WINNIPEG – The export marketing arm for the three prairie pools has been experimenting with sales of grain from other countries.
And the head of Xcan Grain Pool Ltd. says the sales, known as other-origin trade, will pay off for western Canadian farmers.
Kenneth Matchett told Manitoba Pool Elevators delegates recently that Xcan expanded its trade in other-origin grains during 1995-96, particularly with canola in Europe with help from its office in Poland.
He explained some customers don’t care where their canola comes from if they get a good price.
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“Canadian (canola) doesn’t have the uniqueness that it did before Europe caught on to it,” Matchett said.
If a Mexican customer wants to buy canola, and European product is cheaper, Xcan may buy some to sell to its customer. If the price for European canola then increases beyond the Canadian price, Xcan will substitute Canadian seed for the Mexican contract and sell the European seed in the higher valued market.
The process is known as arbitrage, and Matchett said it’s commonly used by large international grain companies.
Farmers shouldn’t look at the process as a betrayal, Matchett said. “(The trade) was going to happen that way anyhow, so it’s not like we’ve lost a market opportunity. It’s a question of participating a little further down the chain.
“By participating, the opportunity is there, if the markets swing around, to substitute Canadian (product).”
And Matchett said Xcan will only sell other-origin grain when it can make a profit or find an arbitrage opportunity.
So far, the sales have been a success. Matchett said Xcan has moved more Canadian canola than it would have if it didn’t trade other-origin seed.
Less than 10 percent of its business is in other-origin grain, Matchett said, emphasizing Xcan’s mission is to move grain from the pools in Western Canada.
