Alarge and high-quality crop along with an early harvest was just what the doctor ordered to ease the transition to the post-single-desk era, says the CWB’s chief operating officer.
“I can’t imagine what we’d all be going through… if we were talking about a crop that was predominantly (No.) 3 red (spring wheat) with falling number issues,” Ward Weisensel said at the 17th annual Fields on Wheels conference. “It would be unbelievable.”
Low quality ups the logistical challenge because it requires more segregation of grain to meet customers’ quality specifications, but this year’s wheat crop is grading mainly No. 1 and 2 with protein averaging 13.8 per cent, he said.
Grain unloads at Vancouver during the first quarter of the current crop year have been above average. However, earlier this month, there were 20 to 25 grain ships waiting to be loaded at Vancouver, Weisensel told reporters later. Normally there’d be around 10 but rain has hampered loading.
The loss of the single desk — which Weisensel called the biggest change in his 21-year career — has, not surprisingly, resulted in some unexpected things, he said. For example, nearby terminal capacity is not being fully used.
“When you have assets, you want to make sure they are fully utilized all the time,” Weisensel said.
To fill that capacity, grain companies have to make money on their export sales, which means buyers either have to pay more or farmers take less, or both, he added.
“It could be a missed opportunity though because if we miss the utilization of capacity now you can’t get it back and that may mean we won’t be able to move all the grain prior to new crop coming on,” he said.
“If you don’t use it, that revenue stream is gone — you never get it back. It’s like a jet leaving with empty seats.”
Weisensel admitted reaching agreements with grain companies to handle CWB grain also took longer than he expected.
“We underestimated a lot of the complexities around the relationships between the grain companies and wheat board.”
As well, high grain prices “make pooling a more iffy option for farmers,” he said.
The CWB, now a government-owned, for-profit grain company, must be privatized or wound down by Aug. 1, 2017. The company’s goal is to present its privatization plan to the federal government a year ahead of the deadline, Weisensel said.
“Depending on how we privatize this, you’re going to be seeking capital from the marketplace so you don’t want to be caught in a time frame where it’s not a good time to do it and you’re up against a deadline,” he said.
The CWB is also looking at acquiring its own grain-handling facilities, but Weisensel wouldn’t speculate on whether it will build new elevators or buy existing ones. Canada’s elevator capacity could also increase as new companies, such as Cenex Harvest States, Bunge and Noble Grain, enter the western Canadian market, he said.
“In the previous environment, they saw us as their Canadian origination strategy,” he said. “Now they’ve got to look at a different approach.”
Asked if the CWB might merge with an existing grain company, Weisensel replied: “Everything is on the table. It’s just a question of how it fits and how it fits where we want to place ourselves strategically within the marketplace.”
CWB president and CEO Ian White has said previously he hopes farmers will play a role in the company’s future ownership.
Preparing for an open market was akin to starting a grain company almost from scratch, Weisensel said.
The first priority was downsizing to 100 employees from 430 based on the expectation the new CWB would market much less grain.
“If you can’t get the balance sheet right at the start of the business, the rest is a moot point,” Weisensel said.
The company’s transition to the open market was also made possible because the federal government provided $350 million in capital and is also guaranteeing its borrowings, he said.
The move stirred controversy since some of the capital is coming from the CWB’s contingency fund, which many farm groups argue should be returned to farmers since it’s money collected from them. Ottawa says wheat board assets belong to the government.