Canada Markets

Aug. 1 marked not only the first day of the 2013/14 Canadian crop year, but also the first full year of wheat and barley market deregulation in western Canada. To mark the occasion, Federal Agriculture Minister Gerry Ritz joined a group of producers and industry representatives at a farm at Pense, Saskatchewan, to celebrate the end of the first successful year in the new environment.

The Canadian Federation of Independent Business is a voice for small business across the country, representing a total of 109,000 businesses, of which 7,200 are agribusiness firms with the majority being producers. This organization was involved with the event, releasing data from a recent poll suggesting that the move to deregulation is well supported.

The question was asked: "What overall impact has the ability to market wheat and barley outside of the Canadian Wheat Board (CWB) had on your agri-business?" As seen on the attached chart, a total of 81% of respondents felt the move has either had a very positive impact or a somewhat positive impact. A total of 9% of respondents felt the move was either very negative or somewhat negative, while 8% felt the move had no impact and 2% responded that they didn't know.

This compares to an informal DTN survey carried out in the month of March in the weekly DTN360 Poll. When asked how market deregulation has impacted their respective operations, 67% responded that deregulation has created opportunities that have enhanced their farm operation, while an additional 4% suggested that deregulation had little or no impact. Thirteen percent felt that deregulation had increased the challenges and risks within their operation, 12% indicated that deregulation did not apply to their operation (this was a cross country poll) and 4% responded to "other."

Some additional responses from the CFIB study include:

-- 78% felt they had increased control of decision-making for their product

-- 66% felt they receive better market signals

-- 66% felt they have better access to competitive prices

-- 62% responded that they had increased cash flow

-- 37% felt they had less stress due to increased control

When asked to select from a list of negative factors surrounding market deregulation, a significant 74% indicated that they had not experienced any negative impacts!

The comment made over and over was that the sun came up on Aug. 1, just as it had the day before. Many experienced exceptional prices over the past crop year with the potential to deliver earlier in the year along with the ability to receive 100% of the proceeds on the spot. Those against deregulation will suggest the United States Midwest drought in 2012 was behind the opportunity created in the past year, while the only winners were the grain companies, who must be responsible for the disappearing protein premiums. The two sides of this issue will perhaps never reach agreement, especially given the emotional arguments that firmly entrench the stances taken.

One note of interest was the fact that the move to the new crop year was very much like any other day. Talking to a friend in the grain hauling industry, the comment was made that there was no scramble in July to move product to meet the July 31 deadline, which can often lead to year-end congestion in the handling system, sometimes resulting in crop year-end extensions and congestion leading into harvest. It does seem like there is a more orderly flow of product.

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

(ES)

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