Revamped Canadian Wheat Board faces 1st test
Federal government stripped agency of its monopoly in August
The Canadian Wheat Board is facing its first test in the open market, competing with other grain companies to get farmers' business this fall.
The federal Conservative government stripped the agency of its monopoly on wheat and barley sales in August, meaning Prairie producers can sell their grain to the board or to other companies.
Staff at the Winnipeg-based CWB are now trying to convince farmers to sign up for its early delivery wheat pool by a Friday deadline, as it seeks a high buy-in rate to prove it is still relevant in the open market.
Gord Flaten, the board's vice-president of grain procurement, says it is aiming to get 30 to 40 per cent of total sales.
"We've had a lot of sign-up already, and we're happy with that," Flaten said, although he would not say how many farmers have signed contracts to date.
Under the wheat board's previous monopoly, farmers could join the pool throughout the year and get a cash payout on the average price of wheat.
Now, the CWB has only two deadlines, and farmers must decide whether to join the early pool now or keep watching the markets to determine when they should sell their grain themselves for cash.
Farmers will also have until the end of October to make a final decision on whether to participate in the board's wheat pool this year.
'Just another grain company'
Flaten said the CWB is offering the option of buying farmers' wheat on a cash basis, much like what private grain companies do.
But the board's strength, he said, is with its pools, which sell grain to international customers throughout the year and pays contributing farmers an average price for the season.
"Getting a good average price for the year is a real accomplishment," Flaten said. "In fact, more than 50 per cent of cash contracts end up getting sold for less than the average."
But Butch Harder, a Manitoba wheat farmer and a longtime supporter of the board, said he has not decided where or when to sell most of the bumper crop he grew this year.
"I've been rather undecided because to me, I view the wheat board now as just another grain company, and it's not win-win. So I'm really torn," he said.
Harder said he has already sold some of his crop to another grain company when prices were at $7 a bushel. However, the cash price has since gone up by $2 a bushel, meaning he has lost money.
When asked what he will do with the rest of his harvest, Harder said it will depend what option will produce the highest payout.
"I don't have the confidence in the wheat board pool return outlook that I used to [have] because they don't have a monopoly anymore. If you ask me what that decision is right now, I can't tell you," he said.
An Alberta farmer is taking a different approach.
Martin Hall plans to sell all of his crops locally, instead of dealing with the CWB.
"I had a real good year and I am looking forward to having the opportunity to market my own grain," said Hall.
He fought the CWB for decades and in the 1990s spent a night in jail for trying to sell his wheat to the U.S.
"It’s a good thing for all Canadians to see if there is something that should change, if you continue to fight it we have a great opportunity to make change," he said.
Another Alberta farmer, who is located just minutes from the U.S. border, is also taking advantage of the new rules.
"I have been waiting for this for all of my farming career to be able to sell to whoever I want," Boyd Bianchi said.
He has already taken seven truck loads of wheat to the U.S. this year — something that could have landed him in jail in the past.
Crucial first year
"I do know this: I will sell a percentage — I don't know whether it'll be large or small — through the board," Harder added.
"I do want to see how it works, and I suspect that's the attitude of quite a few farmers this year."
Derek Brewin, who teaches agribusiness and agricultural economics at the University of Manitoba, said this season will be crucial for the new CWB, and it just happens to be a season of record high prices.
"The board has to prove itself," Brewin said.
"I'm really interested to see how many tonnes they take versus the main grain companies, what their final price looks like, and the movement of tonnes," he added.
"That kind of shows how important the final consumers have felt the board was in the past, that they still want to use the board to manage their buying."