Durum/Wheat Buy-Back is a still a like Cruel Joke!
1.The CWB Export License states that you must have a delivery contract for all the durum you want to export which is fine. BUT you can't export more than what has been called by the CWB. How can a farmer build up a relationship with a processor when his deliveries are ultimately controlled by the CWB.
2.Also it appears that you still must name the buyer in the Export License. In the past when a grain company, I won't name, developed a market in China (using the CWB export licensing system)
the CWB came later and scooped up the business by offering a lower price to the customer. Coincidence? I think not!
3.Given the pricing uncertainties it would also be impossible to lock in an agreed to price with customer over any lengthy time period since the price you must pay for the Buy-Back is related to the export date. So much for hedging.
See Export Licence Info Below:
CWB Export Licence
In order for farmers to export their own grain in whole or processed form, it is necessary to first obtain a CWB export licence for those grains and products exported from eastern and western Canada.
Under the Canadian Wheat Board Act, the CWB is responsible for the marketing of all wheat and barley in export markets and in the domestic markets for human consumption.
The CWB also manages the issuance of export and inter-provincial licences.
Western Canadian farmers who want to obtain a CWB export licence must participate in the CWB pool account. The CWB will establish a cash price based on the date of sale and the type and quality of the grain offered for sale. The sales documents are then drawn up so an individual or company can secure ownership of the wheat or barley and the documents needed to market it to a specified export market. This is called the "producer-direct sale" process.
Producer-direct sales:
(a)The farmer needs to have a signed CWB delivery contract that has been called for delivery or available acreage-based delivery calls so that he/she may deliver grain.
(b)The farmer or elevator manager contacts the CWB to receive a U.S. cash sales price. For milling wheat, this cash price is based on the North American value for spring wheat, which is established by using the Minneapolis market for futures and milling quality.
(c)The farmer must negotiate the elevator company's administration charges with the elevator agent. The farmer will then consider whether a producer-direct sale is profitable and whether to proceed with the transaction.
(d)If the decision is made to go ahead with the transaction, the farmer must establish the weight and the grade of grain, which is involved in the transaction.
The elevator company, on behalf of the farmer, must complete a sales contract with the CWB at the agreed CWB cash price.
Standard contract terms will be applied (such as 30-day delivery period and five per cent tolerance on weight). The sales contract is legally binding and requires a company/farmer to pay the difference between the CWB cash price and the initial payment to deliver the grain.
The farmer must have a valid delivery permit book, delivery contract and adequate contract calls for the sales of this grain.
(e)On behalf of the farmer, the elevator company will apply for an export licence providing the CWB with the farmer's name, address, the Custom's port of exit, the destination, the consignee at final destination and the quantity and grade of grain to be exported. The CWB will provide the elevator company with a sales contract and an export licence.
The CWB will forward the necessary copies of the licence to Canada Customs.
(f)The elevator company will issue a producer certificate for the grain, which reflects the initial payment for the grade and tonnage of grain in the transaction. The farmer is now eligible for all interim and final payments on that grain.
(g)The elevator manager enters the type and quantity of grain in the appropriate place in the delivery permit book.
(h)The farmer and/or trucker transporting the grain for export must stop at Canada Customs to deliver two copies each of the export licence and the bill of lading. Canada Customs will stamp and return one copy of each to the farmer/trucker and will return the second copy to the CWB.
Failure to stop and report to Canada Customs is an offense under the Customs Act, and is subject to penalties under that Act.
NOTE: It is important to notify the CWB immediately if the Customs port of exit is to be changed. The CWB will take steps to ensure proper changes are made to the export licence. CWB export incenses expire 60 days after the date of issuance. If the export licence has been used in part, it is not possible to move the licence between ports. A new export licence must be issued.
(i)In order to export bulk barley or a processed wheat or barley product, a similar export licence is required. If a farmer wishes to export his/her processed product he/she must complete a producer-direct sale process and obtain an export licence.
A company, which is exporting a processed product, must present the sales contract number to the CWB in order to receive an export licence. The CWB Export Licencing Department handles these export licences.
