Farmers
Early Payment Options
Program information
Starting August 1, 2006, the CWB will begin offering Early Payment Option (EPO) programs for the following grains:
- All classes of wheat, which include CW Red Spring, CW Hard White Spring, Canada Prairie Spring Red, Canada Prairie Spring White, CW Extra Strong, CW Red Winter and CW Soft White Spring. All grades (including protein levels) are eligible for delivery except sample grades and mixed grain.
- Feed wheat – the reference grade is CW Feed; eligible grades include CW Feed, No. 4 CWRS, No. 4 CWHWS and No. 3 CWSWS;
- Durum – the reference grade is No. 1 CWAD 13.0; eligible grades include No. 1, 2 and 3 CWAD;
- No. 4 CWAD – the reference grade is No. 4 CWAD;
- No. 5 CWAD – the reference grade is No. 5 CWAD;
- Selected barley – the reference grades are Standard Select Two-Row and Standard Select Six-Row;
- Feed barley – the reference grade is No. 1 CW Barley. Starting in the 2006-07 crop year, the EPO for feed barley is a separate contract from the Guaranteed Delivery Contract (GDC). Producers will have the opportunity to use the EPO independent of committing tonnage to a GDC. Producers will be able to evaluate EPV and discount values prior to settlement of their feed barley. The EPV and discount will be locked in on the date of the EPO sign-up for 2006-07.
The EPO programs provide producers with improved cash flow and a guaranteed payment value for their grain.
CONTRACT SIGN-UP and COMMITMENT
Producers can sign up for EPO contracts from August 1, 2006 until July 31, 2007. The CWB will withdraw the lower percentage level Early Payment Values (EPVs) when the initial payment for the reference grades are increased during the crop year, and approach or exceed the EPV lock-in levels.
Producers must commit a minimum of 20 tonnes to an EPO contract. Tonnage can be committed either before or at the time of delivery.
EPO for selected barley – if producers participate in a ‘crop-share’ lease agreement, both the producer and the landlord must obtain their own separate Selected Barley Storage and Delivery Contract(s) and selected barley EPO contract(s). This requirement pertains only to the selected barley EPO and FPC programs. Deliveries are processed on a first-in, first-applied basis, by Producer Identification Number.
Producers can sign up by:
- calling the CWB at 1-800-275-4292 to advise of the class of grain, tonnes and price they wish to commit. Producers are required to provide their 10-digit producer identification number and CWB Personal Identification Number (PIN) when calling.
- completing a fax acceptance form (available at www.cwb.ca or through our Fax on Demand number at 1-800-275-4292) and faxing it to the CWB.
The CWB will mail producers a PPO contract confirmation shortly after sign-up, which will include the contract number, type and tonnes committed under the EPO contract. Producers are to insert this form into their delivery permit book.
EARLY PAYMENT VALUE and DISCOUNT
For all programs, the EPV is equal to 80, 90, or 100 per cent of the Pool Return Outlook (PRO) for the reference grade of the class or type of grain. The CWB will announce the EPV and discount daily. The discount reflects risk, time value of money and administration costs. The EPV and discount are in effect between 2:30 p.m. until 7:30 a.m. Central Time (CT) on the next business day.
The EPV and discount are both locked in at the date of sign-up. The EPV and discount will be available by telephone and Fax on Demand at 1-800-275-4292, or at www.cwb.ca.
Producers can sign multiple EPO contracts throughout the crop year.
DELIVERY and SETTLEMENT
There is a minimum delivery guarantee of 60 per cent for durum contracted through CWB delivery contracts (Series A and B for durum). Producers signing 1 000 tonnes under a delivery contract should only commit 600 tonnes to an EPO for durum. If CWB contract acceptance levels for Series A and B combined are greater than the 60 per cent minimum delivery guarantee, the producer can use this percentage to apply deliveries against the EPO for durum. Producers must maximize their Series A delivery opportunities in order to qualify for the delivery guarantee.
Producers are responsible to deliver their committed tonnage under the EPO program through regular CWB delivery call opportunities.
