CWB introduces higher initial payments, cash-out option

by World Grain Staff
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WINNIPEG, MANITOBA, CANADA — The Canadian Wheat Board (CWB) announced on July 10 that it will offer farmers higher initial payments and a new cash-out option to assist with their cash-flow needs.

Initial pool payments, which are paid to farmers shortly after delivery of grain to the elevator, will be offered at significantly higher levels for 2012-13 than before. For spring and winter wheat, CWB intends to boost the initial payments to approximately 75% of expected final pool returns.

In addition, CWB will offer a pool cashout option that will enable farmers to access a fixed and final payment on delivered grain.

"Farmers want more of their pooled returns up front, so we have taken steps to satisfy that need," said CWB President and Chief Executive Officer Ian White. "We understand the importance of cash flow in grain farming. At the same time, we are keenly aware that risk management is crucial for farmers. Our new pool programs successfully combine these key requirements."

For grain other than spring and winter wheat, initial payment levels will depend on risk assessment, but will be higher than previous years. Initial payments were previously set at about 65% ent of projected final returns. To provide the higher upfront payment, CWB will combine ongoing government guarantees with its own risk-management strategies. Adjustment payments will be paid to farmers as sales progress and final returns can be projected with more certainty.

For farmers interested in faster cash flow, the pool cashout option will provide full payment on delivered grain at values determined daily, based on market conditions. Values will be available on the CWB Web site, starting Aug. 1.

In the interim, CWB is providing highlights of relevant current market conditions and new-crop price considerations through a New-Crop Market Monitor, now posted under the "Farmers" tab at www.cwb.ca.

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