The Canadian Wheat Boards (CWB) is reporting record revenue of $7 billion in sales on behalf of Western Canadian farmers.
The organization’s president says the 57 per cent increase over last year reflects the ability of a single sales desk to market strategically during a period of generally overall higher prices.
Ian White claims a pooled approach to selling in this year’s high-price international grain environment was responsible for putting an estimated additional $560 million in farmers’ pockets, included in total revenue for spring wheat and durum. By contrast, most American farmers sold early — well before the dramatic price spikes of early 2008.
“The CWB took a strategic approach to marketing during a time of unprecedented prices,” White said at a news conference. “Combined with the disciplined selling pace of the pools, this meant we could take advantage of market rallies for higher overall returns.”
Producers’ pooled earnings for high-quality spring wheat, after freight and handling, are expected to be $8.44 per bushel in Saskatchewan, $8.56 in Manitoba and $8.69 in Alberta –almost double that of 2006-07. For high-quality durum, returns are up 120 per cent from the previous year, at $12.30 per bushel in Saskatchewan and $12.40 in Alberta. White noted that some farmers used CWB pricing options to get prices as high as $20 for wheat.
Larry Hill, chair of the CWB board of directors, said the 2007-08 crop year demonstrates the advantages of the western Canadian approach to wheat and barley marketing.
“If you’re looking for evidence that the CWB adds value for farmers, you need look no further than this year’s numbers. The combination of pooling and pricing options gives modern farmers the tools they need to succeed in the international marketplace.”
For durum wheat in particular, White said the CWB was able to leverage its role as a single seller, with 52 per cent of the world market, to achieve strong values for farmers while meeting customer needs for consistent supply.
CWB malting barley sales were the highest in eight years at 2. 4 million tonnes — a 33-per-cent increase over last year. This included record sales of 114 000 tonnes to Mexico and a half-million-tonne increase in exports to the United States. Producer returns for designated barley will be about $5 per bushel at farmgate, up 65 per cent over 2006-07.
Looking ahead to 2008-09, spring wheat pool return projections have declined about six per cent from 2007-08 levels, but remain well above historical averages. Markets have fallen over the past few weeks due to improved prospects for the U.S. winter wheat harvest and expectations of record world wheat production.
Preliminary export numbers for 2007-08 are 11.3 million tonnes (MT), 3.1 MT durum, 1.6 MT feed barley and 1.3 MT malting barley. Domestic sales were 2.1 MT for wheat, 285 000 tonnes durum and 1.1 MT malting barley. End-of-year grain stocks are now very low at 3.9 MT.
The CWB also released increased crop production estimates today, noting that cool temperatures have lowered grade expectations for the 2008 crop.
The CWB now projects a western Canadian wheat crop of 16.9 MT, durum of 5.2 MT and barley of 10.1 MT. The CWB’s 2008-09 preliminary bulk export target is 15.3 MT.