Cargill keen to provide wheat-pooling option

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THE CEO of Cargill Ltd. in Canada says his company is ready and willing to provide a pooling option for western Canadian wheat farmers next year.

Len Penner said this week he believes there will be demand for such an option after legislation — which may be passed as early as Monday evening — ends the CWB’s monopoly by next August.

Penner said he’s not sure of the extent of the demand or how aggressive the CWB’s successor or other private-sector grain-handling companies would be in offering that option to farmers. But he is sure Cargill will be in that market.

“We would be prepared to make that decision very quickly,” he said.

He said Cargill would make a range of options available to farmers that would allow them to manage their farm practices and match it with their pricing approach.

“We would want a wide range of solutions on the shelf for farmers to choose from,” he said.

Third reading and the final vote on Bill C-18 (the Marketing Freedom for Grain Farmers Act) is scheduled for early Monday evening.

Penner said Cargill is fully tooled up to start offering forward price contracts for the 2012 harvest.

He said wheat contracts might have more complexities than canola contracts, but the style and type of contracts Cargill would offer wheat farmers won’t be much different than has been the case with canola farmers.

As to how crowded the race will be to sign up production, he said it will depend on how interested farmers are in signing forward-price contracts.

Penner said he expects much the same dynamic as the canola market, where about 25 per cent of production is committed to forward-price contracts.

“We never see 100 per cent of (canola) production priced before harvest comes off,” he said.

Penner said there was strong demand for a pooling option in Australia a couple of years ago after that country went through a process similar to the one the CWB is going through.

“We believe farmers will continue to want pooling,” said Penner. “We saw that with Australian wheat farmers.”

The question is the scale and scope.

Penner said there are some dynamics it will need to assess to know how large a pooling presence it ends up with.

“Knowing that the wheat board is still around and is going to be an entity, (we need to see) what role it will play on the pooling side versus what other companies choose to do,” he said.

He said he expects there will be more players who will start to take a greater interest in the Canadian market when the wheat and barley markets are opened up, but Cargill’s own footprint in Canada would not likely change significantly.

Cargill is the largest grain company in the world. The privately owned global agri-food company based in Minneapolis has about 10,000 employees in Canada.

martin.cash@freepress.mb.ca