The Western Canadian Wheat Growers Association is celebrating the one year anniversary of an open market for wheat and barley in western Canada.
“The move to an open market has met or exceeded all our expectations,” says Levi Wood, President of the Wheat Growers. “It has been a smooth transition, with farmers reaping the benefits of higher wheat prices, improved cash-flow and greater delivery opportunities.”
The ending of the Canadian Wheat Board monopoly on August 1, 2012 gave prairie farmers the flexibility to market their grain at a time of their choosing. Many farmers elected to deliver all or most of their wheat off the combine last fall, generating good cash flow and relieving the pressure to sell canola or other crops at that time.
The western Canadian marketplace has also seen the entry of new buyers, resulting in increased competition and more marketing options for farmers. Many farmers also took advantage of higher market prices this spring and forward-priced a portion of their crop.
“For the first time ever farmers have been able to directly participate in a market rally,” says Wood. “We’ve also had the opportunity to take advantage of good basis levels, especially when buyers have needed supplies to top-off shipments.”
Critics of the move to an open market had claimed there would be a flood of truck shipments to the United States and that the U.S. government would shut down the border. That has not been the case. Trade relations with the U.S. remain good, despite an increase in wheat shipments to 2.4 million tonnes in the first ten months of the crop year (August to May) compared to 1.8 million tonnes in the same period last year. The vast majority of this wheat has been shipped to the U.S. by rail.
“As the Wheat Growers expected, we’ve seen a modest increase in wheat shipments going south,” says Wood. “However the real advantage is that higher U.S. prices came north. The wheat prices we now get on our farm accurately reflect world market values.”
Prairie farmers have responded to their new-found marketing freedom by increasing their wheat acreage. According to the latest numbers from Statscan, wheat acreage (including durum) in western Canada rose 9% this spring.
“The move to an open market has been a tremendous success,” concludes Wood. “It has given prairie farmers higher returns and fueled growing optimism over the future of grain farming in western Canada.”
