Canada: Agricore United and CWB dispute over Canadian barley prices

Agricore United, Canada's largest grain company has begun posting its own international feed barley price for farmers – a price that dwarfs current price signals from the Canadian Wheat Board, Reuters reported January 27.

But the CWB, which has a monopoly on feed barley exports from Western Canada, said Agricore's spot price is unrealistic and misleading.

On Thursday, Agricore's spot feed barley price was C$233.70 ($198) a tonne, basis Vancouver, 23 percent higher than the Canadian Wheat Board's projected pool return of C$190 a tonne, basis Vancouver.

"Prices are going up, and that's one of the reasons why we felt that it was important to ensure farmers were aware of what the international prices were as they're making their (planting) decisions," said Cam Dahl, Agricore's government relations and policy development officer.

The internally calculated price is somewhat theoretical, Dahl acknowledged, since farmers cannot sell their barley directly to Agricore for the export market.

But he said the price reflects what Agricore could pay if the market were open.

A spokeswoman for the CWB said Agricore's price seemed to reflect recent feed barley sales made into the Japanese market, where demand is limited.

"You can quote any price you want, as long as you're not trading it," Maureen Fitzhenry said. "It's highly unlikely that a grain company would be paying that out to farmers: that would be implying that they're willing to take no margin whatsoever on that sale," she said.

The CWB's projected return reflects sales the agency is making into the premium Japanese market, but also includes sales it expects to make into other lower-priced markets between Feb. 1 and July 31, Fitzhenry said.

The CWB pools its sales, and then returns the revenues to farmers, less expenses, at the end of the crop year. Once a month, it issues a pool return outlook to give farmers a sense of what they may receive at the end of the year.

The Canadian government wants to end the CWB's barley monopoly, and will soon ask western Canadian farmers to cast their vote on whether to open up the market. Agriculture Minister Chuck Strahl announced the barley plebiscite details on Monday, the same day Agricore began posting its international barley price.

Fitzhenry questioned Agricore's timing, but Dahl said it was coincidental. "There wasn't any intent on having any effect on how people vote in the plebiscite," he said.

Farmers who are delegates to Agricore's annual policy-setting sessions support opening up the market, Dahl said, but the company has not taken a position on the barley vote and will not campaign to influence farmers' votes.

The Canadian Wheat Board is one of the world's largest grain marketers, but feed barley accounted for less than 500,000 tonnes of the total 19.4 million tonnes of grain it handled in the year ended July 31, 2005. Farmers sell most of their barley directly to the domestic livestock market.

Domestic barley prices have also been strong. The equivalent domestic price, basis Vancouver, would have been in the range of C$200 a tonne on Thursday, Dahl said.

Prices for most grains and oilseeds have rallied because of strong world demand for bio-fuels.

($1=$1.18 Canadian)

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