No more delay for initial price raise - WP editorial

THE federal government should act more quickly when the Canadian Wheat

Board recommends increases to initial payments for wheat, durum and

barley.

The board has regularly boosted the Pool Return Outlook this crop year

to reflect rising world grain prices due to production problems here,

in the United States and Australia. The PRO now forecasts that Canadian

wheat at port will fetch the highest price ever.

However, the initial payment, the money the farmer gets when delivering

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grain to the elevator, drifts far behind because of Ottawa’s lethargy.

The board can not raise initial prices. It can only recommend increases

to the federal government because the Canadian treasury guarantees the

payments. To manage the risk of an unexpected price retreat, Ottawa

usually sets the guarantee at about 75 percent of the PRO. But as of

Oct. 7, the guaranteed initial for wheat was only about 60 percent of

the PRO.

Raising that to 75 percent of the PRO would see the initial payment for

No. 1 CWRS 11.5 percent protein climb to $225 per tonne, a $50 per

tonne or $1.36 per bushel increase.

That’s a significant amount and the sooner farmers get it, the better

in this year when cash flow is a problem for many producers facing

severely reduced yields.

There is no reason for Ottawa to fret or delay. The PRO clearly

reflects the reality of the world market, which will be short of

quality grain until next summer at least.

The initial should be increased now and Ottawa must act promptly on

future wheat board recommendations regarding the initial.

This is not a handout. It is what farmers want most, money from the

marketplace.

While Ottawa dawdles, some flour mills, bread makers and retailers are

wasting no time in increasing the price of their products.

They say the drought has increased the cost of grain and they are

simply passing that cost to consumers.

But the Agricultural Producers Association of Saskatchewan did some

calculating that shows the drought should have only a modest impact.

Despite the worst harvest since 1970, Prairie farmers’ return from a

bushel of wheat has climbed by only about 30 percent over last year.

That increases the cost of a loaf of bread a mere three cents, pushing

the farmer’s return to 11 cents from eight last year, according to APAS.

And yet some bakers say they have seen flour prices increase by $10 a

bag in recent weeks.

There is a disconnect here. Perhaps the real reason for the price

increase lies in other links of the processing chain, such as energy,

labour, transportation and processor and retailer profits.

Farmers get a small share of the consumer dollar, but that part is

important to them and payment should not be delayed by Ottawa.

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