Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Ken Eshpeter hops a fence at his farm in Daysland, Alta., on Aug. 22, 2013. Mr. Eshpeter is chairman of the Battle River Railway, a co-operative-owned short-line focused on transporting grain. (JOHN ULAN)
Ken Eshpeter hops a fence at his farm in Daysland, Alta., on Aug. 22, 2013. Mr. Eshpeter is chairman of the Battle River Railway, a co-operative-owned short-line focused on transporting grain. (JOHN ULAN)

Buy, grow, sell high: Canada’s wheat farmers turn into commodity traders Add to ...

John Guelly’s work does not end once his combine is set on auto-steer. Bouncing over his 1,000 acres of land perched on the seat of the large farm machine, the Westlock, Alta., farmer takes advantage of the time to switch on his iPad and check out his go-to websites for agricultural prices.

Along with the intense job of harvesting at this time of year, Mr. Guelly now keeps a close eye on futures contracts for wheat and barley and the global commodity market so he can get the best prices for his crops. Checking several times a day on the rates grain companies are offering is a must. But he doesn’t mind.

More Related to this Story

“One of the reasons people farm is they like to be their own boss,” said Mr. Guelly, 46, whose family has been on the same land for three generations. The new system, he said, has “improved our ability to sell wheat when we want to, and know exactly what we’re going to get paid for it.”

Canada, the second largest exporter of wheat in the world, has transformed the way farmers sell their crops.

Just two harvests ago, all farmers of food-quality wheat and barley in Alberta, Saskatchewan and Manitoba (and a small portion of British Columbia) were forced to sell through the Canadian Wheat Board, known as a single-desk system. The Conservative government ended that monopoly in August, 2012.

Now, farmers such as Mr. Guelly make their own arrangements.

Regulations and government-mandated marketing have given way to competition and choices in selling. But the dependability of the wheat board system has also vanished, leaving farmers more exposed to a downturn. The first year of the new system brought record-breaking prices for wheat, driven by drought in the United States. But prices are falling from that high because of expectations of a bumper crop. Farmers are now free of the restrictions of the wheat board, but they have also lost its certainty.

Canadian Prairie wheat prices are linked to futures on U.S. commodity exchanges, but Saskatchewan farmer Rob Florence said he and other wheat growers must guess whether grain companies are giving them what their crops are actually worth. He completed a university course on Canadian commodity futures and options after the board was downsized, and sells to several grain companies, including the wheat board. Even so, he said he can spend an hour or more on the computer every day trying to keep track of grain prices.

“I don’t know I’m getting a fair price, and sometimes I’ll discover after the fact that I’m not getting a fair price,” the 59-year-old farmer said. He explained that farmers occasionally read in the news that a company that bought their wheat has resold it at a huge profit.

The Winnipeg-based board evoked strong emotions on the Prairies from its beginning as a wheat and barley marketer meant to help producers through the Great Depression, up to the 1990s when a small group of Western farmers, angry with the prescribed sales system, illegally sold wheat in the United States. This frustration helped spur the policies of the Reform Party, the western political movement that gave birth to the current Conservative Party.

Despite lingering concerns, federal Agriculture Minister Gerry Ritz – once a Reformer himself – has already pronounced the termination of the single desk a success.

He said the change has given farmers the freedom to market their own grain, and he believes the ability to choose “the time, price and place” of grain sales has already resulted in higher profits. According to Agriculture and Agri-Food Canada, the crop-year average wheat price for the 2012-13 was $285 per tonne compared to the average pooled return of $257 per tonne during the previous five crop years under the wheat board, an increase of nearly 11 per cent.

“I’m not judging it arbitrarily. I’m going by what farmers tell me ... they’re exceptionally pleased with it, and that it has been a very successful year,” Mr. Ritz said. “Farmers used to be held hostage.”

There’s no doubt the change is a challenge to the existence of the downsized Canadian Wheat Board – which will not release its present-day sales volumes but has said it is aiming for 20-30 per cent of the crop market under the new system.

No one from the board was available for an interview, and as of yet, there are no new details on a five-year plan to privatize it (a press conference on the issue scheduled for earlier this month was cancelled).

However, the new system has boosted business opportunities for global grain players such as Viterra Inc., Richardson International Ltd. and Cargill Ltd., which can now buy directly from farmers.

Kyle Jeworski, Viterra’s president and chief executive for North America, said his company has been able to find greater efficiencies under the new system. He said the end of the monopoly means pricing is more transparent for farmers. Now producers can view grain futures a year out, and lock in prices if they choose, or sell at a posted spot price.

In Meota, Sask., Tyler Mack’s phone buzzes with text messages throughout the day to alert him to the prices companies are offering. He likes that companies compete for his crops, and that he gets paid as soon as he makes a delivery. Under the wheat board, he would get part of the payment up front and the rest months later.

“Now I can just haul it and sell it, and get paid the full amount,” the 34-year-old farmer said. “It’s a lot nicer from my perspective.”

While some farmers say the change to a deregulated market is a horn of plenty, proponents of the single-desk system have always argued the wheat board’s size meant it could command better prices around the world. Although one lawsuit attempting to force the government to reverse the change was shot down, an uncertified class action initiated by Friends of the Canadian Wheat Board will go to Federal Court this fall.

“It’s freedom alright – freedom for the big grain players,” said Ken Eshpeter, a farmer in Daysland, Alta., and chairman of the Battle River Railway, a co-operative-owned short line focused on transporting grain.

“It was the single desk that was the crucial factor. It was the single desk gave farmers, as a collective marketing group, the power and the leverage,” Mr. Eshpeter said.

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular