The recent amendment to the Canadian Wheat Board’s policy on new generation co-ops has a group of pasta producers salivating for more.
“This was part of the policy that we asked for. It’s great,” said David Schnell, president of Prairie Pasta Producers.
But he said there’s one more step. The board has to change its pricing policy.
“If the wheat board continues to work to allow the farmer to receive the full value of his durum, great, it’s a done deal.”
Schnell said that last step would pave the way for an equity drive to build a pasta plant and mill in Saskatchewan.
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“Then and only then will our members invest.”
But wheat board director Larry Hill said if the group is waiting for a break on pricing, it is not going to get it. The proposed plant will buy durum at the board’s domestic human consumption (DHC) price, the same as any other mill. In years when that DHC price is higher than what farmers get for delivering their grain to the board, so be it. The board will not return the DHC spread to the farmer-members of new generation co-ops (NGCs).
The board’s new policy does allow stock switching, which gives farmers across the Prairies a chance to participate in a new generation co-op, no matter where it’s located.
It means a farmer in Edmonton can deliver durum to a mill in Weyburn, Sask., without having to truck it there. The board would record the delivery to an elevator in Edmonton against the shares the farmer holds in the co-op in Weyburn and then allow the co-op to obtain that same quality of grain locally.
“That’s actually the weakness of the idea, not the strength,” said the president of the Western Canadian Wheat Growers Association.
Kevin Archibald said producers in southwestern Manitoba and southeastern Saskatchewan have a comparative advantage in growing high quality durum.
“If this program was put in place you could have somebody in eastern Manitoba invest in Prairie Pasta and grow low quality durum to do the stock swap.”
Less power
Archibald said it negates the advantage that producers in and around Weyburn, Sask., would have and takes the decision-making powers away from the people who grow high quality durum.
“You’ve got influences from parts of the Prairies that don’t understand that comparative advantage and in a way are trying to share in that comparative advantage that doesn’t really belong to them. That’s the weakness of it.”
Hill said that’s faulty logic.
“There’s a huge high quality durum area that’s beyond the economic trucking distance of a plant in Weyburn.”
He said the stock switching option will allow growers in places like Lethbridge, Alta., to participate in a NGC situated in Weyburn, which is something that couldn’t be done if the board wasn’t around.
“There are a lot of very capable people that will be able to judge the business plan and to make a good contribution to Prairie Pasta from areas more than a hundred miles from the plant.”
And he said it’s up to the NGC to decide where its members will come from.
“They’re the ones that are looking for members and I would assume they’d pick members from people that are in areas that can grow high quality durum.”
