Wanted: More Cheap Barley

[parsley]

Phil de Kemp/Malsters /CWB

[parsley]

Winnipeg Free Press
Sat May 12 2007
By Larry Kusch

"Malt industry fears for worst
Marketing choice may cost millions z Feds don't see changeover as big problem


MALTING companies fear they could be out tens of millions of dollars as Ottawa prepares to change Prairie barley marketing rules Aug. 1.

And the Canadian Wheat Board says the federal government could avoid a potential mess -- including defaults on contracts, industry lawsuits and upset customers -- this summer if it delays implementing marketing choice until next year.

"We're just caught in the middle as an industry right now, and we shouldn't have to be because we are the largest customers for producers' barley," said Phil de Kemp, president of the Malt Industry Association of Canada.

Agriculture Minister Chuck Strahl surprised many in the grain industry March 28 in announcing farmers would be free to market barley to whomever they wished beginning this summer. A task force, appointed by Strahl, had earlier recommended the move be made on Jan. 31, 2008.

"It's not as cut and dried as the government thinks it is," de Kemp said of Ottawa's decision.

"This is a very complicated issue with the industry being caught in the middle holding all of the risk and all of the liability right now," he said in an interview from Ottawa.

The malt association's members, which include International Malting Company Canada Ltd. (formerly Dominion Malting) in Winnipeg, are worried that supply contracts they've signed with farmers and the Canadian Wheat Board over the last several months won't be honoured once the rules change.

The price of barley has risen significantly since many of these contracts were signed.

If malting companies had to purchase for all their needs at today's prices they'd be out a lot of money -- estimated to be in the "high tens of millions of dollars."

Officials with two malting companies reportedly called on Ottawa a few weeks ago to delay implementation of marketing choice for barley until Aug. 1, 2008, to allow the industry time to adjust to the new rules. This week, representatives from three Prairie-based malting plants either referred the Free Press to de Kemp or did not return phone calls.

De Kemp said the association is now "united" in saying that it can live up to a change this summer -- as long as the wheat board or the government covers the industry's contract liabilities.

Gord Flaten, the wheat board's vice-president of marketing, said this might solve the problem from the malting industry's perspective. But if his organization bore the brunt of these liabilities, it would incur "huge financial losses," which it cannot afford and which would come directly out of farmers' pockets. (The wheat board deducts its costs from payments to Prairie farmers for the grain it sells on their behalf.)

"I think it's important to point out that the wheat board doesn't have a bunch of money to cover losses like this," Flaten said. "The only money we have is money that is owing to farmers (from the sale of their grain)."

A spokesman for Strahl said officials "don't see the Aug. 1, 2007, changeover as a significant problem."

"We feel there are solutions (to industry concerns) that are possible, and we're talking to all parties involved to see how we can continue and ensure a smooth transition," Conrad Bellehumeur said,.

While he said Ottawa is encouraging everyone involved to honour their commitments, Bellehumeur contended that wheat board contracts with barley producers allow for farmers to opt out of deliveries if they pay a penalty.

Flaten disputed that interpretation, saying farmers are obliged to deliver on their contracts if their barley is accepted as malting quality.

"It's quite problematic, actually, if there is a suggestion that the way to solve this problem is that farmers who have not delivered yet should back out of their contracts," he said.

larry.kusch@freepress.mb.ca"

[wd9]

Once again we see the incredible value the CWB provides farmers. Maltsters are crying the blues because they may have to pay for what the barley is worth.

For those staunch CWB supporters out there, explain to me how that the CWB failing to get even marginally close to actual malt value provides me financial benefit and that why this reg change shouldn't occur as soon as possible? No touchy feely emotional philosophical answers, just financial please!

[parsley]

Flaten would do a better job grading sheep at the auction barn than trying to get farmers to deliver malting barley at dockage rates.

What nerve, these CWB barley experts have, pre-selling at firesale prices, and then trying to cover up their incompetence in losing millions by trying to assign the blame to the Government. And to farmers!

The only reason to come out cocky, like Flaten does, is if he's abandoning ship, and he's already got his reference in his hand.

There's 22 or so barley dipasses still at the Board , writing press releases, and researching webpages and making up barley tunes. Nothing better to do.

After all, watch the PRO, at the same time the Board claims they can't sell barley cause, well, they just can't.

Farmers need 20 barley experts de-kempted and de-leted into ag-trash.

Fast.

