About us
FAQs
Frequently asked questions
- What is the CWB?
- Where do farmers fit in?
- How does the CWB sell farmers' grain?
- To how many countries does the CWB sell grain? What is Canada's market share?
- Why does the CWB need a monopoly to sell farmers' grain? Can't this all be done through grain companies?
- What about market development? Couldn't other organizations develop markets just as well as the CWB does?
- To whom is the CWB accountable?
- How many employees does the CWB have?
- How much does it cost farmers to run the CWB?
- Why doesn't the CWB release its export sales prices?
- Why can't farmers deliver wheat and barley to the CWB when they want, rather than signing a delivery contract and waiting for a contract call?
- If the CWB is doing such a good job of marketing, why is the United States price for grain sometimes higher than the CWB's pool return outlook?
- Is there a way farmers can sell to the United Statesmarket?
- Do grain companies receive a lower buy-back price than a farmer for grain exported to the United States?
More questions?
1-800-ASK-4-CWB (1-800-275-4292)
1. What is the CWB?
It's a farmers' marketing agency. The CWB's single business activity is to market grain. It has been given monopoly authority under federal legislation to market wheat and barley on behalf of all farmers in Western Canada in export markets and within Canada for human consumption. The CWB's mandate is to market these grains to get the most money it can for farmers.
2. Where do farmers fit in?
Farmers are the cornerstone of what is essentially a farmer-owned, farmer-driven sales organization. When farmers deliver grain to the CWB, they receive an initial payment based on the grade delivered. They then become a shareholder in the pool account for that grain; one each for wheat, durum, feed barley and designated barley. As shareholders, they are entitled to additional revenues earned during the crop year, over and above the initial payment. All farmers who deliver a particular grade of grain to the CWB within a given crop year receive the same value at export position as all other farmers delivering this grade. This is price pooling and it's the method by which the CWB distributes the benefits of a monopoly marketing system. Price pooling also reduces the risk of adverse price movements over the crop year. It smoothes out the ups and downs of the market.
Since December 31, 1998 the CWB has been governed by 15 Directors, 10 of whom are elected by western Canadian wheat and barley growers.
3. How does the CWB sell farmers' grain?
The CWB begins by deciding where to market the grain so that product development (new classes, varieties), market development and sales activities are focused to ensure a customer mix that makes the most money. The CWB then sizes up what farmers have produced and what they are likely to deliver. The CWB compares this with world supply, demand and price forecasts to develop a sales plan for the year. It then allocates available supplies/grades to the highest paying customers. The marketing plan begins five to six months before the start of the crop year and is continually updated as new information becomes available. The sales plan is the focal point of the CWB marketing strategy. It involves input from virtually all departments at the CWB - Weather and Crop Surveillance, Market Analysis, Risk Management, Transportation and Country Operations, and Planning and Coordination - in what is one of the most sophisticated networks of market intelligence and analyses in the world.
This focus on market intelligence, and product and market development combined with the ability to choose among alternative sales opportunities distinguishes the Canadian approach to marketing from the United Statesapproach. The effectiveness of a single desk seller is dependent on knowing and being able to manage the amount of wheat and barley that is available for sale. This ability is entirely based upon the CWB's delivery monopoly.
4. To how many countries does the CWB sell grain? What is our market share?
The CWB exports wheat, durum and barley to more than 70 countries. On average the CWB has about 20 per cent of the world market share in wheat, 65 per cent of durum wheat, 30 per cent of malting barley and 15 per cent of feed barley.
5. Why does the CWB need a monopoly to sell farmers' grain? Can't this all be done through grain companies?
The delivery monopoly and the control it gives the CWB over the western Canadian inventory of wheat and barley are essential to carrying out the sales strategy. In a sales negotiation, the monopoly means the CWB is the only game in town for the customer who wants to buy western Canadian wheat and barley. This makes it possible to charge higher prices than if there were many sellers. If the buyer really wants the Canadian product and CWB customer service - and many do because of the superior quality of both - the buyer has to pay what the CWB asks.
The CWB has the ability to price differently to different markets on a given day without eroding returns from premium markets. It can do this because it is the only supplier of the grains it markets, not because it has substantially better sales people or more marketing expertise (these help but are not sufficient by themselves). Without the monopoly, the CWB would be selling in direct competition with other sellers of Canadian grain. Such competition among sellers would quickly reduce the market price for a given quality of grain to one level.
