A Prairie barley growers’ group says those who have uncontracted malting-quality barley have been “blindsided” by the Canadian Wheat Board’s decision not to use its designated barley pool to select for new export sales.
The CWB announced Friday that so as to protect relatively high current pooled values for designated barley, given recent international market price declines, it will carry out “most” new malting barley business for the rest of 2008-09 using CashPlus, a board program that offers farmers an upfront cash price.
“Where does this leave farmers with uncontracted malt barley?” Western Barley Growers Association acting president Brian Otto said in a statement Wednesday.
“If the producers have to find their own cash markets for malt barley (via CashPlus), what service is the CWB providing? It astounds me that they feel they add value here. Why are they even involved?”
There was no indication at the beginning of the crop year that the CWB’s malting barley pool could essentially be closed early, said Otto, who farms at Warner, Alta., about 60 km southeast of Lethbridge.
Come January, there was no indication from the CWB that it was considering closing the pooled account prematurely, said Otto, who stepped in as acting president of the Airdrie, Alta.-based WBGA when president Jeff Nielsen was elected in December to the CWB’s board of directors.
“Giving malt producers advance notice of such a move should have been a priority,” Otto said.
The CWB said last week that it sold a “considerable quantity” of malting barley earlier in the current pool year, when international prices were $2 to $3 per bushel higher than they are today.
Since then, the CWB said, a “large volume” of high-quality barley from competing countries, particularly from the European Union, came to market and pressured prices.
The CWB said it’s on track for record bulk malting barley exports in 2008-09 of at least 1.4 million tonnes. Calling it “an extraordinary year for barley,” CEO Ian White said a “large volume” of Prairie malting barley had been selected for this pool.
And Prairie farmers, White said Friday, “have now become aware that additional selection opportunities are limited due to the large, high-quality barley crop in Canada and around the world.”
But Otto said barley growers deserve answers now to several questions arising from the CWB’s decision. “Is the account closed to all new sales of malt barley after the announced closing? Does the CWB plan to make a final payment sooner since the account was closed halfway through the current crop year?”
Otto described the CWB’s decision as “a dramatic example where pooling only works for some producers and not for others who, unfortunately, were waiting until later in the crop year for malt selection.”
In a market “flooded” with malt barley, uncontracted Prairie producers would have picked up on market signals from the industry encouraging them to sell into the feed market when those prices were significantly higher, Otto said.
“As it is, the CWB clouded these market signals and interfered with producers’ ability to make informed marketing decisions with their barley.”
White, in the CWB’s release Friday, had said that “by using CashPlus for the rest of the year, the CWB can help inject the price certainty that farmers want… whether they sold through the pools earlier or secure a cash value now.”