The Canadian Wheat Board made an interesting announcement recently when it unveiled it would begin marketing canola for Western Canadian farmers.
The decision is one which may ultimately reveal much about what farmers truly feel about the CWB, and also how effective the organization is at marketing.
Of course the history of the board has been as a single-desk seller, meaning it has been the lone export marketer of wheat, durum and barley. As a single-desk operation, the CWB has never had to compete for product from farmers. It handled it all coming from western producers.
That has changed with the decision by the federal government to end the monopoly. The debate will last long about whether the Stephen Harper government played fast and loose with the rules of Parliament in making the change, but the fate of the CWB was still forever changed.
Now the CWB is attempting to adapt to its new reality.
One of the steps it is taking is to market canola, a crop with a well-established network of marketers already in place.
But as the crop which is now competing with wheat in terms of the most acres devoted to it, canola is a major commodity which could help boost the bottom line of the CWB.
But there is an if for the board.
It will only help the CWB if producers are willing to market their canola through the organization.
It’s clear the government expects farmers to abandon the CWB in droves. Agriculture Minister Gerry Ritz has led a chorus where the undertones were pretty clear, the CWB was flawed and not working for farmers.
They made the change on the premise of providing choice, but if they believed the CWB was doing the best job possible for farmers why change the system?
In terms of canola, there was discussion within the last quarter century about the crop perhaps coming under the CWB umbrella, but that never happened.
So now it will be up to the CWB to attract canola bushels from farmers, and if farmers happen to commit significant production to the organization it will speak to how well respected the CWB actually is with farmers.
Don’t expect a huge pile of canola to go to the CWB, at least not immediately.
But longer term the CWB might earn bushels because they do have a worldwide network of marketers who, while previously dedicated to cereal grains, have to have contacts useful in marketing canola.
If the CWB machine can find new, and/or better markets for canola, farmers will turn their way.
It stands to reason in a new open market environment the CWB will need to look for new revenue streams.
Canola, because of its sheer size, is a logical first step.
But think about the connections the CWB has in India, Pakistan and the Middle East. To take on marketing pulse crops might be a natural.
And if you are selling canola, is flax such a stretch?
There is also potential to use the knowledge the CWB has in marketing cereals to include oats and rye. Both are specialty crops with limited acres, so sales are not by container ship, but the mechanics of the sale may not be so different the CWB won’t take it on in their new world, if they can make pools work on smaller crops.
“Farmers have been telling us they want CWB to run canola pools to help manage their price risk and provide them with reliable returns through a system they can trust,” said CWB president and CEO Ian White in a recent release, adding farmer sign-up is now open for the new CWB canola pool.
“The farmer benefits of pooling apply just as successfully to canola as to wheat. Farmers retain all the profits generated from their grain sales, instead of simply taking a flat price at the elevator. It also means they can spend more time on their crops instead of chasing the commodity futures markets.”
The CWB is the only company offering farmers the popular pooled approach to grain marketing for the 2012-13 crop year, which began August 1 under a new open-market model. Under pooling, all revenue is deposited into a single pool and participants are paid the average achieved across the entire marketing period, allowing highly effective price-risk management and a strategic approach to the sales process.
Yes, the future is an unknown for both farmers and the CWB, but how both sides react to the chance to market canola through a pooling system may give us a hint at what the future will be.
Calvin Daniels is Assistant Editor with Yorkton This Week.