Some Canadian farmers get annoyed at having to pour their wheat and barley into revenue-sharing pools when the market is rising.
They see older, lower priced grain sales dragging down the prices that the newly delivered grain will eventually receive through the pool.
Some Australian farmers often have the opposite annoyance: when the market starts to fall and they want to dump their grain into the existing, higher-priced pool, the pool is closed.
Australian grain company head Neil Wandel told the Western Canadian Wheat Growers Association annual convention in Winnipeg that he occasionally receives angry phone calls from nearby farmers when his company, CBH Group, shuts one of its pools.
Read Also
Farmers urged to be grain-safe this fall
Working around grain bins comes with risk, from farmers falling to drowning in grain: Experts have five tips to help avoid grain-related accidents this harvest.
But to him, it’s common sense.
“If we think the price is falling too much, we just close that pool and open a second pool,” said Wandel.
Pooling is a marketing structure popular with many farmers in Canada and Australia, and it can be done in many ways. The Canadian Wheat Board’s wheat pools last through the crop year and eventually offer all farmers the same underlying price for the same quality of grain.
But in Australia, now that the Australian Wheat Board’s export monopoly has ended, different approaches to pooling exist. Wandel said no approach will please everyone, especially if they have to speculate on whether to put their crops into one pool if another one is likely to be soon opened.
Last crop year, faced with a falling market, his company closed its first canola pool and opened a second. Most expected the second pool to bring in lower prices, but received a nice surprise.
“Last year the number two canola pool outperformed the number one pool because the market rose,” he said.
Fellow Australian Ian White, who is also chief executive officer of the CWB, has worked for many different Australian agricultural businesses and marketing companies. He said pooling allows for variations.
“There are many ways of running a pool and pricing it,” said White.
The CWB’s main pools are based on an averaging approach, in which prices of sales throughout the year are blended into one final price. That approach has advantages.
“It allows the ability to capture prices right through the season,” said White.
Wandel said his company goes with its gut when it decides to close one pool and open another.
“Whenever,” he said.
