The Canadian Wheat Board (CWB) recently published its annual report for the 2007-08 crop year. It was an exceptional year for Prairie grain producers, with record sales values and revenue for their grain.
At the same time, the range of flexible payment options available to producers continued to expand. Over six million tonnes were committed to these options last year. Corresponding risk management activities, however, proved very challenging in such a volatile futures market. This resulted in an $86.4 million deficit for the fund that underwrites these programs. While this is a very significant amount, it is not out of proportion with the extreme volatility that rocked commodity markets during this time period to cause this situation.
In the face of extreme market volatility, there were costs for providing farmers with the kind of payment and pricing options they want. The CWB identified the difficulties in risk hedging early in 2008 and began taking steps to address it. In addition, an external consultant was hired last fall to assess the risk-management processes and ensure they meet best-practice standards. Appropriate steps have been taken for our hedging programs going forward.
The financial statements in the CWB’s annual report clearly outline the effect of this deficit on the CWB’s contingency fund and what measures the CWB has taken to manage the situation. Those statements were audited by Deloitte and Touche and approved by the CWB’s board of directors, 10 of whom are elected by farmers and five, including myself, who are appointed by the federal government. The annual report is available online, with a summary mailed directly to all Prairie grain producers. Farmer Forums are also being held across Western Canada in March, at which producers have further opportunity to ask any questions they may have about these results.
In closing, I would like to reassure grain producers that 2007-08 was indeed exceptional, but for all the right reasons.
Ian White President and CEO
Canadian Wheat Board Winnipeg
Please forward letters to Manitoba Co-operator, 1666 Dublin Ave., Winnipeg, R3H 0H1 or Fax: 204-954-1422 or e-mail: [email protected](subject: To the editor)