6. What about market development? Couldn't other organizations develop markets just as well as the CWB does?
The single most important advantage of the CWB approach to sales and marketing is that market development is directed and controlled by the only seller of that grain. The CWB is able to capture all the benefits from its market development efforts and pass them on to farmers. Compare this to United Statesfarmers who rely on private grain companies to export their products. These companies are hesitant to invest in long-term market development activities because they are not assured of capturing the benefits of these market expansion activities (if they could, they would do so for themselves, not for farmers). Consequently, market development, to the extent that it is done, is undertaken by national, non-profit, commodity organizations whose activities are not connected to the commercial sales function.
7. To whom is the CWB accountable?
The CWB is a shared goverance corporation. This is an unique term, and it essentially means that the CWB is governed by farm and government representatives. Ten directors are elected directly by producers. The remaining five Directors are appointed by government for their expertise in various disciplines. The role of these 15 people is to ensure the CWB is working to maximize returns to Prairie farmers.
8. How many employees does the CWB have?
The CWB has 493 positions. The majority are located in the CWB's head office in Winnipeg. The remainder work in the CWB's offices in Vancouver, Tokyo, Beijing and district offices located across the Prairies.
10. How much does it cost farmers to run the CWB?
Audited figures from the 2002-03 crop year show CWB costs of operation at $66.7 million.
11. Why doesn't the CWB release its export sales prices?
The CWB is a commercial agency dealing in a highly concentrated world market with a handful of large sellers. Revealing prices would severely damage the competitiveness of the CWB compared to its competitors in the international grain trade, particularly given that most customers want their purchase prices to remain confidential. While the prices of most individual CWB export sales are confidential, the annual returns are public information and available each year in the audited annual report. The CWB discloses far more details on its operations than the majority of its competitors in the grain business.
12. Why can't farmers deliver their wheat and barley to the CWB when they want, rather than signing a delivery contract and waiting for a contract call?
Compared to other large grain exporters in the world, Canada has one of the most constrained handling and transportation systems. The primary elevator system has approximately 5.5 million tonnes of working capacity which must handle over 30 million tonnes of grain movement. Obviously, everyone cannot deliver their production at once. Grain deliveries must be called into primary elevators in a timely fashion to meet sales commitments in the domestic market and at the export ports of Vancouver, Prince Rupert, Churchill and Thunder Bay/St. Lawrence. This requires a high degree of coordination between the railways, the elevators and the CWB. If grain enters the system before it is required, it occupies capacity that could be used to service immediate customers. This reduces system efficiency and costs farmers money. It is important to note that as the system further rationalizes, the industry will have to increasingly move towards a just-in-time delivery system. Delivery contracts introduced by the CWB in recent years are designed to increase the efficiency of an already constrained system.
13. If the CWB is doing such a good job of marketing, why is the U.S. price for grain sometimes higher than the CWB's Pool Return Outlook?
All sales by the CWB are pooled. The US spot price is not pooled. It is not reasonable to expect that the CWB's projected returns for sales over the entire crop year (not just today's sales prices) should be higher than market prices in the U.S .on every single day of the crop year. What matters the most is how farmers match up over the long term. Several independent studies have documented that as a result of single-desk selling, Canadian farmers have received millions of dollars that would not have been attainable in a multiple-seller environment.
14. Is there a way farmers can sell to the United States market?
Yes. If farmers believe they have an opportunity to capture a premium in the United Statesspot market by exporting their own grain, they can go through the CWB "producer-direct sales" process. In their new role as an export agent for the CWB, they must deliver their grain to the CWB and then purchase it back at the CWB's export price for that day before selling it to the United States. The producer-direct sales price, established off the Minneapolis daily futures price, is simply the value to the pool that the CWB could have obtained if it were selling that particular class and grade of grain on that day into the domestic or export market. This is consistent with the pooling concept whereby all farmers who deliver to the CWB share in the returns from all markets - premium-priced ones and low-priced ones.
15. Do grain companies receive a lower buy-back price than a farmer for grain exported to the United States?
No. As long as the grain is of equal quality, the price to a grain company at any particular time is the same as it would be to a farmer at the same time. However, the CWB's prices change constantly depending on market factors and can sometimes change even within the same day.