Volatile markets have led the Canadian Wheat Board to now charge a variable-rate per-tonne fee to Prairie wheat and durum growers who want to defer pricing of a given year’s crop into the following crop year.
As of March 2, the fee is $4 per tonne for wheat and $3.50 per tonne for durum for farmers who wish to defer pricing of 2008-09 crops into the 2009-10 crop year.
That fee schedule, which took effect at 2 p. m. CT Feb. 26, “could change daily” at 2 p. m. Manitoba time, the CWB said on its website.
The CWB will now also require farmers to give advance notice if they plan to make such a deferral. Farmers who want to price their 2008-09 deliveries of wheat or durum into the 2009-10 pool must advise the CWB between now and June 30.
“Essentially, it boils down to reducing risk and ensuring fairness for all involved in the pool, since pool-year transfers can reduce returns,” the CWB said on its site.
“Switching grain from one year to the next creates uncertainty regarding pool size and affects the pool returns of both the old and new crop year since CWB sales need to be reallocated.”
Allowing farmers to make such deferrals has become a “more significant” issue lately given current market volatility, the board said, noting that its recent review of pool-year transfers found that transfers lowered both old-crop (2006-07) and new-crop (2007-08) returns.
The resulting uncertainty of the pool size also affects the CWB’s planned pricing pace and can cause “significant” hedging losses, the CWB said.
The program fee is nonrefundable and is deducted from any future payments owing to a farmer who applies for a deferral, the CWB said.