The CWB may offer Guaranteed Delivery Contracts (GDCs) for durum No. 4 and No. 5 CWAD from time to time during the crop year. The GDC is a delivery contract that guarantees 100 per cent delivery acceptance upon commitment; therefore the minimum delivery guarantee under the EPO contract will not apply. Producers who make GDC commitments can match their EPO tonnage.
At the time of delivery to the elevator, producers receive from the grain company the initial payment (less freight and elevation). Note: When settling with producers for delivery, elevator managers must record the producer’s EPO contract number and call designation on the cash ticket. The exception to this is the EPO for selected barley, in which case the Selected Barley Storage and Delivery Contract number must be recorded. The producer’s selected barley deliveries will be automatically applied to the EPO until the EPO contract is filled.
Settlements made before the EPO sign-up date cannot be applied against an EPO contract.
Producers will:
- receive the initial payment less freight and elevation at the elevator;
- receive an additional payment from the CWB within ten business days, which includes the difference between the EPV locked in and the initial payment for the reference grade, less a discount;
- receive incremental payments to compensate for deliveries later in the crop year.
Producers will be eligible for CWB adjustment, interim and final payments when those payments exceed their EPV. This represents the upside potential of the EPO contract if the CWB sales returns exceed the producer’s EPV.
TRANSFER OR BUYOUT OF EPO CONTRACTS
Producers can transfer their EPO contract to another producer willing to assume the terms and conditions of the contract. There is a $15 transaction fee to transfer a contract, which is charged to the assignor (original contract holder).
Producers can buy out the outstanding tonnes on their EPO. The buyout rate equals the discount per tonne at time of sign-up, less the time value of money, plus an administration fee of $15 per transaction.
Producers can also transfer between EPO programs in the event of grading changes, providing them the flexibility to meet their EPO commitments, i.e. milling wheat to a feed grade wheat EPO and vice versa. The producer will receive the EPV that was in effect for the settlement grade on the date of the original EPO sign-up, based on the following formula:
{(original discount of the existing EPO – current discount of the existing EPO) + (current discount of the transfer class – original discount of the transfer class)}. If negative, then $0. The applicable roll fee and $15 per transaction administration fee will be added to the calculation.
The roll fee is $1.00 per tonne for 100 per cent, $0.50 per tonne for 90 per cent, and $0.25 per tonne for 80 per cent EPV transfers.
Wheat
The EPO is a pricing alternative that offers you both increased cash flow following delivery and a floor price for your wheat: CWRS, CPSR, CPSW, CWRW, CWES, CWSWS or CWHWS. Early Payment Value (EPV) levels of 80, 90 and 100 per cent are currently available. You can sign up for an EPO for wheat on any working day, starting August 1, 2006. As the EPV values approach or exceed the initial payment for the reference grade, the EPV will be discontinued.
Wheat classes and reference grades for the EPO wheat program in the 2006-07 crop year are:
| Wheat class | Reference grade |
|---|---|
CWRS |
No. 1 CWRS 13.5 |
CPSR |
No. 1 CPSR |
CPSW |
No. 1 CPSW |
CWRW |
No. 1 CWRW |
CWES |
No. 1 CWES |
CWSWS |
No. 1 CWSWS |
CWHWS |
No. 1 CWHWS 13.5 |
Producers can sign an EPO contract and commit tonnage before delivery. The EPV and discount are both priced at the date of sign-up.
Producers are responsible to deliver their committed tonnage under the EPO program through regular delivery call opportunities.
Note: When making the delivery, producers must assign the delivery to the EPO contract of their choice, before making settlement. Deliveries which have been settled before the EPO sign-up date cannot be applied to an EPO contract.
You can transfer your wheat EPO to a feed wheat EPO. This transfer option provides flexibility to meet your EPO commitments when your milling quality wheat is downgraded or loses quality in storage. You will receive the EPV for feed wheat that was in effect at the time you locked in the EPV for wheat. The CWB will charge the cost of the opportunity to transfer, as determined by the current market spread.
