Newsroom
2001
July 9, 2001
CWB enhances payment options to better serve farmers
Winnipeg -- The Canadian Wheat Board (CWB) today announced
further enhancements to its Producer Payment Options. Starting
August 1, 2001, farmers can take part in the Early Payment Option
(EPO) for Canadian Western Red Winter wheat (CWRW) and Canadian
Western Soft White Spring wheat (CWSWS). Farmers participating in
the trial program will receive a greater portion of their expected
final price upon delivery, while remaining in the pool account.
"The EPO, along with previously announced initiatives like the
fixed price and basis contract, demonstrates our commitment to
giving farmers realistic and meaningful choices," said Board of
Directors Chair Ken Ritter. "These payment alternatives give
farmers more tools to meet their business needs."
The EPO is scheduled to begin as early as August 1 and will run
until November 30, 2001. Here is how it will work:
- Farmers who choose to participate in the EPO will contact the
CWB to commit to a value and tonnage by phone or by fax.
- At the time of delivery, the farmer will receive the initial
payment for the grain and grade delivered, less the regular
freight and elevation charges.
- When the CWB receives the delivery information, it will mail
the farmer an additional payment to bring the total to 90 per
cent of the Pool Return Outlook less a discount for risk, time
value of money and the applicable administrative costs.
- Farmers who deliver early on the EPO will derive the greatest
benefit from the program. As the crop year progresses, the spread
between the initial and final payment traditionally narrows, thus
reducing the size of the additional payment that farmers access
under the terms of the EPO.
- Participants in the EPO remain in the pool account. Once the
value in the pool account increases beyond the early payment
value, farmers will receive adjustment, interim and final
payments.
Farmers who choose to participate in the program will deliver
through regular opportunities, namely acreage-based and delivery
contracts.
For the 2001-02 crop year, the EPO is only available to growers of
CWRW and CWSWS. However, it may be expanded to include other
classes of wheat in future crop years if the program proves to be
successful.
Additional program details will be available on the CWB´s
toll-free line at 1-800-ASK-4-CWB, on our Web site under the
payment section at www.cwb.ca and in Grain Matters, the CWB´s
newsletter to farmers.
The CWB is the world´s largest farmer-controlled wheat and
barley marketer. Headquartered in Winnipeg, Manitoba, it is one of
Canada´s biggest exporters and the largest net earner of
foreign currency. Marketing Prairie-grown wheat and barley to over
70 countries around the world, the CWB returns all sales revenue,
less the costs of marketing, to farmers in Western Canada.
Backgrounder - CWB Early Payment Options
2001-02
Beginning as early as August 1, 2001, the Canadian Wheat Board
(CWB) will offer an Early Payment Option program for CW Red Winter
(CWRW) and CW Soft White Spring (CWSWS) wheat. The program is
designed to provide farmers with improved cash flow and a
guaranteed payment value for these classes of wheat.
Early Payment Value:
At the time of
sign up, farmers will be guaranteed an early payment value (EPV) of
90 per cent of the PRO for the base grade in the class
selected. The CWB will announce the value and discount for
each class offered on a daily basis. The discount covers risk, time
value of money and applicable administration costs. The early
payment value and discount will be available through the toll-free
number, fax on demand and the CWB Web site (www.cwb.ca).
Contract sign up and commitment:
Farmers must sign up their intended tonnage for this program by
November 30, 2001. Early delivery will yield the greatest
benefit because, as the crop year progresses, the spread between
the initial and the final payment narrows. This reduces the size of
the additional payment that farmers access under the terms of the
EPO. Eligible grades are No. 1 and 2 CWRW and No. 1 and 2 CWSWS
(including all protein levels). Farmers must commit tonnes prior to
or at the time of delivery. A minimum of 20 tonnes may be
offered.
Farmers can sign up by:
- Phoning the CWB´s toll-free number to commit tonnage and class of grain. Farmers are required to provide their ten-digit identification number and CWB Personal Identification Number (PIN).
- Completing a fax acceptance form (a supply of which will be provided to elevator managers) and sending it to the CWB. The fax acceptance form requires farmers to provide their ten-digit identification number.
The CWB will mail a contract confirmation form shortly after
sign up. Farmers are to insert this form in their delivery permit
book. The EPO confirmation will include a contract number and
committed tonnage.
Delivery and Settlement:
Farmers are
responsible for delivering their committed tonnage under the EPO
through regular delivery opportunities (acreage-based and contract
calls). They will be subject to liquidated damages if they fail to
meet the terms of their delivery contracts.
Farmers will receive the initial payment less freight and elevation
from the grain company upon delivery. Once the CWB receives the
delivery information, it will make an additional payment to the
farmer. This amount will bring the total payment to 90 per cent of
the CWB PRO at the time of sign up for the specific class of wheat
delivered under the program less the discount.
The CWB will mail the payment within 15 days of receiving
farmers´ delivery information. Farmers will also receive an
incremental payment from the CWB to compensate for deliveries later
in the crop year.
Farmers remain in the CWB pool account and are eligible for
additional adjustment, interim and final payments once the payments
exceed their early payment value.
Examples:
The numbers in the
following two examples are taken from the 2000-01 crop year and
represent approximate prices that would have been available had the
EPO been in place at that time for CWSWS.
| Example #1 Early Payment Option CWSWS Wheat Pricing on August 15th, 2000 Delivery on August 20th, 2000 |
||
| $/tonne | $/bushel | |
| Pool Return Outlook | $157 | $4.28 |
| Early Payment Value (90%) | $141.30 | $3.85 |
| Discount* | ($4) | ($.11) |
|
|
||
| Producer receives | $137.30 | $3.74 |
| Average freight and elevation charges* | ($45) | ($1.23) |
| Net | $92.30 | $2.51 |
| Initial received at delivery | $64 | $1.74 |
| CWB sends the difference | $28.30 | $.77 |
On June 27th, 2001, the initial on CWSWS was raised to $150 per tonne. This is higher than the EPV so a payment of $8.70 would have been issued at that time.
| Example #2 Early Payment Option CWSWS Wheat Pricing on November 25th, 2000 Delivery on December 29th, 2000 |
||
| $/tonne | $/bushel | |
| Pool Return Outlook | $168 | $4.58 |
| Early Payment Value (90%) | $151.20 | $4.12 |
| Discount* | ($4) | ($.11) |
|
|
||
| Producer receives | $147.20 | $4.01 |
| Incremental payment for later delivery* | $.50 | $.01 |
| Average freight and elevation charges* | ($45) | ($1.23) |
| Net | $102.70 | $2.79 |
| Initial received at delivery | $77 | $2.10 |
| CWB sends the difference | $25.70 | $.69 |
As of June 27th, 2001, the initial on CWSWS is $150
per tonne. Therefore, no further payments would have been issued to
date.
*These amounts have been estimated for the purposes of
illustration. Actual amounts could have varied.