WINNIPEG – Canadian farmers are shutting themselves out of one of the world’s most lucrative markets for feed barley.
So little barley is being sold to the Canadian Wheat Board that the agency says it will be unable to fulfill its 1995 supply agreement with Japan and won’t sign a new one for 1996.
Wheat board chief commissioner Lorne Hehn said last week the board is receiving deliveries of 5,000 tonnes of feed barley a week. But it needs at least 60,000 tonnes a week to meet Japanese demand.
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The board will be meeting with the Japanese grain buyers at the end of November to give them the bad news.
“We won’t be able to give them a targeted volume,” Hehn told reporters last week. “What we’ll do is give them our best endeavor to supply on the basis of whatever we can originate.”
The board says that as of Nov. 2, a bushel of barley sold to Japan would provide a farmer in Red Deer, Alta., with a net return of $4.28, compared with a domestic price of $3.26.
“That’s a full dollar spread above the street price, yet we couldn’t sell to Japan because nobody is delivering to us,” Hehn told delegates attending the annual meeting of Manitoba Pool Elevators. The board said those high export prices will be reflected in its next pool return outlook.
The CWB has traditionally signed an annual memorandum of understanding with the Japan Food Agency calling for sales of 800,000 tonnes of feed barley, plus or minus 10 percent.
Missed the target
So far this calendar year, shipments are about 160,000 tonnes short of the sales target and the board says it will be unable to make that up by the end of the year.
Hehn said the Japanese won’t be very happy, but he hopes they will at least accept the board’s formal commitment to give them first priority on whatever feed barley the board can scrounge up.
That may not be much based on the sign-up rate so far for Series A contracts, which is well below what the board would like to see.
One delegate said events in the feed barley market last year hurt the board badly among many farmers who traditionally support the marketing agency.
Delegate Norval Lee of Erickson, Man., said a lot of farmers in his area lived up to their contracts to deliver barley to the board and lost out as a result: “My loyalty to the board was badly shaken,” he said.
The board reduced its estimated pool return late in the 1994-95 crop year, when short supplies left it unable to make anticipated sales of more than 400,000 tonnes of feed barley to Japan.
Hehn sympathized, but said the board would not have to reduce the PRO if farmers had delivered the full amount of barley they had contracted to the board.
As a result of last year’s experience, he said, the board won’t be selling any feed barley this year until it sees it in the system.