A risk premium of $1.00 per tonne for 100% EPVs, $0.50 per tonne for 90% EPVs, and $0.25 per tonne for 80% EPVs will be charged upon transfer and your previous EPO commitment will be cancelled.
Durum
The EPO is a pricing alternative that offers you both increased cash flow following delivery and a floor price for your durum: No. 1 CWAD, No. 2 CWAD and No. 3 CWAD. Early Payment Value (EPV) levels of 80, 90 and 100 per cent are currently available. You can sign up for an EPO for durum on any working day, starting August 1, 2006. As the EPV values approach or exceed the initial payment for the reference grade, the EPV will be discontinued.
The reference grade for the EPO durum program in the 2006-07 crop year is No. 1 CWAD 13.0.
Producers can sign an EPO contract and commit tonnage before delivery. The EPV and discount are both priced at the date of sign-up.
Producers are responsible to deliver their committed tonnage under the EPO program through regular delivery call opportunities.
Note: When making the delivery, producers must assign the delivery to the EPO contract of their choice, before making settlement. Deliveries which have been settled before the EPO sign-up date cannot be applied to an EPO contract.
Producers signing an EPO for durum are guaranteed acceptance of 60% of their production offered under Series A or B 2006-07 durum delivery contracts (up to the maximum of their EPO contract). The minimum delivery guarantee should be used as a guideline to determine the amount of production to offer under the program.
Example of a 2006-07 EPO for durum (delivery guarantee of 60%)
A producer signing 1 000 tonnes under a durum delivery contract should only commit 600 tonnes to an EPO for durum. The producer is assured of being able to deliver this amount.
600 tonnes = 1 000 x 60%
If CWB contract acceptance levels for Series A and B combined are greater than the 60% delivery guarantee, the producer would be able to use this percentage to apply deliveries against the EPO for durum.
Participants must keep in mind the minimum delivery guarantee for durum will only be considered for those who maximize their delivery opportunity by offering their production under the Series A contract. Producers who sign an EPO contract and a Series B delivery contract, not utilizing Series A, will not be granted the minimum delivery guarantee and will be at risk of pricing damages if the Series B contract acceptance level is greatly reduced.
You can transfer your durum EPO to a Durum No. 4 CWAD or No. 5 CWAD EPO. This transfer option provides flexibility to meet your EPO commitments when your milling quality durum is downgraded or loses quality in storage. You will receive the EPV for Durum No. 4 CWAD or No. 5 CWAD that was in effect at the time you locked in the EPV for durum. The CWB will charge the cost of the opportunity to transfer, as determined by the current market spread.
A risk premium of $1.00 per tonne for 100% EPVs, $0.50 per tonne for 90% EPVs, and $0.25 per tonne for 80% EPVs will be charged upon transfer and your previous EPO commitment will be cancelled.
Feed wheat
The EPO is a pricing alternative that offers you both increased cash flow following delivery and a floor price for your feed wheat. Early Payment Value (EPV) levels of 80, 90 and 100 per cent are currently available. You can sign up for an EPO for feed wheat on any working day, starting August 1, 2006. As the EPV values approach or exceed the initial payment for the reference grade, the EPV will be discontinued.
The reference grade for the EPO feed wheat program in the 2006-07 crop year is CW Feed.
Producers can sign an EPO contract and commit tonnage before delivery. The EPV and discount are both priced at the date of sign-up.
Producers are responsible to deliver their committed tonnage under the EPO program through regular delivery call opportunities.
Note: When making the delivery, producers must assign the delivery to the EPO contract of their choice, before making settlement. Deliveries which have been settled before the EPO sign-up date cannot be applied to an EPO contract.
You can transfer your feed wheat EPO to a wheat EPO. This transfer option provides flexibility to meet your EPO commitments when your feed wheat is upgraded. You will receive the EPV for wheat that was in effect at the time you locked in the EPV for feed wheat. The CWB will charge the cost of the opportunity to transfer, as determined by the current market spread.
A risk premium of $1.00 per tonne for 100% EPVs, $0.50 per tonne for 90% EPVs, and $0.25 per tonne for 80% EPVs will be charged upon transfer and your previous EPO commitment will be cancelled.
