WINNIPEG, MANITOBA, CANADA — The Canadian Wheat Board (CWB) announced on July 30 the 2012-13 initial payments for farmers who contract wheat, durum and malting barley to its Early Delivery Pool and Harvest Pool, newly created to serve farmers in the competitive grain-marketing environment that begins Aug. 1. The payments are effective on that date for deliveries into the 2012-13 pools.
"CWB pools are designed to provide good value to farmers as we enter a competitive new grain-marketing era," said CWB President and Chief Executive Officer Ian White. "Our pools are capturing strong current market values and are an excellent tool for farmers to manage ongoing volatility in price and protein spreads."
The government of Canada continues to guarantee most of the initial payments and approves the basic levels at which they are set. New this year, CWB is taking on additional risk to provide farmers with a higher upfront payment, in recognition of cash-flow needs. As a result, CWB initial payments are equal to about 75% of anticipated final Harvest Pool returns, as projected when the payment calculations were prepared. In the interim, the markets continued to strengthen. As CWB locks in these higher values, the initial payments will increase further.
With harvest beginning, CWB will issue its first new-crop Pool Return Outlooks (PRO) in the near future. PROs will be issued when market conditions warrant, no longer on a regular monthly schedule.
A complete listing of initial payments for all grades in dollars per tonne and dollars per bushel is posted at www.cwb.ca/payments.
Pool volume may be limited depending on farmer demand and logistical capacity. Farmer participation in CWB pools is based on a first-come, first-served system. The Early Delivery Pool has a sign-up deadline of Sept. 28 and a marketing period that runs from harvest to Jan. 31, 2013 with final payment shortly thereafter. The Harvest Pool has a sign-up deadline of Oct. 31 and a marketing period that runs from harvest to July 31, 2013.
Initial payments represent a portion of the returns farmers can expect from the sale of their grain over the entire year. During the crop year, CWB regularly reviews the initial payments and recommends adjustment payments as market conditions and sales progress warrant.
Farmers' decisions to participate in CWB pools should not be based on these initial payment values nor on the market's current view of new-crop prices. Instead, farmers should consider signing pool contracts as an excellent risk-management tool that will provide a solid return over a longer period.