Clock ticking for company co-operation on grain price transparency

Gerry Ritz wants information posted starting Aug. 1 and John De Pape is confident the target can be met

John De Pape is trying to get all Prairie grain companies to give him their prices so he can post regional averages starting Aug. 1, but if they don’t the federal government might have to force them to.

“It’s a stick the (agriculture) minister (Gerry Ritz) has,” De Pape, president of FARMCO, told the Keystone Agricultural Producers (KAP) General Council April 16. “He’s reluctant to use it, but in all honesty if we fail in getting compliance voluntarily I’ll have to make that recommendation to the minister.

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“Nobody wants to do that, in my view anyway. If you regulate it you never get the same result as if you’d done it on your own.”

De Pape and the Alberta Wheat Commission, with funding from Growing Forward 2, are working to deliver better grain market transparency.

A prototype website displaying daily prices based on data provided by a limited number of companies can be found at http://www.pdqinfo.ca.

Currently the site shows average prices in eight regions for four crops — Canada Western Red Spring wheat, Canada Western Amber durum, Canada Prairie Spring wheat and canola. The goal is to post prices for all western crops, De Pape said. However, companies can be “pretty protective” of prices.

“There is a large proportion of bids out there that are not available to everybody. I’m not going to name names but there are four companies that do not provide prices beyond their own customers.

“When a company puts out a price as a bid, that, in my view, is a public good. But some companies say, ‘that’s my price, I’m not going to share it with everybody, just the people I deal with.’ Well, that’s not full disclosure.”

Markets need information to work properly, to encourage competition and arbitrage prices, De Pape said. It’s not a new idea. Many grain markets, including in the United States, have better information, he said.

“Better information makes for better decisions,” he said.

For example, recently Manitoba canola prices were $36 a tonne higher than in northeast Saskatchewan. That might be enough to encourage some farmers to truck canola to Manitoba, De Pape said.

Port prices not visible

Western Canadian farmers have been seeking more price information since the demise of the Canadian Wheat Board’s monopoly in 2012. But the wide gap between inland and port prices last crop year focused a light on the problem. At times farmers were getting $4 or $5 per bushel less for their wheat than what it was selling for in Vancouver, De Pape said.

That’s also triggered demands for more information about grain prices at port. But getting accurate numbers there is a bigger problem, De Pape said. For starters not much grain changes ownership at port. In addition, there’s usually several months between when a sale is made and when the grain arrives at port, making it complicated to compare the port price with a country one.

Moreover, the difference between the port and country price reveals how much a company is grossing.

“I’m really not in favour of going to the companies and asking, ‘what did you sell for?’ I am sensitive to their competitive interests. I think the detriment of that is greater than the benefit.”

There are other ways to gauge whether port and inland prices are too far apart, including a demurrage index that would reflect delays in rail movement, which of late have been blamed for the wide basis (difference between cash and futures prices), he said.

Market transparency also requires assess to good data, including stocks and export reports and production estimates, De Pape said. He compared seven months of canola exports and found the Canadian Grain Commission (CGC) reported almost 250,000 fewer tonnes of canola exports than Statistics Canada. Export statistics are also almost two months old. Data needs to be accurate and timely, De Pape said.

There are also gaps in the data. For example, the CGC doesn’t track the volume of grain exported from Canada in containers. (Amendments before the House of Commons are meant to fix that.) Last crop year 18 per cent of Canada’s grain exports was shipped in containers, he said.

Meanwhile, De Pape continues to negotiate to get grain prices through the Western Grain Elevator Association, which represents the West’s major grain firms.

“They have ideas and we have ideas and we’re trying to find common ground,” he told reporters. “There are a number of things that we agree on. They have not said no. They say they just want to make sure it’s done right. They have their own corporate interests in mind in terms of what is right. We may have a hard time agreeing on what is right.”

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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