Representatives from both countries expect most wheat will remain on home turf

By MATTHEW WEAVER

Capital Press

The Canadian Wheat Board is now called CWB, and farmers in the U.S. and Canada are figuring out what the change means to them.

As of Aug. 1, the CWB's marketing monopoly in Canada dissolved, allowing farmers there to independently market their grain domestically and overseas.

Wheat organizations on both sides of the border have teamed up to offer a website answering questions for Canadian and U.S. farmers about what the change might mean for them.

"The big benefit to the U.S. producer is we have a much more similar-type marketing system in Canada than we did," said Shannon Schlecht, director of policy for U.S. Wheat Associates. "We're competing on the export markets and domestic market on an open, market-based system we haven't had for almost 70 years."

The board was established as a monopoly in the 1930s.

Canadian farmers are free to export grain from Canada to the U.S. or other markets, or sell domestically to flour mills or barley malting plants, said Richard Phillips, executive director of Grain Growers of Canada.

The change allows farmers in both countries to explore possible market opportunities across the border.

Schlecht and Phillips both expect growers to compare the prices they could receive, although much of the grain is expected to remain in the same country it is grown.

"Whether you're an American farmer or Canadian farmer, you've usually built up a pretty good business relationship with your local elevator manager," Phillips said. "I think a lot of people will be reluctant to sever those relationships, unless there's a substantial financial incentive to do it."

Schlecht doesn't expect a major impact to wheat prices as a result of the change, since the same volume is being produced in each country.

"We are going to have new trade transparency between U.S. elevators and Canadian elevators we haven't seen before," he said, noting he expects prices to equalize and be competitive.

Phillips expects similar prices on both sides of the border, unless a company or country is short on grain and offers premiums.

Schlecht said there are key differences between the two marketing systems to be mindful of, including the customary units of measurement -- metric tons in Canada compared with bushels in the U.S. -- and the differences in currency and recording of quality.

Phillips recommends taking a representative sample to grain elevators in the other country to negotiate grade and dockage to determine the price netted back to farmers.

"I anticipate we will see a lot of people doing tire-kicking, so to speak," he said.

The Canadian system must adjust to the wheat American farmers grow. Traditionally, Phillips said, U.S. wheat could cross the border free of tariffs and duties, but U.S. varieties weren't allowed to be sold in the Canadian grading system as anything other than feed wheat because they are not registered in Canada and have not gone through three years of Canadian agronomic trials.

Canadian companies may now buy under U.S. grain specifications, so American farmers can simply share their American grain specifications. It will also make price comparison simpler, Phillips said.

"Most Canadians on our side understand full well trade has to go both ways," he said. "There should be the same freedom to move wheat one way as the other way."

Schlecht said much remains to be determined in the coming months. The industry will be examining seed trade and commercial handling operations, he said.

Online

http://canada-usgrainandseedtrade.info

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