Last year’s high-quality, small-volume wheat crop has made for smooth
sailing for the Canadian Wheat Board’s tendering system.
In fact, the only problems to date have involved companies delivering
higher-quality wheat than is called for in the tender contracts.
“It’s a good year for it to start,” said Adrian Measner, the board’s
executive vice-president for marketing.
This is actually the second year in which the board has been required
to ship at least 25 percent of its sales through commercial tenders.
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But the big grain handling companies refused to participate last year
in a disagreement over the rules, so this marks the first year of full
industry participation.
In the first 25 weeks of the 2001-02 crop year, the board has offered
31,975 car lots for tender, representing roughly 2.8 million tonnes of
grain.
It accepted bids from 21 companies on 20,072 cars, representing about
1.8 million tonnes of grain.
By contrast, only about 7,100 cars carrying 625,000 tonnes of grain
moved under commercial tender in the entire 2000-01 crop year.
Measner said while it hasn’t been a big problem, there have been a
number of instances this year of grain companies delivering, for
example, wheat with 14.5 percent protein rather than the 13.5 percent
specified in the tender document.
When that happens, it comes out of the company’s pocket.
“They don’t get reimbursed for the higher initial price,” said Measner.
“They only get reimbursed for the 13.5 and have to eat the difference.”
Other financial penalties may also be assessed for non-performance on
the contract.
Measner said over-delivery of protein or grade doesn’t create major
problems for the board in fulfilling its sales contracts, since the
grain can generally be blended down to meet the contract specifications.
It would be a much more serious situation if the board was unable to
meet a contract because No. 3 CWRS was delivered to port after No. 2
CWRS had been ordered.
Jason Skinner, general manager of North West Terminal at Unity, Sask.,
said the experience so far this crop year has driven home to grain
shippers the importance of quality control.
“It has created a climate where companies have to ship the quality of
grain the CWB is asking for, and if you’re not in a position to do
that, it doesn’t work in your favour,” he said.
“The bottom line is you have to ship what the board wants, or face
pretty sharp penalties.”