Parsley

[kamichel]

Looks like maltsters contracted grain without farmers commitments. Looks to me like the maltster should pay for that one if deliveries cannot be made. Also the farmers that contracted should be forced to deliver, fields inspected, bins probed, and fined for not taking care of grain in storage if negligent. Also CWB has a contingency fund that they do not want to tap into which in my opinion would more than cover any bad deals they have made so far.

[kamichel]

Can anyone get any information on min. price contracted acres from the CWB? I will bet on this one that it is HUGE. Is there any access to this information?

[kamichel]

Possibly malt prices are a lot higher yet than us farmers know about. Damm and I am not planting barley.

[chaffmeister]

The title of this thread should have been:

"Wanted: the barley that I bought at the price that was committed to me"

Parsley - good to see you understand that it's the CWB-system the screwed up here and not the maltsters.

I've said it before and I'll say it again - the solution to this is for the CWB to pay farmers what it needs to, to keep the malt barley away from the steers - cash bids if it needs to - and just run a deficit. Then the feds pick up the tab anyway.

Precedent for the govt paying-up after a policy shift: the Crow. Feds paid farmers but also paid millers and maltsters based on their exposure on outstanding contracts.

Simple.

[chaffmeister]

kamichel: to be clear, it was the CWB that contracted barley without farmers commitments - not the maltsters. The maltsters sold malt to brewers and covered their barley with the CWB (as they have to).

[parsley]

What are the maltsters doing in Ottawa lobbying?

"Officials with two malting companies reportedly called on Ottawa a few weeks ago to delay implementation of marketing choice for barley until Aug. 1, 2008, to allow the industry time to adjust to the new rules."

What scum.

I cannot think of any Government in the history of this country that could have done more to prepare the way for choice.

The maltsters obviously wanted them to have written an opera in Italian about open marketing in f flat, as long as it took three years or more. If the de kampstevilles are so stupid they didn't know that change was coming, they should be grading sheep along with the barley experts.

In the meantime, those maltsters should stay the hell out of Ottawa unless they really want to tick off choice farmers.

AND BTW, piles of malting barley could be delivered before August 1. Are you trying to say that absolutely will not happen?

Unless we are speaking different languages, I do not see any calcuable LOSS on the part of the maltsters at this time.

Do you chaffmeister? If you do, quantify what the loss is as of the end of last week.

And while you are at it, what would the loss be if the malt barley crop had entirely frozen last year? Would the maltsters still be whining about a calcuable loss?

Parsley

[parsley]

And just so we are clear....I am specifically referring to farmer held grain not offered to the CWB.

For those individual farmers who signed a malt contract, that is a legal matter between the two parties if there is a contract breech, and rightly so.

Parsley

[Burbert]

To hell with Canadian malty's and their beer, I like the Amerikin stuff anyway. Let them go broke, and we can sell our barley for cow food. Bet the price of feed barley stays high now for ever, cause , of us smart farmers and our contracts. We rule the roost now. Maybe the malty's will look South and buy grain from the US or East. Maybe the standards will come down and they will accept anything they can get! This is win,win, win, win, win for Western farmers, we are on a roll, lets trash the entire system, things can only get better. Anarchy brings prosperity, yeah let the good times roll. With a contract they have to pay, or you kin sue them, that would be fun, wouldn't it, let the Canadian justice system into our pockets, thats a good thing????? Bet there a lot of lawyers familiar with ag issues, waiting in the wings to get rich, off simple farmers.

[parsley]

Remember in '02-'03?? The CWB imported malting barley from Denmark!

Canadian farmers couldn't sell their barley unless they sold it for firesale prices to the CWB. And when they sold it for feed, the WB gives top dollar to Denmark farmers.

At least August 1, we'll be able to shop elsewhere for a better price.

In the meantime Burbert, call all your single desk friends and tell them to deliver that malt barley NOW! They are the guys that KNOW they'll still get Board dollars.

Do them a favor.

Parsley

[icelander]

I can't understand how the cwb and malters are afraid of farmers not delivering barley to them. If the prices are still so low that they can't get barley then the so called experts at the cwb should be fired.I signed a guaranteed mininum price contract and am wondering what is going to happen to it?

[chaffmeister]

Parsley - at the very least, get your facts right. The CWB had NOTHING to do with the imports from Denmark. The maltsters did it on their own. Kinda answers your question about how the maltsters would react if the crop was entirely frozen.