Prairie wheat and feed barley growers can now buy their way out of a Canadian Wheat Board delivery contract during the crop year. Buyouts are available for wheat, durum and feed barley once an acceptance level has been announced for a given class of grain, according to the CWB.
To perform a buyout, the CWB says, a farmer would pay the daily buyout fee as posted each day online ( www.cwb.ca), plus a $25 transaction fee. Eligible Prairie farmers can buy out of the board’s Series contracts, Guaranteed Delivery Contracts (GDCs), GrainFlo program, Wheat Storage Program and Churchill Storage Program, the CWB said. The new daily per-tonne buyout fee allows a farmer to see the cost to reduce or eliminate tonnage on a delivery contract, and to make an “informed business decision” whether it is in his or her interest to buy out a contract, says the CWB. A farmer who wants to buy out of a 2010-11 delivery contract would have to contact the CWB at 1-800-275-4292 with his or her 10-digit identification number and four-digit PIN. The buyout fee schedule is to be posted at 3 p.m. CT, Monday to Friday.
Farmers are asked to contact their grain company representatives for information on buyouts of identity-preserved (IP) contract programs and company-specific GDCs.
The daily fee is calculated by taking the difference between the per-tonne price for which the CWB can expect to sell the grain today and the average value at which the CWB has sold comparable grain during the pool year. This is multiplied by the percentage of the pool sold to date. If the buyout fee that day is zero, only the transaction fee of $25 is applied. The buyout fee “accurately reflects the true market cost associated with buying out accepted tonnes committed to a contract,” the CWB says. Historically, at the end of the crop year, the CWB has charged liquidated damages ranging from $6 to $25 per tonne. That range has been eliminated. A farmer who doesn’t deliver and doesn’t complete a buyout form by the end of a given crop year would be charged the buyout fee posted on the last day of that crop year, the CWB says.