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					                                                                                                                                                                                  ISSN 0383-4417



                                                                                                                                                        SPECIAL EDITION

  Grain Marketing
  R E POR T
  December 2008/January 2009                                                   Prairie strong, worldwide                                                                   www.cwb.ca

Ten years of farmer control Taking our crop to market
                                Not only did January 1 usher           A review of sales, movement and prices for the 2008-09 crop year and a look forward
                                in a new year, it also marked           by Ward Weisensel, Chief Operating Officer
                                the 10th anniversary of the
                                CWB as a farmer-controlled             Marketing the 2008-09 crop presents a mix of                       Moving your grain
                                organization. For me, it was           challenges and opportunities.
                                a time to reflect on what                                                                                 Collectively, western Canadian farmers produced a large
                                farmer control means.                  Challenges are abundant in these times of global                   crop this year, with production of the six major western
                                It was a time to look back             economic turmoil. Overall uncertainty, extreme market              Canadian grains at 54.3 million tonnes (MT). We project
                                at the dramatic changes                price volatility, tight credit, currency volatility (see article   CWB exports of 17.6 MT during the crop year, compared
                                that have resulted from                on page 3) and large global grain production all                   to 17.4 MT last year.
                                our direct involvement in              contribute to the current challenging environment.
                                                                                                                                          The CWB is targeting to export 12.7 MT of wheat,
                                running the CWB. As a                  Grain buyers are taking a cautious approach to
                                                                                                                                          3.35 MT of durum, and 1.6 MT of barley this crop year.
    Larry Hill                  farmer, I am proud to have             purchases in the face of economic uncertainty.
                                                                                                                                          We exported 40 per cent of our total target by the end
                                been part of this ongoing
    Chair, CWB                                                         On the opportunity side, prices remain relatively                  of the 2008 calendar year, and we expect to export
    board of directors          transformation of our                                                                                     80 per cent of our targeted levels by the end of May.
                                marketing company from                 high from a historical perspective, although they have
                                the beginning – as one of              dropped from the record highs we saw last year. The
                                                                                                                                          We have announced Series A acceptance levels at
  the original elected directors and now as its chair.                 CWB has taken advantage of increased rail and lake
                                                                                                                                          80 per cent for Canada Western Red Spring wheat
                                                                       freight capacity to move increased volumes of this
                                                                                                                                          and 60 per cent for Canada Western Amber Durum.
  Now approaching its 75th year of business, I believe                 year’s large Prairie crop during the busy post-harvest
                                                                                                                                          In a market environment characterized by cautious hand
  the CWB has changed more in the past 10 years than                   period. The increased logistical capacity has allowed
                                                                                                                                          to mouth purchasing, aggressive pricing by competitors,
  it did in the previous six decades.                                  the CWB to preposition grain at St. Lawrence ports
                                                                                                                                          and record world wheat production, the CWB has
                                                                       to meet additional demand from buyers for winter
  The CWB has always had the mandate to market our grain,                                                                                 adopted a staged approach to acceptance of wheat
                                                                       shipment of western Canadian wheat and durum.
  maximize our returns and minimize the risks inherent                                                                                    offered under contract. We will be accepting more
  in the global marketplace. But for decades, farmers were             The CWB ran a successful marketing program through                 grain on subsequent contract series, based on progress
  not really in charge – we were passive participants.                 the Port of Churchill again this year. Despite very low            in our overall sales program.
  Obviously, we wanted direct input and control. We felt               carry-in stocks of wheat, we shipped 424 000 tonnes
  strongly about our right to directly participate in                  through this cost-effective corridor, slightly more                Wheat
  discussions that influence our livelihood.                           than average.                                                      Record world wheat production during the 2008-09
                                                                                                                                          growing season has pressured markets lower over the
                                On January 1, 1999,                    In addition, low ocean freight rates are reducing
                                                                                                                                          past six months. This downward price movement has
                                we officially gained that              costs of shipping from all ports (see article page 3).
                                                                                                                                          occurred despite the fact that ending stocks of wheat
                                control. Our presence at               This is something that no one anticipated this year.
