Alittle over two years ago, the Canadian Wheat Board came up with a program called CashPlus for malting barley sales. Depending on who you listen to, it’s either been an absolute failure or a tremendous success.
CashPlus was initiated at a time when the Conservative government was doing everything in its power to end the CWB’s monopoly in barley. The program is a way for producers to lock in a guaranteed price for barley that is selected for malting.
CashPlus results from the first full year of operation are now public and the controversy has been reignited. The flashpoint is the top-up payment over and above what producers locked in as a guaranteed price.
Based on what its members paid the CWB for malting barley, the Canadian Malting Industry Association is saying the top-up payment should be $25 a tonne. Meanwhile, the CWB says the returns achieved throughout the crop year averaged $19.15 a tonne higher than the amount paid to producers in upfront, guaranteed prices.
From this, $6.26 per tonne was deducted for various expenses. The net result is that $12.89 a tonne or about 28 cents a bushel will be going to the more than 1,200 Prairie farmers who participated in the CashPlus program for malting barley in the 2008-09 crop year.
The Western Barley Growers Association, Saskatchewan MP David Anderson and the Western Canadian Wheat Growers Association have all issued news releases claiming money has gone missing. They basically allege that the CWB has misappropriated funds.
While they claim farmers should be receiving more, they don’t seem to have any tangible evidence. Members of the Canadian Malting Industry Association only bought about half of the barley sold under CashPlus. They wouldn’t have any way of knowing the value of other sales.
The association also criticizes the program for being “complicated, cumbersome and extremely expensive to administer.” Those criticisms may be valid for barley buyers, but the program wasn’t complicated for barley farmers. All you had to do was sign a contract at the guaranteed price.
As one of the producers who participated in CashPlus, I’m pleased. The program guaranteed me $6.50 a bushel. I was able to lock in that price prior to seeding back in 2008. On top of that price, I’ll now be receiving a top-up of 28 cents.
By comparison, malting barley in the regular pool account is only going to generate about $5.40 a bushel. That’s the total going to producers, including the final payment. So, producers who locked in early through CashPlus earned an extra $1.38 a bushel.
This wasn’t because of CWB marketing brilliance. World malting barley prices were at record-high levels in early 2008. CashPlus simply provided a mechanism to lock in those attractive prices.
As time went on, malting barley prices sagged. Producers who didn’t lock in through CashPlus had to settle for the average pooled price for the year.
The CashPlus guarantee won’t always look attractive in the final analysis. In a year when malting barley prices rise, locking in early will result in a lower price.
Most producers who utilized CashPlus didn’t count on a top-up payment. The 28 cents is a bonus.
The debate will continue over the CWB’s sales monopoly. There are valid arguments and strongly held views on both sides. But CWB opponents are going to have a tough time gaining much traction over their CashPlus criticisms.
Kevin Hursh is a professional agrologist and farmer based in
Saskatoon. He can be reached at [email protected]