Pedde has a grain and cow-calf operation near Indian Head, Sask.
There has been much discussion and disagreement in western Canadian farming circles as to what grain prices are in the northern United States.
There is the philosophical aspect to the discussion: are we western Canadian producers getting as much for our wheat as our Montana brethren?
Then there is the contractual aspect: the Canadian Wheat Board daily price contract is “… derived from an average of a basket of U.S. northern tier state elevator prices.”
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The U.S. Department of Agriculture publishes a daily survey of grain prices throughout various states including those in seven Montana regions. There are at least four reasons why these prices are an accurate reflection.
First, the simple fact is that the USDA collects and reports these prices. The grain markets worldwide closely follow USDA supply and disposition reports, and with the associated price moves, markets clearly give a lot of credence to them.
These USDA daily price reports for the Montana regions should be viewed no differently.
These USDA price reports are consistent with those used in the USDA loan deficiency payment (LDP) program, one of the main U.S. agricultural income support programs with billions of dollars at stake.
For example, the USDA market news reported that in northeastern Montana, the September dark northern spring average low bid was $6.98. The average LDP price for hard red spring in northeastern-tier Montana counties was $6.97.
The USDA price series are used by institutions such as the University of Illinois in their annual review of how well producers and market advisers are marketing their grain.
In general, academic institutions are built upon the use of valid data in their research efforts. There will of course be people who question the use of this data but they would do well to review their stance on the use of non-public price data in various CWB studies.
Finally, for the calendar year 2003, the CWB estimate of prevailing market prices for dark northern spring 14 percent protein in Wolf Point, Montana, was on average 13 cents per bushel higher than the USDA estimate for that same location.
The CWB provided this estimate, which was used in CWB Performance Benchmarking, University of Alberta, February 2007. Given that the CWB estimate was consistently higher for each month in 2003, the burden is on those who now claim that U.S. prices are lower than USDA reported prices.
The net conclusion: there is no reason for the USDA to report anything other than fair prices.
The simple threat of legal action by affected parties, ranging from farmers participating in LDP to grain market traders, is a significant motivator.
Far too often, rational discussions about recent CWB issues, whether the value added by the CWB or the price impact due to the July court decision, are futile because advocates use data that support their perspective.
CWB management should also take these prices into account when setting daily price contract values and be willing to provide explanations when there are deviations from these reported prices.
