A group interested in building a $120 million pasta plant and mill in Western Canada said the Canadian Wheat Board is forcing them to build south of the border.
Prairie Pasta Producers was hoping to get a price break from the CWB, but that isn’t going to happen.
Mills in Canada are required to pay the domestic human consumption price for grain, a Minneapolis-based price that is about $9 to $13 a tonne higher than what farmers receive as a final payment for delivering durum to the pool accounts.
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Prairie Pasta Producers said that if they were to build a plant in Canada instead of the United States, they required a break on that DHC policy, but the CWB directors have said ‘no.’
“That would have totally destroyed the whole concept of single-desk selling had we given these people an outright exemption,” said Fillmore, Sask., director Terry Hanson.
Prairie Pasta is “dismayed” with the decision, David Schnell, chair of the group, said in a news release.
“I can’t believe that with the farm economy the way it is with more and more family farms slipping into bankruptcy, that the Canadian Wheat Board couldn’t show more leadership in putting more money into the hands of farmers.”
The decision was made during a CWB meeting held in Regina July 27-29, where the board adopted its new generation co-op policy.
What the board is offering farmers who deliver grain to a new generation co-op like Prairie Pasta is a fixed-price option based on the mid-range of the Pool Return Outlook.
Farmers who take advantage of that option will receive cash up front for the grain they deliver. And there will be no quota delivery restrictions for farmers who deliver their grain to a new generation co-op.
The CWB will also refund some administrative and carrying costs to those farmers who take advantage of the fixed-price option since their grain hasn’t gone through the board’s regular system.
“It’s not as rich as the (Prairie Pasta) people would have wanted,” said Hanson, who has been vocal in his opposition to the proposed DHC exemption. But he said it was the only way to give something to new generation co-ops and still be fair to other growers who deliver to the grain pools.
In the releases, Schnell said the policy doesn’t come close to what farmers need to add value to their grain.
“This isn’t a new generation policy – it’s simply a rewording of a previously announced pricing option.”
Hanson feels the board was rushed into making a decision on Prairie Pasta’s proposal and was hampered by a lack of information. He said the board still hasn’t received provincial regulations governing new generation co-ops and there were interprovincial and international trade issues that had to be resolved.
“There’s many problems in trying to develop a policy around a number of what-ifs.”
One of the biggest what-ifs was the lack of a business plan from the Prairie Pasta folks.
“We were being very much rushed to deal with a specific proposal without a concrete proposal to look at.”
Hanson said the board’s decision does not discourage value-added processing on the Prairies, pointing out there are 14 mills now operating in Western Canada, representing nearly a third of Canada’s flour milling capacity.
Although Prairie Pasta said “it is now forced to consider a U.S.-only option,” the group says the fight with the wheat board is not over.
“We will continue to look to ways to change the CWB on this issue.”