Feed barley
The EPO is a pricing alternative that offers you both increased cash flow following delivery and a floor price for your feed barley. Early Payment Value (EPV) levels of 80, 90 and 100 per cent are currently available. You can sign up for an EPO for feed barley on any working day, starting August 1, 2006. As the EPV values approach or exceed the initial payment for the reference grade, the EPV will be discontinued.
The reference grade for the EPO feed barley program in the 2006-07 crop year is No. 1 CW Barley.
Starting in the 2006-07 crop year, the EPO for Feed Barley is a separate contract from the Guaranteed Delivery Contract (GDC) for Feed Barley. Producers will have the opportunity to use the EPO independently of committing tonnage to a GDC. Producers will be able to evaluate EPO and discount values before settlement of their Feed Barley.
Producers can sign an EPO contract and commit tonnage before delivery. The EPV and discount are both priced at the date of sign-up.
Producers are responsible to deliver their committed tonnage under the EPO program through regular delivery call opportunities.
Note: When making the delivery, producers must assign the delivery to the EPO contract of their choice, before making settlement. Deliveries which have been settled before the EPO sign-up date cannot be applied to an EPO contract.
The EPO and discount will be locked in on the date of EPO sign-up for 2006-07.
You must also sign a Guaranteed Delivery Contract (GDC) for feed barley when offered from time to time during the crop year. GDCs offer 100 per cent delivery.
You can transfer your feed barley EPO to a selected barley EPO. You will receive the EPV for selected barley that was in effect at the time you locked in the EPV for feed barley. The CWB will charge the cost of the opportunity to transfer, as determined by the current market spread.
A risk premium of $1.00 per tonne for 100% EPVs, $0.50 per tonne for 90% EPVs, and $0.25 per tonne for 80% EPVs will be charged upon transfer and your previous EPO commitment will be cancelled.
Selected Barley
The EPO is a pricing alternative that offers you both increased cash flow following delivery and a floor price for your selected barley (Two-Row and Six-Row). Early Payment Value (EPV) levels of 80, 90 and 100 per cent are currently available. You can sign up for an EPO for selected barley on any working day, starting August 1, 2006. As the EPV values approach or exceed the initial payment for the reference grade, the EPV will be discontinued.
The reference grades for the EPO selected barley program in the 2006-07 crop year are Standard Select Two-Row and Standard Select Six-Row.
Producers can sign an EPO contract and commit tonnage before delivery. The EPV and discount are both priced at the date of sign-up.
Producers are responsible to deliver their committed tonnage under the EPO program through regular delivery call opportunities.
Note: When making the delivery, producers must assign the delivery to the EPO contract of their choice, before making settlement. Deliveries which have been settled before the EPO sign-up date cannot be applied to an EPO contract.
If you participate in a ‘crop-share’ lease agreement, both the producer and the landlord must sign their own separate Selected Barley Storage and Delivery Contract and EPO selected barley contract (s). This requirement pertains only to the selected barley EPO program. Deliveries are processed on a First In/First Applied (FIFA) basis, by Producer ID number.
You can transfer your selected barley EPO to a feed barley EPO. This transfer option provides flexibility to meet your EPO commitments when your selected barley is downgraded or loses quality in storage. You will receive the EPV for feed barley that was in effect at the time you locked in the EPV for selected barley. The CWB will charge the cost of the opportunity to transfer, as determined by the current market spread.
A risk premium of $1.00 per tonne for 100% EPVs, $0.50 per tonne for 90% EPVs, and $0.25 per tonne for 80% EPVs will be charged upon transfer and your previous EPO commitment will be cancelled.
No. 4 Durum
The EPO is a pricing alternative that offers you both increased cash flow following delivery and a floor price for your Durum No. 4 CWAD. Early Payment Value (EPV) levels of 80, 90 and 100 per cent are currently available. You can sign up for an EPO for durum No. 4 CWAD on any working day, starting August 1, 2006. As the EPV values approach or exceed the initial payment for the reference grade, the EPV will be discontinued.