                                                                                                                                          had reached historic lows at the end of the 2007-08
                                the board table means that                                                                                marketing year.
                                CWB policy direction is not            Overall, the 2008-09 western Canadian crop is above
                                something decided by                   average in quantity and quality. A cool start to the
                                                                                                                                          Exports from the Black Sea region and European Union
                                government officials.                  season gave way to above-normal temperatures in
                                                                                                                                          have been very aggressive since the completion of the
                                Government appointees                  August. Dry and warm conditions during the mid-
                                                                                                                                          harvest. With the southern hemisphere harvest nearing
                                still play a role in our shared        September to mid-October period allowed for a rapid
                                                                       completion to the harvest and helped preserve                                                     (continued on page 2)
                                                                       crop quality.
                                       (continued on page 2)
                                                                                                                                                             Inside this issue:
                                                                                                                                                             The Canadian dollar: a wild ride .. Page 3

                                                                                                                                                             Ocean freight market collapses .... Page 3
                                                                  RETURN UNDELIVERABLE CANADIAN ADDRESSES TO
                                                                  CWB 423 MAIN STREET                                                                        Ten years of farmer control .......... Page 4
                                                                  PO BOX 816 STN MAIN
                                                                  WINNIPEG MB R3C 2P5                                                                        Canadian wheat makes it good .... Page 7
                                                                  E-mail: questions@cwb.ca
   December 2008/January 2009                                                                Grain Matters                                                                                             1
                                                                                                                                                                                        Pm 40062423
    (continued from page 1)

     governance partnership, but farmers hold 10 of the                                           (continued from page 1)        premium to milling wheat. Domestic durum production
     15 seats on the board. Ultimately, we call the shots.                                                                       in many importing countries increased from last year,
                                                                                                 completion, we are now          slowing import demand. World durum production is
     Farmers’ questions and concerns drive the agenda,                                           seeing very aggressive          forecast to reach 38.7 MT, up 3.7 MT from the 2007-08
     as they should.                                                                             prices offered out of both      crop year.
                                                                                                 Argentina and Australia.
     Over the past 10 years, the agenda for our board                                            Export sales from the           The largest production increases have occurred in North
     of directors has been as varied as it has been full:                                        United States have been         America and Europe – combined production from these
     transportation, trade challenges and the implications                                       slowed by strong                regions is up by 4.5 MT. The Canadian crop is forecast
     of genetically modified wheat, to name but a few.                                           competition from other          to reach 5.5 MT, the largest crop since 2005-06. Durum
     I’ve enjoyed the opportunity to be a part of the             Ward Weisensel,                wheat producing nations.        quality is relatively good with the majority of production
     solutions. Where there’s been compromise or                  CWB, Chief Operating           Global growing conditions       falling into the top two grades.
     disagreement, the satisfaction for me has come               Officer                        have been very good
     from talking to fellow farmers – in particular, the                                                                       The larger size and higher quality of this year’s European
                                                                                                 during the year, which led
     farmer who ends the discussion with an appreciation                                                                       crop has slowed their import demand when compared
                                                                  to above average production in most of the major
     of the situation, a thank you and a friendly word of                                                                      with the past two years. North African demand is expected
                                                                  growing areas. Overall demand for wheat has increased
     encouragement.                                                                                                            to be slow during the first half of the marketing year, as
                                                                  with the U.S. Department of Agriculture projecting
                                                                                                                               countries use up domestic supplies. Demand and prices
     The first decade of farmer control has been one of           world trade at 125 MT, up from 115 MT last year, and
                                                                                                                               in the second half of the year will also be affected by the
     many initiatives. We have overseen a period of               ending stock levels of about 144 MT, which is similar
                                                                                                                               outlook for the 2009-10 crop. Reduced seeded area and
     enormous change. Under our watch, the first of               to 2005-06 levels.
