By Roberta Rampton
WINNIPEG, Manitoba, April 23 (Reuters) - Ottawa should wait
until Aug. 1, 2008, to put its new barley marketing regulations into
effect to give maltsters time to fill or unwind existing contracts,
Canada's two largest malting companies said on Monday.
Maltsters have made significant sales based on contracts for barley
supplies with the Canadian Wheat Board beyond Aug. 1, 2007 -- the date
Canada's agriculture minister has set for the agency to lose its sales
monopoly, said Robert Meijer, spokesman for Prairie Malt Ltd., owned
jointly by Saskatchewan Wheat Pool <SWP.TOand Cargill Ltd.
"We can push (the date) back, or the wheat board and the government, I
suspect, will be held fully accountable for the liability this is
going to create in terms of costs," Meijer said.
Maltsters have told government officials, including Agriculture
Minister Chuck Strahl, that the liability would be in the "high tens of millions"
of
dollars, Meijer said.
Farmers' barley deliveries have already slowed because of market
uncertainty about the Aug. 1 change, and all players in the industry
stand to be harmed, said Steven Gorst, president of privately held
Canada Malting Co. Ltd., the country's largest maltster.
"Currently it does not seem the government has fully grasped the
problems an abrupt change will generate," Gorst said in an e-mail
response to questions.
The government, the CWB and maltsters need to "sit down and work
through a sensible transition" and postpone the change by a year, Gorst said.
Officials were not available for comment from Canada's two other
maltsters, Rahr Malting Canada Ltd. and International Malting Co.
Canada Ltd.
Canadian maltsters export more than C$200 million ($179 million) of
malt per year and buy about half the CWB's malting barley supplies annually.
Canada is the world's second-largest exporter of malt, which is used
to make beer.
The government published its draft regulations on Saturday to end the
CWB's monopoly on sales of barley from Canada's main Prairie growing
region to maltsters and export markets, which would give farmers the
option of selling directly to buyers.
A government analysis accompanying the regulations acknowledged the
CWB might not be able to attract enough barley to fill its sales contracts.
"Some companies ... may have to pay higher prices to obtain barley
from grain companies or directly from farmers, as barley prices have
increased recently," the government's regulatory impact analysis statement said.
There is a 30-day comment period for the regulations, after which time
the department and cabinet will consider whether changes are required
before bringing them into effect.
The CWB has not yet determined whether it will continue to sell barley
past Aug. 1, and has told farmers it can longer provide an outlook for
returns for the crop because of the uncertainty.
The CWB and other groups have also said they may challenge the
government's plans in court.
In an interview last week, Strahl insisted he would not delay the Aug. 1
start date.
Maltsters knew the government intended to make changes to the CWB's
monopoly, Meijer said, but did not know how plans would unfold, and had no
legal alternative but to secure supplies from the CWB.
Prairie Malt would like to see the regulations specify an Aug. 1, 2008,
change date to allow time for any court challenges as well as to give
maltsters enough lead time to adjust contracts and secure future supplies,
Meijer said.
"We're talking about a year to get it right," he said.
($1=$1.12 Canadian)
((Reporting by Roberta Rampton, editing by Rob Wilson; Reuters
Messaging: roberta.rampton.reuters.com@reuters.net; 204
947-3548))
REUTERS
WINNIPEG, Manitoba, April 23 (Reuters) - Ottawa should wait
until Aug. 1, 2008, to put its new barley marketing regulations into
effect to give maltsters time to fill or unwind existing contracts,
Canada's two largest malting companies said on Monday.
Maltsters have made significant sales based on contracts for barley
supplies with the Canadian Wheat Board beyond Aug. 1, 2007 -- the date
Canada's agriculture minister has set for the agency to lose its sales
monopoly, said Robert Meijer, spokesman for Prairie Malt Ltd., owned
jointly by Saskatchewan Wheat Pool <SWP.TOand Cargill Ltd.
"We can push (the date) back, or the wheat board and the government, I
suspect, will be held fully accountable for the liability this is
going to create in terms of costs," Meijer said.
Maltsters have told government officials, including Agriculture
Minister Chuck Strahl, that the liability would be in the "high tens of millions"
of
dollars, Meijer said.
Farmers' barley deliveries have already slowed because of market
uncertainty about the Aug. 1 change, and all players in the industry
stand to be harmed, said Steven Gorst, president of privately held
Canada Malting Co. Ltd., the country's largest maltster.
"Currently it does not seem the government has fully grasped the
problems an abrupt change will generate," Gorst said in an e-mail
response to questions.
The government, the CWB and maltsters need to "sit down and work
through a sensible transition" and postpone the change by a year, Gorst said.
Officials were not available for comment from Canada's two other
maltsters, Rahr Malting Canada Ltd. and International Malting Co.
Canada Ltd.
Canadian maltsters export more than C$200 million ($179 million) of
malt per year and buy about half the CWB's malting barley supplies annually.
Canada is the world's second-largest exporter of malt, which is used
to make beer.
The government published its draft regulations on Saturday to end the
CWB's monopoly on sales of barley from Canada's main Prairie growing
region to maltsters and export markets, which would give farmers the
option of selling directly to buyers.
A government analysis accompanying the regulations acknowledged the
CWB might not be able to attract enough barley to fill its sales contracts.
"Some companies ... may have to pay higher prices to obtain barley
from grain companies or directly from farmers, as barley prices have
increased recently," the government's regulatory impact analysis statement said.
There is a 30-day comment period for the regulations, after which time
the department and cabinet will consider whether changes are required
before bringing them into effect.
The CWB has not yet determined whether it will continue to sell barley
past Aug. 1, and has told farmers it can longer provide an outlook for
returns for the crop because of the uncertainty.
The CWB and other groups have also said they may challenge the
government's plans in court.
In an interview last week, Strahl insisted he would not delay the Aug. 1
start date.
Maltsters knew the government intended to make changes to the CWB's
monopoly, Meijer said, but did not know how plans would unfold, and had no
legal alternative but to secure supplies from the CWB.
Prairie Malt would like to see the regulations specify an Aug. 1, 2008,
change date to allow time for any court challenges as well as to give
maltsters enough lead time to adjust contracts and secure future supplies,
Meijer said.
"We're talking about a year to get it right," he said.
($1=$1.12 Canadian)
((Reporting by Roberta Rampton, editing by Rob Wilson; Reuters
Messaging: roberta.rampton.reuters.com@reuters.net; 204
947-3548))
REUTERS
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