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Newsroom
1998
Farmers win as grain companies use CWB Malting Barley ProgramDate: August 20, 1998
Winnipeg - Farmers are the winners from the CWB's new incentive program aimed at encouraging elevator companies to pay farmers "on the driveway" for their malting barley.
"A number of elevator companies have announced they will be paying farmers the CWB initial payment for designated barley at the time of delivery, instead of when the product arrives at port," said Commissioner Richard Klassen. "This is the environment that we've been trying to encourage for some time."
Klassen said the CWB has been the driving force behind recent reforms for malting barley handling and marketing and has been working with the grain industry over the past few years to have farmers paid up-front for their malting barley. "In all of our focus groups, farmers repeatedly told us that they wanted this change. We're pleased to see more companies now moving in this direction."
The CWB program is aimed at increasing the opportunity for farmers to receive payment at the time of delivery, while recognizing elevator companies' increased risk and costs. The program will be offered to elevator companies in the 1998-99 and 1999-2000 crop years. The objective is to have farmers paid on delivery on at least 80 per cent of the company's total designated barley business by 1999-2000. Elevator companies who achieve this will receive a maximum of $1.50 per tonne over the two-year period.
"Companies can take one or two years to achieve the 80 per cent goal. However, to qualify for the program in 1999-2000, the company must purchase, at the primary elevator, 80 per cent of its total business in malting barley," Klassen said.
Designated barley is barley that will produce good malt. To be selected for malting, barley of an appropriate variety must be sound, plump, relatively low in protein and have a high degree of germination. Peeled and broken kernels, immaturity, weathering, disease, sprouting, artificial drying and storage at high moisture levels all adversely affect the uniformity and vigor of germination. Barley with these defects is rejected and becomes feed barley. Malting barley is worth more than feed barley. In the 1998-99 crop year, malting barley is currently projected at a $47 - $57 per tonne premium to feed barley.
When farmers deliver wheat, durum and feed barley to a country elevator for sale by the CWB, farmers receive the initial payment. When the product reaches port, the CWB reimburses the elevator company the amount of the initial payment. Elevator companies carry the responsibility of moving these grains to port. Because of the stringent selection criteria for designated barley however, elevator companies have been reluctant to pay farmers at the time of delivery in the event that the grain unloads as feed barley. Farmers have been carrying the risk of moving the barley to port.
The CWB is one of the world's largest wheat and barley exporters, with annual sales revenues approaching $6 billion. It is Canada's fifth largest exporter and largest net earner of foreign exchange. Marketing Prairie-grown wheat and barley to over 70 countries around the world, the CWB returns all sales revenues, less the costs of marketing, to farmers in Western Canada.