                                                                                                                                            production is expected next year, which
     many new programs was introduced to create                   The uncertainty in the financial markets          Global growing          should provide some support to the market.
     flexibility in pricing, payments and delivery.               has also had an impact on wheat prices.           conditions have
     Today, we have a slate of Producer Payment Options.          The uncertain investment climate has              been very good           Barley
     On the malting barley side, we have CashPlus.                reduced the amount of speculative fund            during the year,         World barley production has increased
     For deliveries, we have GrainFlo.                            money flowing into grain futures markets.         which led to             by over 20 MT in 2008-09 to 153 MT.
     The farmer controlled board has also introduced              Wheat futures have lost between 33 and            above average            The increased production was primarily
     more accountability and transparency. One of our             40 per cent of their value since late             production in            in Europe and the Black Sea region, which
     first acts was to invite the federal auditor general to      August. Chicago corn futures have                 most of the              accounted for more than 12 MT of the total
     examine CWB operations and governance. Perfor-               dropped about 38 per cent over the same           major growing            increase from last year.
     mance benchmarking was another high priority,                time period.                                      areas.
                                                                                                                                             Canadian production is forecast to reach
     along with producer surveys, Farmer Forum account-           The U.S. export pace has been slower                                      11.8 MT, with western Canadian production
     ability meetings and regular farmer consultations.           than in 2007-08. This year, the U.S. has                       reaching 11.2 MT. The larger global production has
     Farmers have also been front and centre in the               sold three-quarters of their projected 27.2 MT export          pressured both feed and malting barley prices around the
     discussion about transportation reform. It was               program as of November 20. Last year at this time,             world. Black Sea and European exports of feed barley
     heartening to see how differences between industry           86 per cent of the U.S. export program had been sold.          have pushed international values to very low levels.
     groups normally in opposition to one another could           Western Canadian production of wheat was above
                                                                  average this year, with spring wheat production reaching       The improved quality of this year’s European barley crop
     be set aside to advocate in the interest of farmers.
                                                                  18 MT. Quality is above average as well, which will help in    has resulted in increased competition in the malting
     The first decade of farmer control at the CWB                the marketing of this year’s crop. The increased global        barley sector. Deteriorating conditions in the Australian
     has been marked by events at times fascinating,              production in 2008-09 is mostly comprised of lower             growing regions have provided some support for malting
     frustrating and, more often than not, both.                  quality wheat, although the supply of higher quality           barley prices, but supplies from Australia are still
     For me, farmer control continues to be about                 wheat is slightly above the 2007-08 level.                     expected to be larger than last year.
     doing the right thing – for farmers.
                                                                  Durum                                                          Demand for malting barley has been steady in the first
     The CWB is our CWB. Let’s celebrate a decade                                                                                half of the year. We have a solid sales program and are
                                                                  The durum market has followed the wheat market down
     of farmers working for farmers at the CWB.                                                                                  pursuing additional opportunities where demand exists.
                                                                  during the past months but remains at a historically high



    Western Canadian farmers elect CWB directors
     Western Canadian farmers have chosen their represen-         the first ever producer car unit train and a founding          crops farm at Kane, MB. Bill has a degree in agriculture
     tatives in five districts where CWB director elections       member of the West Central Road & Rail Ltd.                    and a post-graduate degree in soil science. He has
     were held last fall. The election results will see three     District 6 – Cam Goff (new director): Cam farms a              served as a director of Keystone Agricultural Producers,
     new members at the table when the board of directors         family-run operation of 5,000 acres near Hanley, SK            the Western Grains Research Foundation and the
     meets on January 26-28:                                      and grows malt barley, canola, spring and winter wheat,        Manitoba Farm Products Marketing Council. Bill has
                                                                  durum, oats, flax, peas, mustard, lentils and chickpeas.       been a CWB director since 2004.
     District 2 – Jeff Nielsen (new director): Jeff operates
     J.E. Nielsen Farms Inc., near Olds, AB, a 1,350-acre         He and his wife, Beverley, also operate an agricultural
                                                                                                                                 The new board of directors officially took office on
     grains and oilseed family farm. Jeff has previously been     supply business.
