single desk works
Richard Gray
Source: The StarPhoenix (Saskatoon)
Date: February 15, 2007
Edition Name: Final
Section: Forum
Page: A11
Following is the opinion of the writer, a professor of agricultural
economics at
the University of Saskatchewan.
A great deal has been made of high American spot prices for malting barley
in the United States. Farmers are being led to believe that they would receive
these higher prices if the Canadian Wheat Board's single desk were
eliminated. However, this outcome would not occur.
First of all, the current U.S. barley prices have little to do with the
average price received by U.S. producers for their 2006 crop.
U.S. maltsters typically contract for about 80 per cent of their malt
barley
needs. These contracts were signed with U.S. producers last spring when
barley
prices were much lower. Therefore only a small per cent of U.S. producers
are
able to take advantage of the current high spot prices.
In Canada, producers will receive a pooled price made up of sales made last
spring averaged with some sales at the current high prices.
If the single desk powers were removed, the currently high malting barley
prices
in North America would quickly fall to prices near feed barley levels.
While
Canada is not a large feed grain producer in the world, it is very large in
malting barley. Canada grows almost three times the quantity of barley that
the
U.S. grows.
Canadian malting barley makes up 20-40 per cent of world malt barley
exports.
Most of the barley varieties that producers grow in Western Canada are
suitable
for malting, so in most years there are very large supplies of
malting-quality
barley produced in this country and most of it ends up in the feed market.
In the absence of the single desk, these large Canadian supplies of malt
barley
would be available for sale in the North America at any price above feed
levels.
The result would be a collapse in the malting barley premium.
The U.S. and Canadian maltsters have limited capacity and a limited demand
for
malt barley. If the supply of Canadian barley to this market is managed
through
the single desk, these sales can earn a good premium for producers. In the
absence of a single desk, these premium prices would not exist.
So, the high U.S. spot prices are an indication that the single desk is
working,
but should not be confused with the prices that would be earned in the
absence
of a single desk.
In a study completed in 2005, it was estimated that for the 1995-2003 crop
years, farmers would see an average drop of almost $40 per tonne in malt
barley
prices if the single desk were removed. The results of this extensive study
are
available at www.kis.usask.ca.
It is shameful that most of the malting barley sales experts in Canada,
such as
the CWB sales staff, are prevented by the government from informing
producers
during this important plebiscite.
Without their participation in the dialogue misinformation and
misconceptions
can go unchallenged. Surely the best policy to create an informed debate is
to
allow all knowledgeable parties to participate in the debate.
Richard Gray
Source: The StarPhoenix (Saskatoon)
Date: February 15, 2007
Edition Name: Final
Section: Forum
Page: A11
Following is the opinion of the writer, a professor of agricultural
economics at
the University of Saskatchewan.
A great deal has been made of high American spot prices for malting barley
in the United States. Farmers are being led to believe that they would receive
these higher prices if the Canadian Wheat Board's single desk were
eliminated. However, this outcome would not occur.
First of all, the current U.S. barley prices have little to do with the
average price received by U.S. producers for their 2006 crop.
U.S. maltsters typically contract for about 80 per cent of their malt
barley
needs. These contracts were signed with U.S. producers last spring when
barley
prices were much lower. Therefore only a small per cent of U.S. producers
are
able to take advantage of the current high spot prices.
In Canada, producers will receive a pooled price made up of sales made last
spring averaged with some sales at the current high prices.
If the single desk powers were removed, the currently high malting barley
prices
in North America would quickly fall to prices near feed barley levels.
While
Canada is not a large feed grain producer in the world, it is very large in
malting barley. Canada grows almost three times the quantity of barley that
the
U.S. grows.
Canadian malting barley makes up 20-40 per cent of world malt barley
exports.
Most of the barley varieties that producers grow in Western Canada are
suitable
for malting, so in most years there are very large supplies of
malting-quality
barley produced in this country and most of it ends up in the feed market.
In the absence of the single desk, these large Canadian supplies of malt
barley
would be available for sale in the North America at any price above feed
levels.
The result would be a collapse in the malting barley premium.
The U.S. and Canadian maltsters have limited capacity and a limited demand
for
malt barley. If the supply of Canadian barley to this market is managed
through
the single desk, these sales can earn a good premium for producers. In the
absence of a single desk, these premium prices would not exist.
So, the high U.S. spot prices are an indication that the single desk is
working,
but should not be confused with the prices that would be earned in the
absence
of a single desk.
In a study completed in 2005, it was estimated that for the 1995-2003 crop
years, farmers would see an average drop of almost $40 per tonne in malt
barley
prices if the single desk were removed. The results of this extensive study
are
available at www.kis.usask.ca.
It is shameful that most of the malting barley sales experts in Canada,
such as
the CWB sales staff, are prevented by the government from informing
producers
during this important plebiscite.
Without their participation in the dialogue misinformation and
misconceptions
can go unchallenged. Surely the best policy to create an informed debate is
to
allow all knowledgeable parties to participate in the debate.
Comment