June 25, 2012

 

Canadian Wheat Board signs deals with grain handling firms

 

 

In order to handle grain for farmers who want to pool their grain with the Canadian Wheat Board (CWB), an agreement has been signed by the CWB with six companies including Canada's largest grain handler, as it faced with losing its monopoly on western wheat and barley sales August 1.

 

"Farmers now have delivery points all across Western Canada to market their grain with CWB," said Ian White, president and CEO of the CWB, here Thursday (June 21). "There are now more than 120 country elevators that will accept CWB grain under our current agreements, with more on the way.''

 

Viterra Inc. jointly announced the agreement with the CWB, which will allow farmers who have signed CWB contracts to deliver grain to Viterra facilities across Western Canada, including port facilities.

 

"The agreement provides growers with access to the CWB pool programmes for wheat, durum and barley, and to Viterra's comprehensive logistics network across Western Canada,' said Fran Malecha, Viterra's chief operating officer for grain. Malecha added Glencore, which is in the process of acquiring Viterra for US$6.1 billion, would honour the CWB agreement.

 

Other companies that signed agreements with CWB are: Cargill Ltd., South West Terminal, Mission Terminal, West Central Road and Rail, Delmar Commodities, Linear Grain and Agro Source. Two other large players, Richardson International Ltd. and Louis Dreyfus Corp. have not yet signed agreements with the CWB.

 

A senior CWB official said the companies that have agreements with the CWB account for roughly half of the grain handling capacity in Western Canada. The agreements are critical to the CWB's future as a grain company, since it has no grain handling assets or access to port facilities. But CWB says it's the only grain company that offers farmers price-pooling options, which average prices over time, reducing price volatility.

 

White said the agreements will help the CWB compete for farmers' business when the "single desk'' monopoly disappears in August. White added, "Farmers should now be able to move ahead and sign CWB contracts with confidence.''

 

Agriculture Minister Gerry Ritz, who introduced the Marketing Freedom for Grain Farmers Act, which removes the single desk, applauded the CWB for signing the grain handling agreements.

 

"This announcement gives farmers the certainty they need to move forward with their business plans and rightfully market their own wheat and barley," Ritz said in a news release. "These agreements, once again, demonstrate that the CWB is a viable and competitive marketing option for farmers."

 

But Wascana Liberal MP Ralph Goodale said the new "voluntary'' CWB has an uphill battle to convince farmers it's better than the "mandatory" CWB, which could guarantee delivery of 100% of the wheat and barley grain grown in Western Canada.

 

"If they're at about half (western grain handling capacity), that's half the capacity compared with what the wheat board used to have, which was 100%,'' said Goodale, a former agriculture minister and minister responsible for the CWB.

 

And Goodale said many questions remain unanswered, including how much farmers can expect the new CWB will pay for initial payments and what happens to the CWB's US$200-million contingency fund, which has been appropriated by the government to cover the new CWB's business risks.

 

Goodale added the grain companies are "cherry picking'' the CWB's staff, which is expected to be down more than three quarters - from 430 at the start of last year to about 100 by the end of this year.

 

"Now that the wheat board is nothing more than another grain company, without any assets, it's just in their way,'' Goodale said.  "The grain companies will simply want the expertise, and to heck with the shell (of the CWB)."