The Canadian Wheat Board tendering system is encouraging competition, but the process could be improved, says Saskatchewan Wheat Pool CEO Mayo Schmidt.
“I think it’s certainly meeting our expectations and meeting the expectations of the farming community because there’s a larger source of revenue coming back to producers, which is new money,” Schmidt told a Dec. 12 conference call with reporters and business analysts.
Sask Pool secured one-third of the board’s tenders during the first three months of fiscal 2002, which ended Oct. 31, Schmidt said.
He said tenders ranging from $4 to $6 per tonne, on average, with some as high as $12, are evidence of competition among the grain companies. The high rates are isolated incidents, he said.
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“Companies who haven’t managed their pipeline as well tend to find themselves full of grain that isn’t prepared to move under normal circumstances and they’re forced to substantially reduce their tariffs to be able to move that product out,” he said. “That’s a phenomenon we haven’t experienced.”
He said companies that lack the pipeline – the seed, chemical, fertilizer, primary country grain elevation and export terminal operations – are less competitive during the bidding or have chosen not to participate. Schmidt said a lack of contract calls prevented companies from competing as widely and aggressively as they would like.
Board spokesperson Justin Kohlman said the board can only call grain as it has sales.
“What we’re trying to do is make sure the companies have as much information as possible so they know what future shipments will look like,” Kohlman said.
He also said the board has to ship 75 percent through car awards and 25 percent through tendering: “That’s what our goal is at all times.”
Schmidt said the process could be improved with more information.
“I think there could be an improved disclosure of the tendering results,” he said. “There’s been a base agreement with the Canadian Wheat Board where those certain facets of that will be disclosed.”
Kohlman said the amount of disclosure was negotiated with all grain companies as part of the agreement.
Schmidt said the pool sees tendering as incremental to existing business and has improved market share.