The reference grade for the EPO No. 4 CWAD program in the 2006-07 crop year is No. 4 CWAD.
Producers can sign an EPO contract and commit tonnage before delivery. The EPV and discount are both priced at the date of sign-up.
Producers are responsible to deliver their committed tonnage under the EPO program through regular delivery call opportunities.
Note: When making the delivery, producers must assign the delivery to the EPO contract of their choice, before making settlement. Deliveries which have been settled before the EPO sign-up date cannot be applied to an EPO contract.
Producers signing an EPO for durum No. 4 CWAD are guaranteed acceptance of 60% of their production offered under the 2006-07 Series A and B durum delivery contracts (up to the maximum of their No. 4 CWAD EPO tonnage). The minimum delivery guarantee should be used as a guideline to determine the amount of production to offer under the program.
The CWB may offer Guaranteed Delivery Contracts (GDCs) for Durum No. 4 CWAD from time to time during the crop year. The GDC is a delivery contract that guarantees 100 per cent delivery acceptance upon commitment; therefore the minimum delivery guarantee under the EPO contract will not apply. Producers who make GDC commitments can match their EPO tonnage.
You can transfer your durum No. 4 CWAD EPO to a durum EPO or a No. 5 CWAD EPO. This transfer option provides flexibility to meet your EPO commitments when your No. 4 CWAD grade changes. You will receive the EPV under the Durum EPO or Durum No. 5 CWAD EPO that was in effect at the time you locked in the EPV for No. 4 CWAD. The CWB will charge the cost of the opportunity to transfer, as determined by the current market spread.
A risk premium of $1.00 per tonne for 100% EPVs, $0.50 per tonne for 90% EPVs, and $0.25 per tonne for 80% EPVs will be charged upon transfer and your previous EPO commitment will be cancelled.
No. 5 Durum
The EPO is a pricing alternative that offers you both increased cash flow following delivery and a floor price for your Durum No. 5 CWAD. Early Payment Value (EPV) levels of 80, 90 and 100 per cent are currently available. You can sign up for an EPO for durum No. 5 CWAD on any working day, starting August 1, 2006. As the EPV values approach or exceed the initial payment for the reference grade, the EPV will be discontinued.
The reference grade for the EPO No. 5 CWAD program in the 2006-07 crop year is No. 5 CWAD.
Producers can sign a EPO contract and commit tonnage before delivery. The EPV and discount are both priced at the date of sign-up.
Producers are responsible to deliver their committed tonnage under the EPO program through regular delivery call opportunities.
Note: When making the delivery, producers must assign the delivery to the EPO contract of their choice, before making settlement. Deliveries which have been settled before the EPO sign-up date cannot be applied to an EPO contract.
Producers signing an EPO for durum No. 5 CWAD are guaranteed acceptance of 60% of their production offered under the 2006-07 Series A and B durum delivery contracts (up to the maximum of their No. 5 CWAD EPO tonnage). The minimum delivery guarantee should be used as a guideline to determine the amount of production to offer under the program.
The CWB may offer Guaranteed Delivery Contracts (GDCs) for durum No. 5 CWAD from time to time during the crop year. The GDC is a delivery contract that guarantees 100 per cent delivery acceptance upon commitment; therefore the minimum delivery guarantee under the EPO contract will not apply. Producers who make GDC commitments can match their EPO tonnage.
You can transfer your durum No. 5 CWAD EPO to a durum EPO or a Durum No. 4 CWAD EPO. This transfer option provides flexibility to meet your EPO commitments when your No. 5 CWAD is upgraded. You will receive the EPV under the Durum EPO or Durum No. 4 CWAD EPO that was in effect at the time you locked in the EPV for No. 5 CWAD. The CWB will charge the cost of the opportunity to transfer, as determined by the current market spread.
A risk premium of $1.00 per tonne for 100% EPVs, $0.50 per tonne for 90% EPVs, and $0.25 per tonne for 80% EPVs will be charged upon transfer and your previous EPO commitment will be cancelled.