ROSCOE, Ill. (DTN) — Canadian wheat, durum and barley farmers will be able to choose where they sell their grain starting this Wednesday, opening up opportunities to sell on both sides of the U.S.-Canadian border.
U.S. farmers can also sell to Canadian elevators, but it’s not as simple as driving a truck to the closest elevator on the other side of the border. That’s why a coalition of U.S. and Canadian grain groups established a website to answer frequently asked questions, http://canada-usgrainandseedtrade.info/….
“The information on this site will help producers who might consider delivering their grain across the border understand market differences,” said Shannon Schlecht, director of policy with U.S. Wheat Associates, in a news release. “Key questions are answered for U.S. and Canadian producers, including how to find a buyer, how wheat will be graded and requirements for crossing the border.”
U.S. Wheat Associates teamed up with the Grain Growers of Canada, Canada Grains Council and the North American Export Grain Association to host and run the website.
Canada’s Marketing Freedom for Grain Farmers Act reversed regulations set in place in the 1940s that required Western Canadian farmers to sell their wheat, durum, oats and barley through the marketing monopoly called the Canadian Wheat Board. While some changes were made to the wheat board through the years, such as removing oats from the board’s control in 1989, farmers still needed to sell their wheat, durum and barley to the CWB.
The full law making it voluntary to market grain to the board goes into effect on Wednesday even though farmers have been allowed to forward contract grain for delivery after August 1 since the law’s passage.
This has opened up the Canadian market, and grain companies have scrambled to gain or expand their foothold in the market while now competing with the CWB for farmers’ grain. Glencore’s purchase of Viterra for $6.2 billion is a prime example.
The new reference website will eventually have information for commercial grain buyers and seed dealers, but as of Monday, only the FAQ sections for Canadian and U.S. producers are complete.
“People on both sides of the border have many questions on the new marketing changes and their implications,” said Dennis Stephens, executive secretary of the Canada Grains Council. “We focused on starting to answer those questions on grading, contracts, and pricing, among others, to provide transparency and facilitate cross-border trade.”
The website organizes questions into eight categories that cover finding a buyer, crossing the border, delivery, settlement and other check-off, tax and related regulations.
One of the critiques of cross-border trade is that because the two countries have different grading policies, it’s easier for Canadian growers to sell their wheat in the U.S. than it is for U.S. farmers to sell in Canada.
The U.S. grading system leans on contract specifications to limit the number of grades, while Canada’s system relies heavily on variety evaluation and registration, resulting in more grades.
While both countries can accept wheat from across the border, only wheat grown in Canada can receive an official, statutory Canadian grade. Origin isn’t a factor in the U.S. grading system, so Canadian wheat can receive an official U.S. grade.
Canadian elevators could still sell U.S.-origin wheat on contract speculations, it’s just classified differently, the website explains.
The website also lists the required check-off fees for different states along the border, which go toward research and promotion of U.S. wheat. Canadian farmers will have to pay the 2-cent-per-bushel check-off fee in Montana and Minnesota and 1.5 cents per bushel if they sell in North Dakota. They’ll pay no check-off fee if they sell in Washington, however.
“It is great to see so many key grower and industry stakeholders come together for this effort,” said Gary C. Martin, president and CEO of the North American Export Grain Association. “We plan to update the site frequently and we strongly encourage growers and industry to contact us through the website with their comments, questions and suggestions.”
Posted by Russell Nemetz