January 5, 2008 / 1:54 AM / in 10 years

Canada grain handlers reject new barley program

WINNIPEG, Manitoba (Reuters) - Canadian grain handlers said on Thursday they will not participate in the Canadian Wheat Board’s new barley pricing program and asked the federal government to end the agency’s marketing monopoly on the crop.

The CWB’s proposed cash pricing program for malting barley would not give farmers accurate price signals and would be cumbersome, said a spokesman for the Western Grain Elevator Association, which represents Canada’s seven largest grain handlers.

“It is a mess, because the wheat board is trying to create some half-way system that is the worst-case scenario,” said Wade Sobkowich.

The confusion over the new program comes as Prairie farmers begin to decide what to grow in spring.

It is the first time the grain companies have publicly called for Ottawa to dismantle the CWB’s “single desk” for sales of barley, which covers barley grown in Western Canada and sold to maltsters and export markets.

Barley sales accounted for about 11 percent of the C$3.5 billion ($3.5 billion) in revenue for the farmer-controlled CWB for the year ended July 31, 2006. Most of its revenue comes from wheat sales.

The government had tried to end the barley monopoly by regulation as of August 1, 2007, but a Federal Court judge ruled the move required full legislative approval of the House of Commons, where it faces political opposition.

An appeal of the court’s ruling will be heard February 26.

The CWB moved to ease concerns about its traditional pooled prices with the new program for malting barley, which would track the daily ups and downs of the spot cash market.

But it had not yet announced how it would derive the cash prices, citing talks with grain companies and maltsters.

The CWB expects those discussions will continue, since buyers of malting barley have said the pooling system does not work well for them, an official said.

Federal Agriculture Minister Gerry Ritz said in a statement earlier this week that he does not support the CWB program.

Canadian maltsters, which buy about 60 percent of the CWB’s malting barley, rejected the new pricing program last week as not being transparent, and repeated calls to end the monopoly.

“It appears to me to be a co-coordinated effort to try and bring some momentum forward for a deregulation to the industry, when what we’re trying to do is bring stability to the industry,” said Deanna Allen, a CWB vice-president.

Grain companies handle export grain on behalf of the CWB, which does not own facilities.

The CWB’s terms for the new program are unwieldy, the Western Grain Elevator Association’s Sobkowich said.

“They’re complicated, they’re confusing, they’re expensive, they limit the price going back to the farmer, and they don’t send the right market signals to the grower or the industry,” he said.

The grain companies also want a way to resolve disputes with the CWB through an independent third party, he said.

($1=$0.99 Canadian)

Reporting by Roberta Rampton; Editing by Rob Wilson

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