                                                                                                                                 December 31, 2008. Biographies of all board members
     elected to the boards of directors of United Grain
                                                                  District 8 – Rod Flaman (incumbent): Rod farms with            are available at www.cwb.ca. (Click the About us tab,
     Growers and Agricore United. Jeff served as president
                                                                  his wife Jeanne just south of the Qu’Appelle Valley,           and then in the left-hand menu, click Our people.)
     of the Western Barley Growers Association from
                                                                  near Edenwold, SK. They produce a variety of field and
     2006-08.                                                                                                                    Producers elect 10 representatives to the 15-member
                                                                  horticultural crops, including certified organic grain.
                                                                  Rod has been a CWB director since 2000.                        board, which oversees the organization and sets its
     District 4 – Bill Woods (new director): Bill was born
                                                                                                                                 policies and direction. Directors are elected for four-year
     and raised on the family farm near Eston, SK, where he
                                                                  District 10 – Bill Toews (incumbent): Bill and his wife        terms, with elections alternating between odd- and
     and his wife Cindy still reside. He was a key organizer of
                                                                  Barbara operate Harambee Farms, a grain and special            even-numbered districts every two years.


2                                                                                     Grain Matters                                          December 2008/January 2009
 The Canadian dollar: a wild ride                                                                                               Transportation savings
  The same volatility that farmers have been witnessing         However, because investors and business managers are            Western Canadian farmers realized
  in the commodity markets has been playing out in the          willing to take less risk, there is less investment in          transportation savings of $30.6 million
  currency markets. In 2007, the Loonie rose above the          commodity futures and less cash tied up in inventories.
  U.S. dollar for the first time in more than 30 years. The     This, in turn, has resulted in lower commodity prices,          through the CWB’s strategic supply chain
  difference between its high and its low in the 12             which offset any gains from the lower dollar.                   arrangements in 2007-08.
  months from November 2007 was more than 30 per
  cent. In early December 2008, the Canadian dollar was         What does the future hold for the Canadian dollar?              “Farmers are benefitting because of the volume of
  15 per cent weaker than where it started the year.                                                                             business the CWB does and the strategic position-
                                                                “Falling commodity prices have been one of the factors
                                                                                                                                 ing we take on their behalf in the supply chain,”
  “The Canadian dollar is now reflecting the pressure of         leading to a weaker Canadian dollar. To the extent that
                                                                                                                                 says Rick Steinke, CWB director of logistics.
   the global credit crunch,” says Kevin Kolisniak, the          you can forecast commodity prices in the future, you
                                                                                                                                “Because of the volume we market on behalf of
   CWB’s manager of capital markets.                             could get a sense of where the Canadian dollar might be
                                                                                                                                 producers, we can forge arrangements with industry
                                                                 going,” says Kolisniak.
                                                                                                                                 players throughout the transportation system.
  With less credit available, global investors are willing to
  accept less risk so they have been pulling their cash         “But you have to balance that off against other factors          That means more money in farmers’ pockets.”
  back to their home countries, or investing in very safe        such as the strong fiscal situation that Canada is in.
                                                                 Although this may weaken over the next couple of years,        The savings are directly returned to farmers through
  government-issued debt. As a result, the countries                                                                            the pool accounts. The CWB is able to leverage the
  with the largest economies and most stable govern-             it should still be stronger than other governments around
                                                                 the world.                                                     high volume of grain being moved to capture volume
  ments, the U.S. and Japan, have seen their currencies
                                                                                                                                savings in the supply chain. The savings come from
  strengthen.
                                                                “It’s extremely difficult to forecast accurately, because       tendering and other arrangements with suppliers.
  Steep drops in the value of the Canadian dollar may            you don’t know which factors are going to carry the most
                                                                 weight in the market. Economic fundamentals seem to            The $30.6 million in savings exceeds the CWB’s
  sound alarming, says Kolisniak, but the weaker
                                                                 get thrown out the window at times like this. This is          projection of savings made at the start of the crop
  Canadian dollar actually benefits farmers.
                                                                 when we see most clearly the advantages of our hedging         year. The previous year saw $35.1 million in savings
  “Most of our grain is priced in U.S. dollars, so a weaker      strategies, which are designed to reduce volatility in pool    on higher volumes, while savings of $22.9 million
   Canadian dollar means that farmers will receive more          returns while taking advantage of opportunities when           were realised in 2005-06 and $26.6 million in
   Canadian dollars for their grain,” he says.                   they arise.”                                                   2004-05.




