Newsroom
2006
CWB market-based pricing options expanded to feed barley
The CWB’s farmer-controlled board of directors has approved a number of refinements to the CWB’s 2007-08 Fixed Price (FPC) and Basis Price (BPC) contracts to provide farmers with more pricing flexibility, more contract options and simpler administration.
These innovative market-based programs, first introduced in 2000-01, enable farmers to lock in a price for their grain based on futures markets values. The refinements, approved at the board’s November 23 meeting, will come into effect at the end of February 2007. They include:
- offering a BPC pricing option for feed barley;
- expansion of the FPC and BPC pricing options to include Pool B feed barley deliveries;
- simplification of the the quality transfer clause in both the feed and selected barley FPC and BPC and;
- increasing the force majeure clause tonnage limit to 200 000 tonnes for all programs combined, up from a limit of 100 000 tonnes in the 2006-07 crop year.
“Farmers have made it clear to us that having a variety of pricing and payment options to choose from is very important to their businesses,” said CWB president and CEO Adrian Measner. “These enhancements were proposed following a complete review of all our Producer Payment Option programs, which was completed in October.
“They build on an impressive array of options that have literally transformed this organization since farmers took it over in 1999. Farmers now have more pricing choice than they would have under any other grain-marketing model.”
The expansion of the fixed priced program means this option will be available for both Pool A and Pool B feed barley, as well as for wheat, durum and selected barley. Basis contracts will be an option for feed barley, as well as wheat and selected barley.
A record number of producers – almost 14,000 – chose to participate in market-based CWB Producer Payment Options for 2006-07, a four-fold increase over last year, with a 500-per-cent increased in committed grain at over 3.5 million tonnes.
Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. As one of Canada’s biggest exporters, the Winnipeg-based organization sells grain to more than 70 countries and returns all sales revenue, less marketing costs, to Prairie farmers.
For more information, please contact:
Maureen Fitzhenry
CWB media relations manager
Tel: (204) 983-3101
Cell: (204) 479-2451
Background information
CWB market-based Producer Payment Options (PPOs)
- Producer Payment Options (PPOs) were introduced in 2000-01 to give farmers flexibility in how and when they price and get paid for their grain. This move was made by the CWB’s farmer-controlled board of directors in response to producers’ desire for more control over these factors.
- CWB pool accounts are the alternative to the market-based PPOs. They provide farmers with risk management by pooling returns from all markets for the entire crop year. By contrast, the PPOs provide the choice to price grain at a particular point in time.
- Producers can manage the degree of price and production risk exposure by selecting the payment option that is right for them. In combination with the risk management provided through price pooling, the PPOs can be used by producers as a balanced marketing strategy throughout the crop year.
- The PPOs include:
- Fixed Price Contract: locks in a flat price based on the December futures and basis.
- Basis Payment Contract: locks in basis and futures values at different times.
- Daily Price Contract: locks in a flat price based on daily U.S. elevator cash prices.
- Early Payment Options: offers payment within 10 days of delivery equal to 80, 90 or 100 per cent of the Pool Return Outlook (minus a discount) plus eligibility for further pooled payments in excess of that amount.
- To provide options on the delivery side, the CWB offers Guaranteed Delivery Contracts and a pilot Delivery Exchange Contract which provides participants with flexibility over the timing of their deliveries.
- Find more information on the Fixed Price and Basis Payment Contracts