By Colin Budd
What’s next?
The Marketing Freedom for Grain Farmers Act is a game changer for Western Canadian grain producers. And unless the last legal changes grant the Canadian Wheat Board’s monopoly a last-minute stay of execution, farmers will be looking to tomorrow.
What that means isn’t exactly crystal clear.
“It’s a big change going forward but I think everyone is still trying to get their heads around what it’s going to mean and how they should best adapt,” said longtime agriculture consultant, journalist and farmer Kevin Hursh. He will be one of three panelists at the Cattlemen’s Corral and Crop Visions keynote address,  “Life Beyond Single Desk Marketing – Impacts to Agriculture,” who will be dissecting the future of wheat, durum and barley markets.
And the changes begin immediately with forward contracts being available for those products. Decisions like locking in prices and whom producers choose to market to haven’t been made since the CWB’s implementation. Hursh said it’s also interesting to see what will happen from a crop mix standpoint as in the past,  producers didn’t have any estimates until the CWB’s Crop Pool Return Outlook came out in February. Now decisions can start being made almost immediately.
“Now you will have someone’s price that they’re willing to pay for crops, so you will have a more direct comparison to compare wheat with canola with lentils to make different cropping decisions,” he said on Tuesday.  “There’s different views out there over what this will mean for crop mix, will it mean more barley? Will it mean less barley? You will find people on both sides of the equation. Will it mean too much durum? Some people think there is a big opportunity in durum and durum is a more limited market in size and a market that Canada can easily glut because we’re a major exporter.”
There’s also the first look at what those contracts will entail. Hursh has yet to see one firsthand, but recommends anyone who has goes over them with a fine-tooth comb because there are so many variables that come with the unknown market.
“Unless these contracts have an act of God clause – meaning that if you have a production failure, you’re not liable for the production or for delivering on the contract – you have to be careful as to making sure you’re not locking in more than your production risk might warrant,” he said. “If it’s malting barley you also have to worry about the quality ramifications if it doesn’t make malting as you read through the contracts.”
Some of the advantages Hursh sees are more flexibility for producers and more cash flow earlier in the year.
“Typically, because of the system, new crop deliveries of wheat, durum and malting barley were restricted. Marketing occurred throughout the season. Now, if you like the price, you’ll be able to sell more of your wheat, durum, malting barley closer to harvest time and you might be able to hold some of the other crops later in the year and play the market with them a little bit more.
“You might not be counting on things like canola or oats to pay as many of the bills first thing in the fall, if you take advantage of some of the opportunities that may exist, marketing crops that were previously marketed by the Canadian Wheat Board.”
And there will be more discussed when the panel, which includes Spring Creek Land and Cattle Co.’s Sandy Russell and the CWB’s Vic Schapansky. Other topics that Hursh says he has been wondering about include how the rail system will adapt and what happens to smaller players in the industry, particularly those who use private inland terminals to move their grain.
Of course, he said, he’ll also be interested to hear Schapansky’s address on the changes for the CWB now that it will be operating like other grain companies.
“But it has some special attributes given its history. It also has some disadvantages, so I’m interested to hear what the Canadian Wheat Board will be offering for options come the first of August.”
He added Russell will be able to give some clarity for cattle producers over what their market could hold. Hursh said feed barley sellers may now tap into international markets, making it more expensive domestically, an offshoot which could potentially affect cattle producers’ bottom lines.
“In the open market, I would suggest – and I’d be interested to hear what Sandy has to say – that cattle producers may often be paying more for their feed barley without a Canadian Wheat Board in place. And if feedlots have to pay more for their feed barley, it could mean somewhat lower bids for calves in the fall. I’ll be interested in Sandy’s analysis on that. She’s more the expert on the cattle side, certainly.”
The Cattlemen’s Corral and Crop Visions runs on Jan. 17 and 18 at the Lloydminster Exhibition Grounds.