Ocean freight market collapses                                                                                                   CWB expands online options
                                                                                                                                 Western Canadian wheat and barley farmers can take
The ocean freight market has seen unprecedented                  commodities is expected to contract, most notably iron          advantage of an array of online business opportunities
                                                                 ore, as steelmakers cut back production in an effort to         for 2008-09 thanks to the CWB’s supply chain
volatility over the past eighteen months, culminat-
                                                                 shore up prices. The availability of credit has tightened as    transformation (SCT) project.
ing with a spectacular crash in the fall of 2008.                well, making it harder for some buyers to finance
                                                                 purchases of commodities of all sorts – approximately           Launched three years ago, the project was designed
“This collapse means ocean freight costs a fraction of                                                                           to streamline and integrate all of the CWB’s business
                                                                 90 per cent of global trade is financed by credit.
 what it did – and that’s good news for farmers,” says                                                                           processes. The overall goal: enhanced service to
 David Przednowek, CWB senior manager of ocean freight          Western Canadian grain is usually at a freight cost              farmers, their industry partners and customers.
 and terminal operations. “All other factors staying the        disadvantage to many parts of the world because of               For farmers, the SCT project has meant the creation of
 same, cheaper freight saves money, and it makes                distance. For example, it takes six or seven days to sail        e-Services and the opportunity to view details of their
 western Canadian wheat more competitive in certain             with a cargo of feed barley from the Black Sea to Saudi          CWB transactions online and to conduct their CWB
 markets.”                                                      Arabia, compared to 35 days from Prince Rupert. So, as           business online.
                                                                freight rates increase, our freight disadvantage increases.
The Baltic Dry Index (BDI) tracks the strength of the spot
                                                                As rates have declined dramatically, our freight disadvan-       Farmers can now view online:
dry bulk shipping market. It is an index of 26 dry bulk
                                                                tage versus Australia to most destinations in southeast          •	 Payment	details,	including	calculations	
trade routes rated by shipbrokers on a daily basis. Grain
                                                                Asia has improved, as has our freight disadvantage on            •	 Deliveries	applied	against	CWB	delivery	
and oilseed shipping by vessel represents only 10 per
                                                                durum trade from the St. Lawrence versus southern                   and pricing contracts
cent of global dry bulk trade. Iron ore and coal account for
                                                                European origins into North Africa.                              •	 Cash	ticket	details
50 to 55 per cent.
                                                                To illustrate, the cost of shipping 50 000 tonnes of grain       •	 Cash	advance	balances	and	account	details,	
By November 2007, the BDI had climbed to 11,000 points,                                                                             including repayments
                                                                from the U.S. Gulf to Japan was about $130 US per tonne
but by late February 2008 it had been cut in half, as a
                                                                in June 2008, but only $25 to $30 US per tonne in late           Business that farmers can conduct online:
pricing standoff between the world’s largest iron ore
                                                                November. Shipping that same cargo from the West                 •	 Permit	renewal
exporters and Chinese importers slowed demand and
                                                                Coast to Japan in June 2008 cost around $75 US per
resulted in cancellations of purchases. The volatility                                                                           •	 Sign-up	of	pricing	and	delivery	contracts
                                                                tonne versus less than $20 US per tonne in late November.
continued, and by mid-May 2008, the BDI set a new                                                                                •	 Sign-up	of	Producer	Payment	Options	(PPOs),	
                                                                The freight spread between the PNW and the U.S. Gulf
record, reaching 11,793 points as demand strengthened                                                                               including Basis Price Contracts (BPCs), Fixed Price
                                                                has narrowed from $55 US to around $10 US.
and a flurry of iron ore cargoes were fixed as importers                                                                            Contracts (FPCs), FlexPro, GrainFlo and Early Payment
caught up on purchases.                                         “No one knows how long rates will remain at these                   Option (EPO) contracts
                                                                 levels, but they are unlikely to increase until global          •	 Entry	of	targets	to	automatically	price	an	existing	
Since May 2008, the BDI has fallen by almost 95 per cent                                                                            contract or sign up a new one if a target is hit
                                                                 demand for commodities – particularly iron ore –
to under 1,000 points, and the shipping industry and
                                                                 increases significantly,” Przednowek says.                      It’s easy to sign up for CWB e-Services. Visit www.cwb.ca .
the global economy are in crisis. Demand for many bulk
                                                                                                                                 Click the e-Services tab, and then click Register today.



