To Pool or not to Pool – That is the question – With apologies to the Bard, whether to pool your wheat and barley through Minister Ritz’s new Conservative Wheat Board is a real question now that seeding is over.

In spite of years of propaganda from the private trade about the wonders of their forward contracts and other services, price pools have always been the most efficient way for farmers to harvest the maximum value from their crop.  The rule of thumb on price pools being:  the larger and longer, the better.

Here is the difference between a CWB price pool and an average price, but you don’t need to understand much more about how effective a pool is than to understand how the farmer controlled CWB came to have almost $200 million in a contingency fund.

When farmers sold their grain to the CWB on one of the pricing options, the CWB then sold that physical grain through its price pooling system and paid the farmer what he had contracted for under the payment options.  That $200 million came from just 18 months worth of the difference between what farmers who thought they could beat the market with pricing options got, and what the CWB achieved in pooled revenue on the same grain.

But that was then and this now.  Today Ritz’s Conservative Wheat Board is trying to secure handling agreements from the grain companies.  It is not surprising the first company to sign such an agreement was Cargill because it is the only one with too little inland elevator capacity to fill its export terminals.  The remainder of the announced handling agreements, with the notable exception of Viterra, are with companies with little or no terminal elevator space although some have some in-country handling facilities.  Of course the real question is how much is left on the table for farmers?

An industry insider is quoted as claiming they would be happy to sign handling agreements on CWB pooled grain but they don’t want to handle CWB grain based on the forward contracts and the other pricing options the CWB is offering in competition with them.  That $200 million the CWB made is obviously small potatoes compared to the multimillions the grain trade anticipates taking from farmers.

So by all objective evidence, pooling through the Con Wheat Board would seem to be a no-brainer for farmers.  But there is one more fly in the ointment.  Even if 100% of farmers wanted to pool their grain through the CWB, they cannot for the simple reason the Conservative Wheat Board does not have access to enough of the grain handling and transportation system to accommodate them.  That is why the Con Wheat Board is only offering pooled contracts on a first come first served basis – they simply cannot make long term commitments because they have limited access to port terminals.  As a former Board member said “now you can bet the Wheat Board will be no bigger than the private trade allows it to be.”

By removing the single desk marketing responsibility of the farmer controlled CWB (and throwing its elected farmer directors out) Minister Ritz has made sure his Conservative Wheat Board is small enough the private trade can take it into the bathroom and drown it in the sink, which is exactly what we see happening now – a very small pool indeed.

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