An upfront cash price of over $5 a bushel for Prairie malting barley would be on offer if the Canadian Wheat Board’s new cash-price contract option were available today, CWB brass announced Wednesday.
The board floated its CashPlus program for malting barley Wednesday into almost two weeks’ worth of advance criticism, made before any particulars were widely available save for a CWB podcast that was available to Prairie wheat and barley growers on the board’s web site before Christmas.
The CWB said in a teleconference that its plan sets up a three-way transaction between a farmer, a selecting company and the CWB. It would give barley growers the option for cash-price contracts while retaining the benefits of single-desk selling through the board.
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Were the contracts made available through selecting companies Wednesday, the upfront cash price would be over $5 a bushel, backed off to west-central Saskatchewan, and the contracts would also allow growers the flexibility to negotiate additional terms with those companies, the board said.
Under this marketing option, the board would establish a guaranteed cash price that “reflects market values.” That price would change, not on a set schedule, but in response to sales and market conditions, the CWB said.
The CWB would handle negotiations on sales price and volume with the leverage of its single marketing desk, after which the selecting company and the barley grower would directly negotiate a contract. The CashPlus contracts would be available both pre- and post-harvest, the CWB said.
On top of the guaranteed price, the CWB would pay growers an additional premium based on any spreads between that guaranteed price and the CWB’s actual sales returns.
“We’ve developed an innovative program that delivers the options farmers are looking for in barley marketing,” said board director Allen Oberg, a farmer at Forestburg, Alta., east of Red Deer, in a CWB release. Farmers said they want more choice as well as a strong, viable CWB and “they will have both” under this plan, he added.
The board noted in its release that CashPlus also “responds to the malting industry’s desire for improved operational certainty in the aftermath of upheavals in the Canadian malting barley industry during 2007.”
Criticism
Nevertheless, Canada’s four biggest maltsters were the first out of the blocks to condemn CashPlus in advance, saying in a joint Dec. 27 release that it “limits the price going back directly to farmers, thereby continuing the inability to send proper price signals to growers.”
(Quoted in the Jan. 10 Manitoba Co-operator from an earlier interview, the CWB’s vice-president of marketing, Gord Flaten, said maltsters “would prefer to pay a price for their barley to be determined by what farmers are willing to sell at.”)
The maltsters were followed in their comments by Federal Agriculture Minister Gerry Ritz, whose government goes to court next month to appeal for the right to deregulate Prairie barley marketing by regulation rather than by a vote in Parliament. He wrote Jan. 2 that CashPlus was a “half measure” that would still “trap” Prairie barley growers in the CWB’s single-desk marketing system.
Ritz on Wednesday reiterated those points, calling CashPlus “nothing more than a diversion while still allowing the board to retain an out of touch, centrally-controlled monopoly.”
The Western Grain Elevator Association, a group representing the Prairies’ largest grain handlers, on Jan. 3 responded to the CWB plan by calling for “the complete deregulation of barley as soon as possible.” The Western Barley Growers Association, a pro-deregulation farmers’ group, also on Jan. 3 called CashPlus “completely unusable by producers.”
