Canada: Farmer interest in payment options jumps 600 per cent in 2004-05

Winnipeg – Western Canadian farmers dramatically increased their participation in the CWB's Producer Payment Options (PPOs) in 2004-05 – including a 600-per-cent increase in grain delivered under Fixed Price or Basis Payment Contracts, taking advantage of strong market rallies in the spring of 2004, CWB posted on April 27.

The growing use of PPOs to provide pricing choice and flexibility for farmers is detailed in the CWB's 2004-05 annual report, which is now available.

A total of 1 171 454 tonnes of wheat, durum, designated barley and barley were committed farmers to Fixed Price or Basis Payment contracts last year, compared to 159 253 tonnes in 2003-04. Early Payment Options were enhanced to get more money to farmers sooner, with participation growing from 2 652 369 tonnes in 2003-04 to 3 081 520 tonnes last year. In addition, the CWB introduced a new PPO in 2004-05 called the Daily Price Contract, which provides farmers with an opportunity to price their grain based on U.S. elevator prices.

"More and more, farmers are recognizing that PPOs give them the choices they need to manage cash flow and pricing," CWB president and CEO Adrian Measner said. "The best part is that they can gain this flexibility without having to give up the benefits of price pooling and the single desk."

The annual report shows CWB revenues last year were $3.7 billion, with administrative expenses of $69.2 million. Weather problems that plagued the near-record yielding 2004 crop – including a hard frost in August and relentless rain in September – created one of the most difficult marketing years ever for western Canadian grain.

Other highlights detailed in the annual report focused on the CWB pursuing innovation by:

Splitting the crop year for feed barley into two pooling periods instead of one, giving farmers better pricing signals and improving the CWB's ability to attract deliveries when sales opportunities are favourable.

Winning two decisive trade victories against the United States in cases argued before the World Trade Organization and a North American Free Trade Agreement tribunal.

Expanding the Pre-delivery Top-up program to give farmers access to a greater portion of their grain's value, before delivery.

Signing a million-tonne sales memorandum of understanding with China, which has become Canada's top-volume milling wheat and malting barley export customer.

Creating the Value-added Incentive Program to promote direct delivery of wheat, durum and designated barley to mills and maltsters in Western Canada.

Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. As one of Canada's biggest exporters, the Winnipeg-based organization sells grain to more than 70 countries and returns all sales revenue, less marketing costs, to Prairie farmers.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .