Farmers
Frequently asked questions
Why is the DEC a separate contract rather than a supplement to the regular delivery contract?
In order to facilitate trading, the DEC will have different processes from the regular delivery contracts for delivery acceptance and authorization as well as a few additions to the contract terms and conditions. In order for the CWB to track and administer DEC trading and delivery efficiently, a separate contract was also the simplest and most efficient approach.
Why do we need to break the DEC contract into four delivery portions? Why can't a farmer sign up the portion he or she wants, rather than participating in all four delivery periods?
The DEC must operate within the existing delivery system that has constrained capacity requiring delivery throughout the entire year to maximize marketing opportunities and volumes. The DEC has also been designed to run in parallel with the regular delivery contracts and so must have a similar overall delivery pattern to fit in alongside the current system without giving any significant preference or advantage to either the existing system or the pilot.
If accuracy is so important, why not ask for more detail on the Series A after the deadline of October 31, 2006?
Providing a mechanism for farmer choice over delivery is the foremost objective of this pilot. The CWB would also like to improve its inventory knowledge as we move forward into the future and assuming DEC is successful and welcomed by farmers, the CWB looks forward to receiving better information on the quality of grain farmers have and also on their preferences for timing of delivery. The CWB may also pursue other efforts to improve the inventory knowledge provided through the Series A sign up.
What's in this program for farmers?
Farmers will have greater control over delivery timing. Acceptance and delivery period are also known in advance. Some farmers may earn some income by trading early delivery opportunity to other producers in private business arrangements.
How do we generate interest/involvement amongst the farmers that would be trading away period 1 and 2 delivery opportunity?
Farmers who currently defer delivery opportunity for a variety of reasons, such as off-farm work, may want to participate in this program as it will be an opportunity to trade with other farmers to secure more preferred delivery for both sides or possible to generate modest income from trading arrangements.
As an example, multi-generational farms may participate, allowing the younger generation to deliver their grain earlier to provide greater cash flow.
Will farmers not in the program be affected?
No. Farmers not participating in the program will not be affected. They will continue to use the Series A, B and C contracts as they have in the past.
What's in this program for the CWB?
The CWB will see a number of benefits from this program. Primarily it will allow greater business choices to farmers within the limits of the overall capacity of our system. Assuming the program is successful and expands in future, the CWB is also expecting to see improved overall inventory knowledge of what grain is available for marketing, because these contracts require a higher level of accuracy and must be fully delivered.
Can producers sign up more than one DEC?
Yes, provided enough volume is available under the tonnage cap for the pilot program, which has been set at 10 to 15 per cent of CWRS production in the region. That tonnage is being filled on a first-come, first served basis.
Farmers should be aware that this program is a pilot program. A prudent course of action would be to test its operation and develop familiarity by committing a portion of deliveries this year prior to potentially fully committing all deliveries from a farm to the program in future years.
Can members of the Board of Directors participate in the program?
Yes. The DEC is related to delivery opportunity only, not pricing of grain. Therefore there is no requirement to limit participation by members of the Board of Directors and CWB employees. They are subject to the same contract terms as all other farmers.
Can the DEC be decreased?
No, similar to Guaranteed Delivery Certificates (GDCs) this program guarantees 100 per cent acceptance of grain offered by producers and expects 100 per cent delivery by specific periods. Sales are negotiated with customers, based on the amount of tonnes that have been accepted for delivery. Therefore, contract decreases are not allowed.
Can farmers cancel a DEC?
No. Farmers should know the quantity and quality of grain they have available for delivery prior to making a DEC commitment.
Is there a cost to trading?
There is no fee or administrative cost for trading levied by the CWB. However, trades are considered private business arrangements between farmers, and there may be circumstances where a farmer offering delivery opportunity on trade may request compensation for foregoing earlier delivery opportunity.
Can farmers sign up and deliver everything on the first quarter?
No. Sign up will result in a DEC delivery commitment spread evenly over four quarters of the crop year. However, a farmer can organize a trade with other farmers in the program to acquire delivery opportunity entirely within the first quarter.
Is the CWB able to manage the logistics to make sure there is demand for the grain that is contracted for movement in each period?
The overall delivery profile of the DEC contracts will be very similar to the profile of the Series A, B and C contracts. The key difference is that farmers will be able to trade the available delivery opportunity with another participating farmer. The grain delivered under these contracts will be marketed and delivered along with all other CWB grain. Defining the pilot region by rail zone will help ensure that the delivery logistics of the program run as smoothly as possible. This is a key area where the pilot will help us test and learn about performance of this approach.
How is the grain called?
Deliveries can be accepted from the first day of the delivery period and must be completed by the last day of the delivery period, unless a trade is transacted. For example, a farmer with 20 tonnes of delivery opportunity in the second period of the year can deliver that grain from November 1 to January 31.
What happens if there is a misgrade?
The producer must find a trade with a farmer in the reverse situation. For example, if Farmer A has signed a DEC contract for No. 1 CWRS 13.5 and harvested No. 2 CWRS 13.5 and Farmer B has signed a No. 2 CWRS 13.5 DEC but harvested No. 1 CWRS 13.5, the two could trade delivery opportunity. One of the objectives of this program is to improve CWB inventory knowledge, so farmers may trade to the correct grade; otherwise, they could be liable for liquidated damages.
Is there a penalty for not delivering?
As with the CWB's Producer Payment Option contracts, farmers participating in DEC contracts are responsible for delivering their full contract commitment. If farmers do no deliver 100 per cent of their DEC contract, they could be assessed liquidated damages.