Some organic grain buyers have joined a group of growers in calling for an end to the Canadian Wheat Board’s monopoly on organic wheat and barley exports.
They say the CWB’s buyback policy is thwarting potential sales, forcing them to look elsewhere for grain.
“A lot of growers will step out of the negotiation because of having to deal with the Canadian Wheat Board,” said Joyce Corser of American Health and Nutrition, a Michigan-based buyer of organic grains.
“If they didn’t have the fear of losing money through the wheat board we could make a lot more deals with them.”
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Richard Behnke, owner of Excalibur Seeds in Lipton, Sask., has a similar outlook. He recently tried to put together a deal with an American buyer for 15,000 bushels of organic hard red spring wheat, but couldn’t make the numbers work.
The buyer was offering a “righteous price” of $7 per bu., but once the board’s $2 buyback charge was factored in, Behnke couldn’t justify approaching farmers with the deal.
“We backed out. I just said there’s no way I’m going to go back to my producer and ask him to take less than $5 per bu. for his organic wheat,” said Behnke.
“After that deal I’ve completely quit with any board grains. It’s too much work.”
Board director Rod Flaman said the deals aren’t pencilling out because organic growers can’t beat the commercial price the board is getting for its wheat. And that’s a good thing for most western Canadian farmers.
Organic growers can market their grain through the pool accounts or through the board’s fixed price or basis payment contracts.
For those who go the pooling route the buyback is equal to the difference between the Minneapolis cash price and the initial payment for a particular class and grade of wheat. If the board’s interim and final payments amount to more than that difference, the producer comes out ahead. If not, there is a cost associated with the sale.
Many organic growers and buyers contend that in the vast majority of cases the buyback costs them about $1.50 per bu.
Flaman said that’s because most buybacks involve shipments to the U.S., which is a premium market for wheat and there has to be a cost associated with that.
He used an example to explain.
Suppose the CWB sold half its wheat into the U.S. market, which was paying $6 per bu. and half into a world market paying $4 per bu. The pool return price would be $5 per bu.
“We can’t all get the premium that exists in the U.S. market, we can only get a share of it,” said Flaman.
He said the privilege of selling all your wheat into the U.S. market under that scenario would cost $1 per bu., or the difference between the U.S. price and the pool return price.
“That’s your cost because you’re stealing from your neighbour and we can’t allow that.”
That explanation doesn’t sit well with organic farmers like Dwayne McGregor. Earlier this marketing year he put together a deal to sell his amber durum for $9.30 per bu., but by the time “all the smoke cleared” with the board’s buyback, he was making less than $8 per bu.
“I’m basically sitting on all my cereals right now because of the buyback,” said McGregor of Chaplin, Sask.
While he feels the CWB does a good job for conventional farmers, he can’t understand why organic producers are forced to pay a fee to the board.
“The sad thing is they don’t do anything for us, they do absolutely nothing for us.”
Flaman said that’s not true because organic wheat is still Canadian wheat, which owes its superior international reputation to the efforts of the CWB.
