Garrett Simmons
LETHBRIDGE HERALD
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Marketing your grain in Alberta used to be pretty straightforward.
The Canadian Wheat Board (CWB) took care of those details and for some Prairie growers, the organization still does.
But with the CWB now voluntary, producers are finding out just what is involved in marketing their product, and the situation is definitely a complex one, according to Terence Koshman, marketing and logistics manager at Lethbridge Inland Terminal Ltd.
Koshman, who spoke Monday night at the Wildrose Agricultural Producers regional meeting in Taber, said all the traditional rules are out the window this year.
"Our philosophy this year has been the 75 to zero rule. We've had 75 years of Canadian What Board monopoly to zero starting this year."
With that, he added Lethbridge Inland Terminal's strategy this year has not been based on price but instead, shifted to risk management.
"There's three ways to spread your risk - through the CWB harvest pool, the CWB early delivering pool, and cash," said Koshman, who added the pool strategy gives growers price averaging.
Some have opted to go it on their own, and sell most of their product en masse, which Koshman added has its risks.
"If you sell everything at once, you're either going to be the hero or the goat."
The market hasn't reacted quite like everyone thought it would, he mentioned, as there is a wheat shortage, and fund buyers are continuing the wreak havoc on the market.
In particular, the market for feed wheat is taking off, as prices there are still very high.
"The feed numbers are a little scary right now," said Koshman. "They cannot maintain these levels."
He added durum is also being taken as feed wheat, a practice which five to 10 years ago just wasn't done.
In terms of logistics, Lethbridge Inland Terminal has shipped a fair share of board-pooled grain, according to Koshman, who added some elevators are reluctant to do so.
"They like control of the product from cradle to grave, with no third-party like the CWB involved," he said. "The problem with that is when they just manage their pipeline, is that the best for the producers?"
Greg Bialobzyski, farm business representative for the CWB, who also spoke at the Wildrose meeting, acknowledged that has been a challenge.
"We do have varying degrees of co-operation with handling partners," he said, and added for the most part, the number one thing elevators want is volume.
Another logistical issue is actual grain movement. He added if Western Canadian farmers hold back grain in large quantities, it could create a logjam in terms of exporting capacity down the line.
"The port of Vancouver has only so much capacity," he said. "If grain shipments are slow during the first six months of the crop year, those tonnes are not necessarily caught up on in the last six months. The port and the railroads can only handle a certain amount of traffic."
But with the free-market system still in its infancy, Koshman said there are a lot of other variables too, and producers will have to monitor the situation in the coming years.
"The big thing we have to worry about with the free market is we don't know what will happen."