One year ago, Ken Ritter, the Canadian Wheat Board chair, vowed to investigate a complaint regarding the way the board handles organic sales.
Last week, the board unveiled a new pricing option it believes will silence the critics.
The primary purpose of the new daily price contract is to appease farmers who have called for a dual market, but it also addresses a nagging complaint from the organic sector.
Growers conducting organic sales must buy their wheat and barley back from the board through the producer direct sales program before they can seek premiums in export markets.
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That involves significant up-front costs that are partially offset by the board’s initial payment.
In most instances, that would be the producer’s only cost of completing a buyback through the board.
But in a case made public last year, Beaubier, Sask., producer Kirk Torkelson was blindsided with a $4,630.13 invoice for a producer direct sale he completed in November 2002.
Torkelson sold his wheat during a price peak and the board charged him a buyback based on the difference between that price and what he would get in current and future pool account payments.
However, wheat prices plunged for the remainder of the crop year and the final payment estimate used at the time of the sale turned out to be far too optimistic. At the end of the year the board had to claw back revenue from the producer.
That didn’t sit well with the CWB’s board of directors. The new program gives growers a tool to prevent similar mishaps in the future.
“He wasn’t able to lock in his price. This mechanism will allow him to do just that,” Ritter said.
CWB chief executive officer Adrian Measner said it will also mitigate the up-front costs of conducting organic sales, which will now reflect the difference between the producer direct sale price and the U.S. spot price.
“Both of those values are based on that U.S. market so we’re expecting that spread to be very reasonable.”
It will still include costs related to risk and administration but in two theoretical examples provided by the board, the spread amounted to less than $5 per tonne.
Critics of the producer direct sales program say the new daily price contract is a step in the right direction but falls short of what they really want, which is the complete divestiture of the board from organic marketing.
After years of frustration with the agency’s buyback process, they view the new policy with skepticism.
“Anything that is going to streamline the process and make it clean is good, but the proof will be in the pudding,” said Richard Behnke, an organic grower and broker from Lipton, Sask.
While the new spread sounds more workable, he remains irked that a portion of the revenue from sales on which he does all the legwork is “claimed
Dwayne McGregor, an organic grower from Chaplin, Sask., who has had numerous run-ins with the board over the buyback issue, said the policy is an improvement but it still amounts to the CWB throwing a bone.
“In reality all they’re doing is skirting the issue. They will not address it.”
He can’t understand why the board continues to stake a claim on grain sales in which it plays no role.
If the board won’t relent on that stance, McGregor said, it should at least set up a separate pool for organic grain because the vast majority of it is sold into high-value markets such as the European Union, the United States and Japan.
“The pool would be a whole lot sweeter for us guys than it would be for the general farmer.”
Measner said there will be a 500,000-tonne sign-up limit for the first year of the new pricing option, which will limit participation. However, there will be a special concession to ensure organic producers have full access to the daily price contract.