 December 2008/January 2009                                                               Grain Matters                                                                                        3
    Celebrating 10                                                                                                          YEARS
    The family farm goes world class
    The traditional gift for a 10th wedding anniversary            and yellow peas. Their farm is their business.
    is tin or aluminum – symbols of flexibility and durability.
    While those symbols apply to the 10th anniversary of           An important part of their business is the CWB.
    farmer control, the real life experiences of the producers     The MacDonalds control the CWB – along with 75,000
    the CWB exists to represent – farmers like Trina and           other western Canadian grain farmers. By electing the
    Dan MacDonald from Plenty, SK – are what bring this            majority of its board of directors, producers ensure that
    milestone to life.                                             their voices are directly heard in an organization whose
                                                                   mandate is to maximize their returns.
    Old macDonald had a farm. Dan and Trina MacDonald                                                                             mation came with the introduction of new, flexible
                                                                   Consolidation of huge agricultural companies, technological    producer pricing options and payment programs.
    have an international grain marketing organization.
                                                                   change, transportation challenges, innovations in farming
    This year marks the 10th anniversary of the CWB becoming       and the ever-competitive global marketplace place many        “Farmer control isn’t really something that people talk
    a farmer-controlled organization. While the CWB has            demands on Dan and Trina’s business. Through the               about, it’s something that’s more in the back of their
    always been about farmers, it wasn’t until 1999 that it        CWB, they take advantage of world-class resources in           minds,” he says, noting that the pace of change has
    became an entity directed by farmers like the MacDonalds.      sales, marketing, product development, logistics,              been more evolutionary than revolutionary.
                                                                   accounting and finance.
    Dan is the third generation of the MacDonalds to farm                                                                         Other changes introduced over the past 10 years
    this land. He and his wife Trina grow wheat, durum,            Farmer control has led to significant changes in the way       are highlighted on page 5. That pace of change
    malting barley, canola, canary seed, red lentils               the CWB operates. For Dan, awareness of this transfor-         is continuing – and farmers are leading the way.



    Taking the reins – Bill C-4 ushered in new era of farmer control
    Until the end of 1998, the CWB was a government               •	 Making	the	CWB	more	democratic	and	accountable	to	               empowered the new board of directors to meet the
    institution overseen by federally appointed commissioners        producers through a board of directors, the majority             needs of diverse farm operations, most notably the
    who acted collectively as its chief executive officer.           directly elected by producers. A 15-member board                 ability to offer farmers more options for pricing and
    For most of that time, an advisory committee brought             assumed responsibility to “direct and manage the                 payment outside of the pool accounts.
    producers’ views to their marketing agency.                      business and affairs of the corporation.” In addition to    •	 Giving	producers	control	over	future	changes	to	the	
                                                                     10 farmer-elected members, five federally appointed            CWB’s marketing mandate. The Canadian Wheat
    A new era began with the enactment of Bill C-4.
                                                                     directors sit at the board table, including the president      Board Act contains the principle that the minister for
    Responding to farmer pressure for the CWB to be more
                                                                     and CEO. Under this new “shared governance”                    the CWB must consult the board of directors and
    accountable, the federal government in 1998 enacted
                                                                     structure, the CWB is now directly accountable to              conduct a vote among producers before any proposal
    the most significant change in the history of the CWB,
                                                                     the farmers it serves.                                         can go before Parliament to add or remove any grain
    giving farmers control over their marketing agency.
                                                                  •	 Giving	the	CWB	more	flexibility	with	regards	to	grain	         from the CWB’s marketing mandate.
