As the fluffy, golden-awned heads of barley flowed seamlessly into Ron Sabourin’s combine last week, he was more focused on getting this year’s crop in the bin than he was with the dawn of a new marketing era in Western Canada.
Sabourin started pricing out this year’s wheat last December and doesn’t plan to use the now voluntary pools operated by the new Canadian Wheat Board. As of Aug. 1, farmers can opt in to the CWB pools or market on their own in what is arguably the biggest change in Western Canada’s grain sector since 1943.
“Around here I don’t think the pool is doing very well,” Sabourin said. “People aren’t that gung-ho on the wheat board around here.”
It’s easy to explain the ambivalence Sabourin and many other Manitoba farmers feel towards the change. They are relishing a rare coincidence of a bumper crop and high prices, due to the blistering drought now affecting 31 U.S. states. Besides, cereal crops just aren’t that big a priority around here anymore.
“For a couple of years we were just growing wheat for rotation,” Sabourin says as he glances between his monitors and the field ahead.
While it differs in other parts of the Prairies, the back roads of the Red River Valley reveal canola, soybeans and corn accounting for most of the acres. Agriculture Minister Gerry Ritz blames the wheat board for the decline in acres, but truth be told, American farmers are making the same decision, following the money in corn and soybeans.
Farther south near Halbstadt, Howard Friesen swings his Versatile tractor around while watching his harrows, then resets the auto-steer and lets go of the wheel.
On the other side of the field, a neighbour’s kids are running his combine, finishing a field of barley. In a couple of hours he expects they’ll finish and his cereal harvest will be in the bin. Friesen already harvested his winter wheat and didn’t seed any spring wheat this year.
“Corn is my biggest crop,” Friesen says. “Corn is king this year.”
Friesen says he isn’t sure he’ll seed winter wheat again this fall. It extends the spraying and harvesting season. And it’s not a cheap crop to grow. Winter wheat needs at least 100 pounds an acre of nitrogen and usually two fungicide applications — one at the flag leaf to ward off leaf diseases and another at flowering to prevent fusarium head blight.
Corn requires as much fertilizer and the seed is more expensive, but it usually outyields winter wheat and it doesn’t need fungicides.
Friesen, like most of his neighbours, grows soybeans. He’d like to see some rain in the forecast.
“If we get an inch of rain now it’ll be big,” he says. “I think they’re hanging in there.”
Friesen hasn’t priced any of his wheat yet.
“I’ll probably just sell it in the cash market,” he says when asked if he’ll put some in the CWB’s pool. “I was never really anti-wheat board, but a lot of guys are. Being a smaller farmer I think it might have been an advantage (for me). Now the big boys they can come up with a big volume of grain and probably get a better deal.”
But with new-crop winter wheat prices close to $8 a bushel, Friesen isn’t worried.
“Marketing is easy when prices are good, but it’s tougher when they’re depressed.”
Conventional wisdom is farmers are less interested in pooling in a rising market. Why settle for an average price when you might be able to sell at the peak or close to it? But capturing the high is often more luck than good management.
CWB president and CEO Ian White says pooling is an inexpensive form of price protection. Some farmers have signed up to pool, but he says many are waiting until the crop is off before committing to the pool or cash market, despite the high prices.
The CWB doesn’t know how much grain it will have to sell so it hasn’t sold much yet. That means the pools can still capture the current high prices, White says.
To further entice farmers the CWB’s initial payments will be 75 per cent of the expected final return, up from 65 per cent. And the CWB promises to make adjustment payments faster. Farmers will be informed about the pool through the pooling period and can cash out early. White says the CWB will soon announce details about its canola pool.
Single-desk supporters are calling Aug. 1, 2012 a day of “infamy.” The former elected directors and the Friends of the Canadian Wheat Board coalition have announced last week they are seeking permission from the Supreme Court of Canada to continue their challenge of the federal government’s actions to the country’s highest court.
Meanwhile, open-market supporters planned to toast the open market with “barley-freedom beer.”
But on Aug. 1 the vast majority of farmers were focused on the harvest, buoyed by near-record grain prices and the prospect of a bountiful harvest.
The sun still rose Aug. 1 and the sky didn’t fall. Loss of the single desk was mourned and celebrated, but mostly ignored — like history.