Lack of information | The CWB hasn’t released its pricing programs and producers say grain firms’ contracts are confusing
Grain Growers of Canada says farmers need the Canadian Wheat Board to begin offering new crop contracts for wheat.
Producers are also unhappy with what they have seen from grain companies.
GGC sent a letter to the CWB and the Western Grain Elevator Association asking both to commit the resources necessary to wrap up talks so the wheat board can launch its pricing programs.
“We’re waiting and we’re watching. Get it done,” said Grain Growers executive director Richard Phillips.
CWB spokesperson Maureen Fitzhenry said the CWB won’t comment about the negotiations, but added that farmers can expect to see details on its pricing programs “very shortly.”
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Phillips said growers have called his office wondering why it is taking so long for the CWB to get in the game. It has been more than two months since the marketing freedom bill received royal assent.
Phillips said his organization pushed hard for marketing choice yet there remains no choice because a key player in the grain industry hasn’t entered the market.
He realizes that negotiations are complex but spring is rapidly approaching and farmers need to make planting decisions.
“Our sense is that they’re not moving as fast as they need to. I don’t think there’s enough urgency on this one,” said Phillips.
Elden Boon, a farmer from Virden, Man., agreed.
“Everything needs to get moving here,” he said.
Boon had hoped the CWB would have released details on its pricing programs by the end of January. The lack of contracting information is frustrating for farmers he talks to on coffee row.
Growers are locking in fertilizer and other input prices, as well as canola and pulse prices. They need to do the same with wheat and barley.
Grain company officials have told Phillips negotiations with the CWB are nearing an end and he is confident that is true. But time is of the essence.
“Put time and resources in on both sides and make this thing happen because farmers expect to see marketing choice,” said Phillips.
Boon had a similar message for the negotiating parties.
“Everybody needs to make the effort here and get some stability in the market going forward,” he said.
“It needs to happen really quickly.”
Boon said growers are also disappointed by what they’ve seen so far from grain companies.
“These contracts are really confusing. You almost need to get some legal advice on them before you sign on the dotted line,” he said.
He feels the contracts are lopsided in favour of the grain companies. They include clauses protecting companies against any potential changes brought about from the lawsuits attempting to overturn the open market.
Prices are based on growers delivering No. 1 and No. 2 quality wheat, leaving uncertainty about what happens if grades are lower. And there are no grade or protein spreads outlined in the documents.
In the past, growers knew exactly how much it would cost to get their grain to export position but handling costs are not spelled out clearly in the new contracts.
“At the end of the day, we’ve got less transparency than what we’ve had in the past,” said Boon.
Because of all the uncertainty, he hasn’t forward priced any of next year’s wheat.
Boon isn’t alone. Phillips estimated 100,000 tonnes of wheat have been contracted, which is a drop in the bucket considering the forecast for 21.8 million tonnes of Canadian production in 2012-13.
Fran Malecha, chief operating officer of grain with Viterra, said they’re trying to make the transition to an open market as smooth as possible.
“We’re working to make sure growers understand those contracts,” he said.
“Hopefully the clarity will continue to come to growers as they move into the season.”
Boon said part of the confusion arises because the contracts are so different from one another.
“I would like to see some standardization in these contracts. Every grain company seems to have their own version of what they want to do,” he said.
Malecha said that problem will likely work itself out.
“Over time you’ll see the bids from the grain companies harmonizing. It might just take a little bit of time here for that to happen,” he said.