Contact:
Export Licencing -
Trevor Magee (204) 983-3569
Producer Direct Sales -
Jim Thompson (204) 983-8728
Gord Price (204) 983-8757
Rick Steinke (204) 983-1029
1.The CWB Export License states that you must have a delivery contract for all the durum you want to export which is fine. BUT you can't export more than what has been called by the CWB. How can a farmer build up a relationship with a processor when his deliveries are ultimately controlled by the CWB.
2.Also it appears that you still must name the buyer in the Export License. In the past when a grain company, I won't name, developed a market in China (using the CWB export licensing system)
the CWB came later and scooped up the business by offering a lower price to the customer. Coincidence? I think not!
3.Given the pricing uncertainties it would also be impossible to lock in an agreed to price with customer over any lengthy time period since the price you must pay for the Buy-Back is related to the export date. So much for hedging.
See Export Licence Info Below:
CWB Export Licence
In order for farmers to export their own grain in whole or processed form, it is necessary to first obtain a CWB export licence for those grains and products exported from eastern and western Canada.
Under the Canadian Wheat Board Act, the CWB is responsible for the marketing of all wheat and barley in export markets and in the domestic markets for human consumption.
The CWB also manages the issuance of export and inter-provincial licences.
Western Canadian farmers who want to obtain a CWB export licence must participate in the CWB pool account. The CWB will establish a cash price based on the date of sale and the type and quality of the grain offered for sale. The sales documents are then drawn up so an individual or company can secure ownership of the wheat or barley and the documents needed to market it to a specified export market. This is called the "producer-direct sale" process.
Producer-direct sales:
(a)The farmer needs to have a signed CWB delivery contract that has been called for delivery or available acreage-based delivery calls so that he/she may deliver grain.
(b)The farmer or elevator manager contacts the CWB to receive a U.S. cash sales price. For milling wheat, this cash price is based on the North American value for spring wheat, which is established by using the Minneapolis market for futures and milling quality.
(c)The farmer must negotiate the elevator company's administration charges with the elevator agent. The farmer will then consider whether a producer-direct sale is profitable and whether to proceed with the transaction.
(d)If the decision is made to go ahead with the transaction, the farmer must establish the weight and the grade of grain, which is involved in the transaction.
The elevator company, on behalf of the farmer, must complete a sales contract with the CWB at the agreed CWB cash price.
Standard contract terms will be applied (such as 30-day delivery period and five per cent tolerance on weight). The sales contract is legally binding and requires a company/farmer to pay the difference between the CWB cash price and the initial payment to deliver the grain.
The farmer must have a valid delivery permit book, delivery contract and adequate contract calls for the sales of this grain.
(e)On behalf of the farmer, the elevator company will apply for an export licence providing the CWB with the farmer's name, address, the Custom's port of exit, the destination, the consignee at final destination and the quantity and grade of grain to be exported. The CWB will provide the elevator company with a sales contract and an export licence.
The CWB will forward the necessary copies of the licence to Canada Customs.
(f)The elevator company will issue a producer certificate for the grain, which reflects the initial payment for the grade and tonnage of grain in the transaction. The farmer is now eligible for all interim and final payments on that grain.
(g)The elevator manager enters the type and quantity of grain in the appropriate place in the delivery permit book.
(h)The farmer and/or trucker transporting the grain for export must stop at Canada Customs to deliver two copies each of the export licence and the bill of lading. Canada Customs will stamp and return one copy of each to the farmer/trucker and will return the second copy to the CWB.
Failure to stop and report to Canada Customs is an offense under the Customs Act, and is subject to penalties under that Act.
NOTE: It is important to notify the CWB immediately if the Customs port of exit is to be changed. The CWB will take steps to ensure proper changes are made to the export licence. CWB export incenses expire 60 days after the date of issuance. If the export licence has been used in part, it is not possible to move the licence between ports. A new export licence must be issued.
(i)In order to export bulk barley or a processed wheat or barley product, a similar export licence is required. If a farmer wishes to export his/her processed product he/she must complete a producer-direct sale process and obtain an export licence.
A company, which is exporting a processed product, must present the sales contract number to the CWB in order to receive an export licence. The CWB Export Licencing Department handles these export licences.
Contact:
Export Licencing -
Trevor Magee (204) 983-3569
Producer Direct Sales -
Jim Thompson (204) 983-8728
Gord Price (204) 983-8757
Rick Steinke (204) 983-1029
Comment