Hey there, time traveller!
This article was published 1/3/2012 (3288 days ago), so information in it may no longer be current.
THE Canadian Wheat board announced Thursday Cargill Ltd. is the first grain handler to establish an agreement with the new CWB.
The deal will allow farmers who decide to continue marketing through the CWB to use Cargill facilities for grain-delivery access and port-handling services.
The CWB's chief executive officer, Ian White, said the Cargill agreement is likely the first of others that will be announced soon.
It means the CWB can market pool and cash contracts to farmers and be able to take delivery of the grain through Cargill facilities.
White said CWB pools and cash contracts, including futures-based programs, as well as malting barley production contracts, will be available for farmers to sign up to within the next few weeks.
A CWB official said the new wheat board is considering offering contracts on other commodities. But in the early stages of the new era of marketing freedom in the grain business, the CWB will restrict its business to wheat, durum and malting barley.
Peter Rowe, Cargill's vice-president, merchandising and transportation, said Cargill has handled board grain in the past.
Now that new legislation is in place ending the CWB's monopoly on marketing Prairie wheat and barley, all of the grain companies will be offering contracts to market Prairie grain. It's assumed the CWB will also reach agreements with Viterra and Richardson, the other two large grain handlers, as well as several smaller elevator companies.
"At the end of the day, farmers will have to decide who they want to deliver grain to," Rowe said. "It could be us and our contract or the CWB contract or other grain companies. It's good news for the farmer in the sense there is another participant in the marketplace."
Rowe said Cargill will offer a range of contract alternatives to farmers.
But he said Cargill will not offer a pooling option, at least not at the outset, leaving the pool option for the CWB.
"We believe the wheat board has the brand equity (when it comes to wheat pools)," Rowe said. "We will run with it and keep a close eye on it to see how successful it is. If there is further feedback and demand for something different, we'll go back and evaluate it."
Last fall, Cargill Ltd. president Len Penner said Cargill was ready and willing to offer pooling options.
But Rowe said when they talked to farmers they heard a strong view that "they were not looking for the CWB to go away, they were looking for choice."
Rowe said it is possible the agreement with the CWB will not mean any difference in the volume of grain moving through Cargill's system because Cargill has handled grain on behalf of the wheat board in the past.
Cargill has 30 facilities across Western Canada and port access at Vancouver, Thunder Bay, Ont., and Baie Comeau, Que.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.