New programs offered by CWB

[furrowtickler]

I was reading Larry Webers column last week and he was talking about the new programs the CWB is offering, these are the changes:

1)Giving farmers the opportunity to lock a futures price as of Sept 1/06 a full year before harvest

2)An act of God clause
3)Providing greater clarity levels about basis how they are caculated once the crop year has begun

4)Creating a full scale basis program on malt barley beginning Feb27/06

5)Steamlining adminstration of the ppo delivery process allowing farmers to paid more quickly.

Just wondering if someone could explain in a little better detail about some of these changes, especially the malt barley one.

Thanks TG

[charliep]

The best place to read about these programs is at the CWB web site.

www.cwb.ca

Most of these programs are not new but rather are modifications to current programs. Some are new and will have to be clarified (i.e. the act of god clause).

The malt barley program was introduced last year as a pilot. Full information can be found at:

http://www.cwb.ca/en/contracts/fixed_price/sbarley_bpc.jsp

The select barley BPC program will be offered as a pilot program in the 2005-06 crop year, capped at 50 000 tonnes and offered to producers who deliver directly to a Canadian malt facility.

Using the reference (base) grades of Standard Select Two-row and Six-row, an in store Vancouver or St. Lawrence basis will be offered at a spread to domestic feed barley market and priced off the Winnipeg Western Barley futures market.

The role of the program is to provide farmers with increased pricing flexibility that follows the domestic feed barley market cycles, with the ability to take advantages of market rallies that may occur during the crop year. The program will also improve access to select barley supplies for maltsters, particularly when domestic feed barley prices are competitive with the CWB select barley PRO."

Information on this past years basis levels can be found at:

http://www.cwb.ca/en/contracts/ppo_workbook/pdf/2005-06fpcbpccharts.pdf

There are other programs for malt barley as well. These include VIP (value addded initiative program) and the protein premiums (mainly maltsters) as well as potential trucking premiums. Malt is one of the few crops that is paid interest and storage once a farmer has signed a contract.

Having said all this, the CWB programs still mask the true value of your crop to your customers. I have asked Canadian maltsters and brewers over time whether the prices they pay the CWB are related to Western Barley futures and the answer has always been no. So this program is simply a way to get paid earlier. The discounts the CWB applies for risk, time value of money and administration have always been substantial.

Hope this helps. Can also talk about the other products if you like.