track exactly where their grain is being shipped.
“There are those potential benefits, and we see no down side,” Kohlman said last week. “Maybe there is a reason not to do it, but we’ll go ahead with the pilot program and if all goes well, we’ll proceed.”
Strong lobby effort
Several industry officials said Scoular Canada Ltd. was instrumental in pushing for the new rules. Scoular, based in Kansas, owns 11 elevators in Nebraska and South Dakota and markets more than 10 million tonnes of grain and 1.1 million tonnes of byproducts annually.
Monty Wetter, of Scoular’s Butte, Mont., office, said the company has been trying to get handling agent status for the last few years and is pleased by last week’s announcement.
“I don’t think it will do any damage to the farmers,” he said. “It should benefit them by having another player in the market.”
Kohlman said that while the line elevator companies will now face some new competition, that’s not the board’s primary concern.
“From a farmer’s perspective, it’s positive, and that’s the way we’re looking at it, not from a company’s perspective,” he said.
The board doesn’t want to predict how many companies will participate in the one-year pilot program or how much grain might be moved. The program will be assessed at the end of the 2000-01 crop year.
While emphasizing that nothing has been determined beyond this year, Kohlman acknowledged the program could be extended to include shipments to overseas customers.
“It could expand in the future if there is the need and it’s in farmers’ best interests,” he said.
