Canada: Wheat Board will continue to sell barley

The Canadian Wheat Board will continue to sell barley after it loses its monopoly on Aug. 1 because it is legally obliged to do so, the chair of its board of directors said, according to Reuters, June 13.

"We have to sell barley in the new crop year," Ken Ritter said in an interview.

The CWB, one of the world's largest grain marketers, had said it was considering bowing out of the barley market because it doesn't own grain handling facilities and would likely not be able to offer farmers a premium to grain companies who control the space.

But the farmer-controlled agency was moving to come up with ideas to minimize financial liability and damage to customer relationships in the wake of Conservative government regulations that come into effect Aug. 1.

The regulations will give farmers the option of selling their barley to the CWB or directly to other buyers, ending the CWB's monopoly on sales of western-grown barley to maltsters and export markets.

Agriculture Minister Chuck Strahl said the CWB was legally bound to continue offering a pooled price for barley.

But without certainty of supplies, Ritter said it was unclear how the CWB would be able to run a pool, which gives farmers a blended price derived from sales made throughout the marketing year.

The CWB most likely will buy barley on a cash basis, said Ward Weisensel, chief operating officer.

"It may be done directly, vis-a-vis the trade, in terms of the malting companies offering a cash price," Weisensel told Reuters.

"It could be done a whole host of different ways. Those are things that are under discussion that are not totally clear yet," he said.

Barley sales accounted for about 11 per cent of the CWB's $3.5 billion in revenue in the year ended July 31, 2006, with the bulk of its operations focused on wheat.

The CWB probably will not offer barley cash prices to farmers directly, Weisensel said. Rather, farmers will look to the grain trade for cash bids.

"They (farmers) will not know whether that business is for the CWB account or for anyone else, but that price will be out there," he said.

A group of farmers who oppose Ottawa's move have launched a legal challenge to overturn the regulatory change, saying the government instead needed to change the CWB's governing legislation, which would require a vote by Parliament.

Ritter said the CWB was mulling whether it will challenge the regulations in court, and may decide next week.

Pending legal rulings, the CWB will continue to serve its customers, Weisensel said, noting the agency has "significant volumes" of business booked, mainly with Canadian malting companies.

"We have an obligation to execute those sales for our customers and we're going to make every effort to do so," he said, adding "time will tell" if the CWB can get the supplies it needs.

The CWB has asked the federal government for compensation for any losses experienced on the malting contracts.

Strahl said it was premature to discuss compensation until the CWB sees whether it can attract enough grain.

Weisensel said the CWB may look at booking more sales.

"We want to keep continuity with customers, and we would entertain business," he said.

He said he has not seen any significant barley sales made outside the CWB to date.

"It is a highly risky (legal) environment for everyone, so we'll have to see how it works out over time," he said.

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