New CWB has role in open market

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Western farmers have long been divided over the Canadian Wheat Board’s monopoly, but farmers on both sides of the debate can agree the new CWB’s role is to add competition to the marketplace, says CWB vice-president for grain procurement Gord Flaten.

The CWB provides farmers with the option to pool wheat, durum and barley sales, which is an inexpensive way to reduce price risk. The CWB’s pools also allow farmers to shop around to find the lowest basis among grain companies at delivery time instead of being locked in with one.

Although legal battles continue over the federal government’s ending of the wheat board’s single desk, Flaten told the Canadian Farm Writer’s Federation annual meeting Sept. 23 he has moved on.

“I think my opinion on the value of the single desk is pretty well informed, but I’m actually not in that debate anymore,” he said.

The federal government has given the CWB, which is currently a government agency, tools to help it operate in an open market as it prepares to be privatized, including guaranteeing borrowings and initial payments plus providing a much-needed pool of almost $200 million in startup capital, Flaten said.

The latter has been controversial because that money and other wheat board assets were paid for by farmers. While farmers had controlled the CWB since 1998 it was a creation of government and therefore the government owns the assets, Flaten said.

Higher prices

The CWB has also succeeded in signing handling agreements with all the grain handlers, making for convenient and competitive deliveries for farmers who opt to sell through the CWB.

This year’s big and early harvest will help the CWB, but high grain prices could mean less interest in pooling, he said.

While the rest of the organization has been downsized, along with many of the former services it provided, the CWB has retained 12 of its 14-member sales team. Paying retention bonuses to key CWB staff has helped, Flaten said in an interview.

The CWB confident it will keep many of its previous grain customers, but not all, he said.

How is the CWB doing so far? It doesn’t know yet, Flaten said a week before the early harvest pool signup deadline. Farmers have been signing up and many others have indicated they will market some of their crops through the pools, he said.

CWB president and CEO Ian White says handling 30 to 40 per cent of the wheat and durum is reasonable target for the CWB.

“If we get more than or less than that I can still see us functioning,” Flaten said, adding there’s no fixed number that would cause the CWB to close its doors.

The CWB is now allowed to market other crops and has started with canola.

“Short term I’d say the significance is not huge but long term it might be very significant,” Flaten said.

The CWB can also buy and sell crops grown outside Canada, but for now is focused on Western Canadian wheat, durum and barley, he said.

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