Warburton Contracts-None for Alberta?

[oilcan]

Is it correct, there are no contracts for raising the wheat varieties, Teal or Barrie, for farmers within Alberta but only to farmers in Manitoba?

[charliep]

That is correct although I will have to do some checking. Warburton contracts are for T.Bay/St. Law. movement so AB. is a pretty hefty freight bill. These contracts are also available in SK. They have proven to be pretty beneficial in the past. Manitoba Pool (now Agricore) has been the main buying agency but I think Pioneer is also doing some. My guess is these type of variety specific contracts offered by grain companies (not the CWB) will become more prevelant in the future. An example is Taber at API, Red Deer willl become more common. Is this a good thing for farm managers?

[oilcan]

Actually the CWB oversees these very lucrative contracts. It would seem farmers in Alberta have to watch thousands of tonnes of feed grains from Manitoba and Saskatchewan depress the local feed market and now are denied these Warburton contracts for the highest quality spring wheat produced in western Canada. What benefit does the CWB serve Alberta farmers if it denies these revenue making contracts? Remember Charlie, there was considerable sourcing for these particular contracts last fall by area grain companies within Alberta, with promises of new contracts for farmers this crop year.

[oilcan]

Some things that should be mentioned ... essentially, Warburton's has selected the guidelines for this program such as the acceptable varieties, the selection criteria, the handling companies they are dealing with and the locations that the grain is selected from. In this instance, its the buyer's choice on these details. They do the testing on samples from farmers that they consider for contracts. Charlie is correct when he says the further west that Warburton's goes, the greater the cost as they want it shipped from St. Lawrence. However, they are primarily concerned in getting the quality required for their specifications. The CWB facilitates these contracts, and ensures that a maximum amount is extracted. The amount over the commercial value that Warburton pays is to cover the identity preservation (IP), extra care in growing and handling and to recognize the selection criteria of the products they require. This premium is passed to the grower, the handling company receives a benefit for the IP coordination and contract adminstration and there is a slight financial benefit to the pool account, which benefits all farmers in western Canada. There is no discrimination against Alberta, its a function of location to port. If there was an identity preserved program develop with a west coast customer, Alberta farmers would have that geographic advantage, assuming the quality profile could be supplied. There's lots of talk about IP customers, but there are few companies in the world that want to pay the extra amount to cover the cost of identity preservation, and the extra work to ensure specific quality through selection. The Warburton's contract shows the world that Canada can deliver on IP programs, and that IP can be a competitive benefit for our customers under the right circumstances. Tom

[oilcan]

First, the contracts are good for the farmers that can take advantage of them. Second, having been offered a premium of close to twenty dollars a metric tonne to help fill this contract by a local grain company, I would disagree with your assumption that there is no discrimination to farmers outside of the sourcing area. Thirdly, where is the present cut-off geographically for these contracts this coming crop year? Are Saskatchewan farmers being offered contracts? My understanding the geographic area extends to Swift Current, is this correct?

[melvill]

There is a fairly detailed description of the Warburton contract in the October '99 issue of Country Guide. The article is worth reading. I checked the Country Guide Web site but old articles aren't archived there.

[craig]

Just a different angle on this style of contracting. There was recent discussion at a winter wheat meeting regarding different varieties having different quality factors. The thought was that there was an opportunity for contracting for certain varieties that would have a higher spec and therefore a higher value. In this day and with access to trucking there would be an opportunity for a large high throughput elevator located in a central location to gather enough production to put together unit trains of a better quality winter wheat. These are opportunities that would benefit producers.

[parsley]

And Craig, that is exactly the kind of creative thinking the West needs. Now, if the CWB will issue no-cost licenses to producers like you and your group, your marketing plan will work well and that leaves you to figure out other ways to create wealth.

Parsley