E-Malt.com News article: Canada: CWB sells a record 2.4 mln tonnes of malting barley in eight years

Western Canadian farmers will receive about $7 billion from grain marketed through the CWB in 2007-08, up 57 per cent over 2006-07 and double the year before, CWB’s official site quoted Ian White, the company’s president and CEO, on July 31.

White said a pooled approach to selling in this year’s high-price international grain environment was responsible for putting an estimated additional $560 million in farmers’ pockets, included in total revenue for spring wheat and durum. By contrast, most American farmers sold early -- well before the dramatic price spikes of early 2008.

Larry Hill, chair of the CWB board of directors, said the 2007-08 crop year demonstrates the advantages of the western Canadian approach to wheat and barley marketing.

CWB malting barley sales were the highest in eight years at 2.4 million tonnes -- a 33-per-cent increase over last year. This included record sales of 114 000 tonnes to Mexico and a half-million-tonne increase in exports to the United States. Producer returns for designated barley will be about $5 per bushel at farmgate, up 65 per cent over 2006-07.

Preliminary export numbers for 2007-08 are 11.3 million tonnes (MT) wheat, 3.1 MT durum, 1.6 MT feed barley and 1.3 MT malting barley. Domestic sales were 2.1 MT for wheat, 285 000 tonnes durum and 1.1 MT malting barley. End-of-year grain stocks are now very low at 3.9 MT.

The CWB also released increased crop production estimates today, noting that cool temperatures have lowered grade expectations for the 2008 crop. The CWB now projects a western Canadian barley crop of 10.1 MT.

Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. One of Canada’s biggest exporters, the Winnipeg-based organization sells grain to more than 70 countries and returns all revenue, less marketing costs, to farmers.


In a nutshell: A crop year-end review

Record $7.7 billion in CWB revenue projected for 2007-08. Ten-year average for CWB combined pool revenue: $4.1 billion; 2006-07: $4.9 billion; 2005-06: $3.5 billion.

Farmers’ per-bushel pooled returns for malting barley are up 65 per cent.

Feed barley exports were 1.6 MT and malting barley exports constituted 1.3 MT. Domestic sales of malting barley were 1.1 MT. (Preliminary figures)

Top malting barley customers were Canada, U.S., China, Mexico and Colombia.

Production in Western Canada for all barley in 2007 was 10.3 MT.

New CWB production estimates for barley in 2008 are 10.1 MT.

The CWB’s 2007-08 preliminary bulk export target (excluding products) for wheat, durum, and barley is 15.3 MT.

Sign-up for the CWB’s new CashPlus program for malting barley to date for 2008-09 is 270 000 tonnes, with seven companies currently participating.


What are “pooled returns”?

Under a pooled approach to grain marketing, all revenue received from the sale of grain from all customers around the world (minus costs*) is assigned to one of four pools: wheat, durum, malting barley and feed barley. Farmers receive the same return for their grade and class of grain, regardless of when they deliver. Pooled marketing, with its disciplined pace and strategic targeting of customer demand segments, allows the CWB to maximize returns. It also meets customer requirements for a consistent supply of grain year-round, which is a competitive advantage. Pooling provides a price risk management option for producers similar in concept to mutual funds in equity markets.

*95 per cent of costs are direct freight, handling and storage charges


05 August, 2008