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Basis comparisons need context

“All we ask is you make note of the fact that when you use the numbers you point out the fact that there is a difference in the way that they are calculated and the canola number has a higher probability of error.”

– MARK HEMMES

Which is more efficient at moving grain to export: the open market or the Canadian Wheat Board (CWB)?

The open market, according to an Informa Economics study, commissioned by the Alberta government and released last summer. As proof the study cites data collected by the Quorum Corporation, which monitors Canada’s grain handling and transportation system.

Quorum put export basis levels for wheat, durum, canola at $55.80, $68.64 and $45.37 a tonne, respectively.

But Quorum’s president Mark Hemmes says the figures need to be put into context – a message he repeated at the Wes tern Canadian Wheat Growers Association’s (WCWGA) annual meeting in Winnipeg Jan. 9.

“All we ask is you make note of the fact that when you use the numbers you point out the fact that there is a difference in the way that they are calculated and the canola number has a higher probability of error,” Hemmes told Morris-area farmer Rolf Penner, who asked if the figures were accurate.

Hemmes said it was too strong to say Informa “misused” the data.

“I don’t have a problem with the way he (Chuck Penner of Informa) used it but I have a problem that he didn’t put an asterisk on it and that was the only thing.”

The asterisk should have noted numbers used to calculate the basis for wheat board crops are very transparent, while those used for calculating non-boards are not. Quorum’s non-board basis is essentially the difference between the posted elevator price and the cash price at a terminal in Vancouver. There’s no way to measure to what extent a company may have shaved its margin on a canola shipment.

The two figures are arrived at in very different ways. Hemmes said the basis for canola could be out as much as $7 a tonne or 12 per cent, which, in those cases, would be closer to that of wheat.

In an interview last August Hemmes said because of the difference in how the numbers

are arrived at, “they are not intended to be compared.” And at that time he did take issue with how Informa used the numbers.

“I don’t think the statistics have been used in a manner in which they were intended,” he said. “They have used them in error.”

Hemmes repeated during an interview during the WCWGA meeting that “you don’t want to compare the two.”

Asked to explain what appeared to be contradictory statements, Hemmes said: “The fact of the matter is, you can make a comparison but you’ve got to be explicit about the difference in the calculation. If you want to use it go ahead, but you better tell people where the numbers come from and then they can make up their own mind. The problem that I’ve got, especially with the way that Chuck Penner presented the numbers, is that he makes it sound like it all comes from the same perspective.”

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About the author

Reporter

Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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