Canada: Anticipated elimination of barley single desk casts doubt on contracts
On April 21st 2007, Canada published its proposed regulations amending the Canadian Wheat Board (CWB) regulations, the purpose of which is to remove the CWB’s monopoly (single desk) powers over inter-provincial and export trade in barley, according to USDA report, May 14.
The government has given August 1st, 2007 as the implementation date. With a global supply shortage and high market prices for barley, producers who have not yet delivered to the CWB may not honor their contracts with grain companies, thereby potentially forcing the latter to pay the current, higher, market price.
Both the federal government and the CWB appear to be unwilling to force grains producers to honor their contracts, as doing so would risk alienating them before a possible upcoming national plebiscite on retaining the single desk for wheat. In addition to the Canadian and U.S. grain companies, their customers – Canadian and some U.S. malting companies – also stand to be adversely impacted by this situation.
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