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Wheat growers want no-cost buybacks to get grain moving

Agriculture Minister Gerry Ritz has pledged to push the Canadian Wheat Board for no-cost buybacks for farmers who want to pre-empt the open market expected Aug. 1.

Ritz told the Western Canadian Wheat Growers Association meeting in Moose Jaw last week he would push for such an arrangement or changes to producer pricing options during upcoming meetings with CWB officials.

“I know that the guys selling bins are clapping,” joked Ritz. “I promise you that we will take a good strong look at that.”

A number of growers at the conference expressed concern about uncertainty surrounding wheat and barley markets related to Bill C-18.

Curtis Sims, a MacGregor-area farmer, said that there is “quite a large volume of wheat” sitting in bins because farmers aren’t willing to sell it to the wheat board now that they have the prospect of marketing choice on Aug. 2, 2012. Unless that wheat starts moving soon, a serious “transitional” backlog in shipping movements might result, he added.

“We’ve got farmers who won’t sell to the wheat board, and the wheat board hasn’t shown any flexibility. Somebody is going to have to connect the dots,” he said.

Federal Agriculture Minister Gerry Ritz responded that a “logistical crash” like the one that followed the end of the Australian wheat board was unlikely because farmers’ needs for cash flow and grain companies’ desire to secure product would get product flowing.

Curtis Hiebert, 35, who farms 11,000 acres near Sperling, Man., has 150,000 bushels of hard red spring wheat in his bins.

With the CWB monopoly set to become history on Aug. 2, 2012, he wonders whether to hold on to it until then, or sign a contract now.

He called the legal challenges a “nuisance,” but his major concern is the current $1.50-per-bushel difference between the CWB and the open market.

Buying his wheat back from CWB would cost him about $1.62 per bushel. That would give him the right to sell it to a local elevator — but for only $1.50 more than the CWB is offering.

“Basically, they know how much they are out of the market, and that’s how much the buyback is,” he said.

Paul Orsak, who farms 5,000 acres near Binscarth, is holding back 100,000 bushels of 2011 wheat due to the “lack of confidence” in the CWB and low prices offered by the board.

“By contracting with them either through the pool or a fixed-price contract, I would be locking in a discount that I wouldn’t be able to recover from,” he said, adding that even if the world price dropped by $1.50, he’d still be better off on the open market.

Bill Duke, from Kenosee Lake, said that he still has malt barley left over from 2009, when talk of an open market enticed him to hang on to it.

“It’s still germinating 94 per cent and I’ll be damned if it’s going on a permit book,” said Duke, a former WCWGA president.

“If they want my barley, they should think of no-fee, no-cost buybacks. That would be the biggest advantage to clearing this crop. It would be simple and still in compliance.”

Henry Voss, a former CWB director, said that it is impossible to tell how much 2011 crop grain is being held off the market.

The Canadian Wheat Board declined comment on the question of whether it would offer no-cost buybacks.

Former farmer-elected director Bill Toews said allowing such a move could hurt the board, spark legal challenges and American trade retaliation.

“It certainly would be something the Americans would pick up on very quickly,” said Toews, who farms at Kane.

Issuing no-cost buybacks could drive down the value of western Canadian wheat and barley, reducing the return to the pools. It could also make it more difficult for the board to secure grain supplies during the remainder of the crop year, which ends July 31.

Any sudden surge in wheat exports to the United States could spark American farmers to try and block imports of Canadian wheat. Under the North American Free Trade Agreement importing countries can legally block a surge of imported produce if it was caused by a government policy change.

“I think it’s a bit of bravado on the part of the Western Canadian Wheat Growers,” he added. “I think they have to have some fun and a bit of a hurrah and bait people and try to make an impression, but the consequences could be pretty serious.”

About the author

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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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