Farmers tiptoe into newly opened Canada wheat market

Wed Jan 18, 2012 9:07am EST
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By Rod Nickel

WINNIPEG, Manitoba (Reuters) - As some of the world's biggest grain traders fan out across Canada's Prairies to compete openly for farmers' wheat and barley for the first time since World War II, they're finding more farmers like Paul Balicki than Stephen Vandervalk.

Balicki, from Saskatchewan, says he's been unimpressed with early offers to buy the spring wheat he plans to grow this year, which he's been required to sell to the Canadian Wheat Board since 1943. Like many of the region's 100,000 farmers, most of whom have no memory of a free-market system, change comes hard.

He hasn't sold a single bushel.

The single-desk system - the last remaining such grain monopoly in the world - is set to expire on August 1, after the Conservative government passed a law in December. But the new system is effectively already in place with grain handlers now scrambling to lock in forward price contracts.

"There's still some uncertainties and some variables," says Balicki. "I don't understand all of it. It's still early, and everyone wants to protect themselves."

By contrast Vandervalk, of Alberta, a longtime critic of the CWB's monopoly over the region's spring wheat, durum and barley, couldn't wait to get started. Even before sowing a single seed, he's sold most of his anticipated barley crop and more than a third of his wheat to companies like Viterra, Richardson International and Parrish & Heimbecker.

"I can lock (prices) in and that's what business is all about," said Vandervalk, president of the Grain Growers of Canada. "It's a totally different mindset. I've put more research into increasing my yield and quality of wheat in the last month than I have probably in my life."

Despite the new law throwing open the competition for prized spring wheat, durum and barley supplies in the No. 4 wheat exporter, change hasn't come quickly and farmers, grain handlers and processors are signing deals with a large amount of caution.   Continued...