“… the 07-08 crop year was a great case study for the advantages of single desk (selling) and pooled pricing.”
– maureen fitzhenry
was $510.35 a tonne ($13.99 a bushel), more than double the 2006-07 return. After deductions the average Manitoba return is $12.67 a bushel.
The in-store return for Special Select two-row and six-row barley was $299.59 and $272.61 a tonne, respectively. That translates to a Manitoba elevator price of $5.22 and $4.53 a bushel.
The wheat pool provided farmers with an estimated $560 million more than they would have received otherwise, Fitzhenry said. That’s based on comparing when and at what price American farmers sold their wheat. Most American farmers sold at less than $7 a bushel, according to U. S. Department of Agriculture figures, adjusted to compare with the appropriate western Canadian wheat grades. It looked like a great price relative to historical returns, but prices went even higher, peaking last February.
“Because we have a single desk and because we work through a pooled model we’re never going to blow out the grain all at one time,” Fitzhenry said. “In essence of the 07-08 crop year was a great case study for the advantages of single desk (selling) and pooled pricing.”
CWB critics say if prices had fallen throughout the year, the picture wouldn’t have been as pretty. Fitzhenry agrees, but said no one can accurately predict the future, including when grain prices will peak. Farmers can also price outside the CWB’s pool and many did last year, but most, like their American cousins, earned less than the pool return.
While the 2007-08 returns are the highest ever in nominal terms, they aren’t when adjusted for inflation. For example, when adjusted in to 2008 dollars, western wheat farmers received $947 a tonne in 1917, $703 in 1944 and $582 in 1973.
However, farmers are much more productive today. The average wheat yield in 1917 was 18 bushels an acre; crop insurance estimates Manitoba farmers averaged 48.6 bushels an acre in 2008.
A combination of factors resulted in grain prices taking off last year, but boiled down to demand exceeding supply.
The CWB is projecting lower returns this crop year, partly because of increased supplies. The global credit crunch and fluctuating currencies make forecasting even harder.
The December 2008-09 PRO put the in-store return for No. 1 CWRS (12.5 per cent) at $8.27 a bushel, down $1.76 or 17.6 per cent. That’s still well above the $5.68 a bushel received by farmers in 2006-07.
The latest durum PRO is $9.74 a bushel, while two-and six-row malting barley at $7.05 and $6.62 are still ahead of last crop year’s total return.
“There are solid fundamentals under all of this,” Fitzhenry said. [email protected]