The FPC for durum will be offered starting with the announcement of
the Pool Return Outlook (PRO) on May 23, 2002. It will enable
farmers to lock in a price on a portion of the durum that they plan
to commit to CWB delivery contracts in 2002-03. Like the existing
FPC that the CWB offers for wheat, the FPC values for durum will be
based on the PRO less a discount for risk, time value of money and
program administration costs. The fixed price will be available
daily via the CWB Web site, through Fax on demand or by calling the
CWB toll-free line. When farmers deliver to an elevator durum that
has been assigned to an FPC, they will receive the initial payment.
An additional payment, representing the difference between the
initial payment and the fixed price, will be issued by the CWB
within two weeks of delivery or settlement. These deliveries
will be outside the durum pool and therefore will not be eligible
for adjustment, interim or final payments.
The durum FPC will be offered as a pilot program in 2002-03.
Limited opportunities for hedging in the durum market mean that
contracted tonnage will be capped between 50 000 and 100 000 tonnes
and accepted on a first-come, first-serve basis. It is hoped that
in future years, contracted tonnage can be increased.
As well, farmers need to carefully consider the volume of durum that
they will commit to an FPC. The CWB will guarantee that farmers
signing an FPC will be able to deliver at least 75 per cent of the
durum that they assign to 2002-03 delivery contracts up to the total
tonnage committed to the FPC. For example, a farmer who will have a
total 1000 tonnes to assign to CWB delivery contracts in the fall
of 2002 should commit no more than 750 tonnes to an FPC for durum.
With the expansion of the Early Payment Option (EPO) to all classes
of wheat (excluding durum) beginning August 1, 2002, farmers will be
able to lock in 90 per cent of the PRO for their crop, less a
discount for risk, time value of money and program administration
charges. Prior to this expansion, only Canada Western Red Winter
and Canada Western Soft White Spring wheat were eligible for the EPO.
When farmers deliver grain committed to an EPO, they receive the
initial payment. Then, within two weeks of delivery, they receive
an additional payment to bring their total returns up to 90 per cent
of the PRO. Participants in the EPO remain in the pool account.
If adjustment, interim or final payments rise above the value that
they have obtained under the EPO, these farmers receive the additional
payments.
the Pool Return Outlook (PRO) on May 23, 2002. It will enable
farmers to lock in a price on a portion of the durum that they plan
to commit to CWB delivery contracts in 2002-03. Like the existing
FPC that the CWB offers for wheat, the FPC values for durum will be
based on the PRO less a discount for risk, time value of money and
program administration costs. The fixed price will be available
daily via the CWB Web site, through Fax on demand or by calling the
CWB toll-free line. When farmers deliver to an elevator durum that
has been assigned to an FPC, they will receive the initial payment.
An additional payment, representing the difference between the
initial payment and the fixed price, will be issued by the CWB
within two weeks of delivery or settlement. These deliveries
will be outside the durum pool and therefore will not be eligible
for adjustment, interim or final payments.
The durum FPC will be offered as a pilot program in 2002-03.
Limited opportunities for hedging in the durum market mean that
contracted tonnage will be capped between 50 000 and 100 000 tonnes
and accepted on a first-come, first-serve basis. It is hoped that
in future years, contracted tonnage can be increased.
As well, farmers need to carefully consider the volume of durum that
they will commit to an FPC. The CWB will guarantee that farmers
signing an FPC will be able to deliver at least 75 per cent of the
durum that they assign to 2002-03 delivery contracts up to the total
tonnage committed to the FPC. For example, a farmer who will have a
total 1000 tonnes to assign to CWB delivery contracts in the fall
of 2002 should commit no more than 750 tonnes to an FPC for durum.
With the expansion of the Early Payment Option (EPO) to all classes
of wheat (excluding durum) beginning August 1, 2002, farmers will be
able to lock in 90 per cent of the PRO for their crop, less a
discount for risk, time value of money and program administration
charges. Prior to this expansion, only Canada Western Red Winter
and Canada Western Soft White Spring wheat were eligible for the EPO.
When farmers deliver grain committed to an EPO, they receive the
initial payment. Then, within two weeks of delivery, they receive
an additional payment to bring their total returns up to 90 per cent
of the PRO. Participants in the EPO remain in the pool account.
If adjustment, interim or final payments rise above the value that
they have obtained under the EPO, these farmers receive the additional
payments.
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