Here are a couple interesting columns from totally different
observers on the actions and role of the Canadian Wheat Board, as the wheat
marketing monopoly era comes to an end. Wednesday August 24 was the final day
for getting ballots on the CWB referendum on the monopoly in the mail.
Many people will know Brenda Tjaden Lepp (pictured at right below) who is co-founder
and a senior market analyst with the commodity marketing consulting company
FarmLink Solutions based in Winnipeg, and Lorne Gunter is a long time columnist
with the Edmonton Journal.
Here is Brenda’s column dated August 24, 2011:
PRODUCERS WANT VOLUNTARY PRICE POOLING
By BRENDA TJADEN LEPP
As the camps on the two extremes step up their
efforts to either stop or rush the government’s plan to end the
Board (CWB) monopoly, many farmers are wondering what if any continuity they
might see in the 2012/13 crop year. Especially considering that winter wheat is
set to be planted in many areas in just weeks from now, grain producers need
some answers quickly regarding future pricing opportunities and market
It would give many farmers some comfort to know
that pooling will still be available as a risk management tool for marketing
their Board grains in the future. The grain industry needs to become vocal and
creative in discussing with farmers the contracting and valuation parameters of
a voluntary pooled cash grain contract.
Based on our discussions with producers, and
FarmLink’s own risk management protocols, we estimate that 20-40% of the wheat,
durum and malt barley crops would be offered to a well-designed voluntary
pricing pool in any given year. Market conditions and farm-specific financial
issues obviously come first in determining how producers make the decision to
sell grain, but there will be plenty of cases where a voluntary pool would be
an appropriate and attractive method for managing crop price risk.
If the Canadian Wheat Board (CWB) could establish
value related to end-use buyer relationships and competitive logistic, it would
seem to be the best for all parties that they offer the voluntary grain pricing
pool. But if the Board continues to steadfastly refuse to consider it, we’d
like to see someone else step up because voluntary pooling could be a great
risk management tool for producers, and a new marketing opportunity for the
Minister Ritz has indicated that short-term
funding is available for work related to transitioning to an open market. The
fact that new futures contracts are currently being designed by the Winnipeg
grain trade for wheat, durum and barley makes it especially timely that the
whole industry collaborate now in creating viable new marketing tools for the
In the past few years the CWB has taken some
solid steps forward in developing new contracts, improving industry relations,
and understanding the price risk related to pooling grain. Given the staff’s
passion and the organization’s history, successful voluntary pooling should be
an easy next step.
It hasn’t been built yet, but all the pieces
are in place for a voluntary cash grain pooling contract to work – farmer
loyalty, deep knowledge of managing price signals and risk related to pooling,
strong relationships with end users and established grain contracting parameters.
If the CWB and other buyers of western Canadian wheat and barley want to earn
producers’ business for the future, building a successful voluntary pool is
something that can be done right now. It will move the debate forward in a
productive new direction, and reduce the stress related to the uncertainty
about future marketing options for Board grains.
AND FROM THE EDMONTON JOURNAL
Lorne Gunter, a long-time columnist with the Edmonton
Journal, made an interesting comparison, saying what if the federal government
had 70 years ago given the Catholic church a monopoly over every Canadian’s
choice of worship. He says no one has the right to impose their opinions,
practices and policies on anyone else, even if the federal government had
granted that authority — “It is a free country, after all.”
You can read Gunter’s full column by clicking on this web
I haven’t done any extensive research on the
question, but I did over the summer, ask a couple people who are well connected
in the grain industry whether they thought the CWB would continue to play a
role in wheat marketing after the monopoly ends. Both said yes.
One producer who is involved with a national policy
organization, says there is a role for the CWB, but he added he was doubtful if
the current board had the will to make it happen.
And the other evening, standing in a nice canola
field north of Calgary, I asked Gary Pike, (pictured right) a long time grain
management specialist with Pike Management Group, about the CWB future. He was
quite adamant that the board, with its connections and expertise, could play a valuable
role (contrary to what the media says).
And Pike was also optimistic that the board will hone out a new, useful
role, in a post-monopoly era. Website: pikemanagementgroup.com
And that’s about all I know about this today.
Lee Hart is a field
editor for Grainews in Calgary, Contact him at 403-592-1964 or by email at [email protected]
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