Farmers in western Canada are missing out on the full benefits of the recent run-up in wheat prices due to the constraints imposed by the Canadian Wheat Board monopoly, says the Western Canadian Wheat Growers.
“Farmers in Ontario, Australia and everywhere else in the world have the opportunity to cash-in on this rally,” says Stephen Vandervalk, Alberta Vice President of the Wheat Growers. “Only in western Canada are we stuck on an island of low prices.”
Yesterday, the best price offered by the CWB to prairie farmers for its flagship CWRS wheat class was $287.37 per tonne under its FlexPro program, which works out to Cdn $6.23 per bushel, basis Saskatchewan. The typical elevator price at elevators in the northern U.S. yesterday for comparable wheat was U.S. $6.72 or Cdn $6.83 per bushel.
“For a farmer with 500 acres and a yield of 40 bushels to the acre, that works out to a direct loss of $12,000,” says Rolf Penner, Manitoba Vice President of the Wheat Growers. “On top of that, a U.S. farmer has the opportunity to deliver all of his wheat at harvest, whereas Cdn farmers are required to bin most of ours, resulting in higher storage and handling costs.”
The CWB’s best prices are offered under its FlexPro program. To be eligible for these prices, farmers had to sign up tonnage by the end of July. For farmers who did not sign up, the next best price is under the CWB’s Fixed Price Contract (FPC), where yesterday the price for 1 CWRS 13.5% protein wheat was pegged at $0.11 per bushel below the FlexPro price.
The CWB’s initial payment (provided to farmers who opt for the pooled price) for 1 CWRS 13.5% currently sits at $2.06 per bushel, basis Saskatchewan. The projected price under the Pool Return Outlook is currently $4.53 per bushel, basis Saskatchewan and while this is expected to rise substantially, history suggests that the final return will still be well below open market average prices.
Adding insult to injury, the Wheat Growers note that farmers elsewhere in Canada are now able to lock-in good prices for next year’s crop, whereas there is no viable opportunity to do so under the CWB. The Wheat Growers call on the federal government to give prairie farmers the ability to sell grain directly to domestic processors or to export markets, on the same terms and conditions now available to farmers in Ontario and elsewhere in Canada.
“Ontario and Maritime farmers have every opportunity to cash in on these high prices,” says Vandervalk. “Farmers in western Canada deserve the same opportunity.”
