The Canadian Wheat Board has tweaked its organic marketing program for the coming crop year.
In the 2007-08 marketing year, the board dropped its pilot organic pool program and switched to offering a cash price to farmers, just like other buyers of organic grain.
For 2008-09, the board is introducing a basis-pooling contract, which offers growers a cash price up front with the possibility of an additional payment at the end of the year.
Patty Rosher, the CWB’s marketing manager for organics, said there was no money to return in 2007-08 due to the significant start-up costs of the cash buying program that ate up any set-aside money.
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For the coming crop year, any proceeds left over will be distributed to participating producers after covering costs and donating to a contingency fund to cover future losses associated with the organic program.
Rosher said the board needs to achieve a break-even point where the organic program is covering staff costs and the expenses associated with grain procurement and execution of the program. She hasn’t calculated what minimum tonnage is needed to reach that point.
The 2006-07 pilot pool program was a disappointment. Twenty-five growers marketed 1,650 tonnes of organic red spring wheat through the board that year.
Growers weren’t impressed with the board’s offer of an initial price and the possibility of a final payment down the road.
“That doesn’t look good compared to the other buyers who are offering a full up-front cash price,” said Rosher.
But the first year of the board’s cash offering isn’t shaping up to be a roaring success either. The numbers are expected to come in around the same level as the pilot pool program due in part to complications with implementing a new accounting system that delayed the start-up of the cash buying program until November.
Rosher expects that by the end of the year, 25 growers will have marketed between 2,000 and 3,000 tonnes of organic red spring, white spring and durum wheat through the program.
“We’ll end up maybe with a two percent market share, which is about what we had in the year that we ran the pool,” she said. “We’re new entrants, very small, new kids on the block.”
Spring contracts are already available for the 2008-09 crop year, but availability is limited. Organic production constitutes less than one percent of overall wheat and barley production in Western Canada, so the board doesn’t want to get ahead of itself in marketing the crop. Sales need to be in place before the agency will commit to buying grain.
Rosher hopes growers will find the new contracts enticing and will consider doing business with the board because of its solid reputation, deferred payment option and 10-day payment term.
Tom Cowell, a buyer with Growers International Organic Sales Inc., said there are plenty of reputable buyers in the market and he scoffed at the board’s 10-day payment term.
“They’re nine days behind us then. We pay on the driveway,” he said.
