Cargill may run a pool for western Canadian farmers’ spring wheat in 2012 and will also be ready to offer farmers forward price contracts for their grains in an open market. Grain handlers will be able to immediately offer farmers contracts to buy next year’s harvest once the Canadian Wheat Board (CWB) no longer has a government-mandated monopoly.
“We have considered all of those particular (pricing) approaches,” says Cargill president Len Penner. “Part of what we need to assess is what role will (the CWB) play on the pooling side versus what other competitors will choose to do.”
Penner says he thinks farmers will want to pool wheat, as they have in Australia after it ended its own wheat marketing monopoly in 2008.The number of pooling options Cargill may offer depends on how much demand there is for them, Penner says.
Pooling options come in different styles and can allow farmers to capture the average price of a commodity over a period of time, or simply turn a combined grain volume over to a company for marketing during a year.
Cargill, the third-largest grain handler in Canada after Viterra and Richardson International, is also “very prepared” to offer farmers forward price contracts for next autumn’s harvest, Penner said.
In a given year, farmers may sell about one-quarter of yearly production of other crops through forward contracts, and the signup for wheat might be slower, Penner says. †