    The changes fell into three broad categories:                    pricing and payment programs for producers. Bill C-4




    Incentives offered through Identity Preserved Contract Program
     The Identity Preserved Contract Program (IPCP) offers         Two market development IPCPs are available:                    •	 Acceptance	levels	driven	by	market	opportunities
     farmers incentives for growing specific varieties.                                                                           •	 Contact Viterra for more information
                                                                   Canada Western Hard White Spring
     In the 2009-10 program, depending on the variety,             – Snowstar                                                     Canada Western Hard White Spring
     incentives can include contract premiums, storage             •	 $15-per-tonne	shared	premium	from	the	CWB	                  – Snowbird, Kanata
     payments and guaranteed delivery.                                and Richardson Pioneer                                      •	 Grade Nos. 1 and 2 only
                                                                   •	 Storage	payment	in	effect	after	February	1,	2010            •	 Acceptance	levels	driven	by	market	opportunities
     Market development IPCPs are used to develop markets                                                                         •	 Contact Paterson Global Foods for more information
                                                                   •	 Guaranteed	acceptance	and	delivery	on	eligible	grades	
     for promising new varieties, and commercial IPCPs are
                                                                   •	 Contact	Richardson	Pioneer	for	more	information
     used to supply customers who have very specific milling                                                                      Canada Western Red Winter Select
     or product needs.                                             Extra Strong Canada Western Amber Durum                        – AC Bellatrix, AC Readymade, AC Tempest,
                                                                   – AC Commander                                                 CDC Buteo, CDC Osprey, mcClintock,
    “Farmers who participate in an IPCP program benefit from
                                                                   •	 Guaranteed acceptance and delivery on eligible grades       Norstar, Radiant
     the incentives, but they are also helping to develop new
                                                                   •	 This	is	the	last	year	that	AC	Commander	will	be	            •	 A	minimum	of	$10	per	tonne	premium	for	Select	
     markets and new uses for western Canadian wheat,”                                                                               signed up under a Guaranteed Delivery
                                                                      included in a market-development IPCP
     said Andrea Hilderman, manager of identity preserved                                                                            Contract (GDC)
                                                                   •	 Contact	Viterra	for	more information
     and food barley programs.                                                                                                    • Minimum 11 per cent protein
                                                                   Commercial IPCP programs include:                              •	 Sourced	only	through	GDCs,	which	will	be	
     Completion of delivery contracts for most IPCP programs       Canada Western Amber Durum                                        100 per cent accepted
     is required by October 31, 2009. Additional information       – AC Navigator                                                 •	 Contact	the	CWB	or	your	grain	company	
     can be found online at www.cwb.ca.                            •	 $2.50-per-tonne	premium on grade Nos. 1 and 2                  for more information


4                                                                                      Grain Matters                                          December 2008/January 2009
of farmer control
 A decade of change
 1999: The CWB’s governance passes into the hands of                    in performance measurement, governance, strategic                  farmers, with commercial businesses, partnerships
       farmers. Ten farmers join the newly created board                planning and information technology.                               and joint ventures to generate additional investment
       of directors after being democratically elected by                                                                                  value for farmers.
                                                                  2002: The first long-term strategic plan is approved by the
       their peers to help steer the organization.
                                                                        CWB board of directors.                                      2006: Two new value-added incentive programs are launched.
 1999: The board of directors invites Canada’s auditor general                                                                             Field to Plate allows niche-market processors to
                                                                  2002: Corporate performance is first measured in four areas              source grain directly from farmers. A revised New
       to review the CWB’s operations and governance.
                                                                       – farmer service, customer service, strengthening the
                                                                                                                                           Generation Co-operative program gives participating
 1999: A new policy for New Generation Co-operatives                    CWB’s mandate and corporate performance – and
                                                                                                                                           farmers access to North American sales prices for
       is approved, enabling all Prairie farmers to participate         relayed to farmers via the annual report.
                                                                                                                                           grain delivered to a new generation co-operative.
       in value-added processing of their grain.
                                                                  2003: Precise, quantifiable corporate performance measures         2006: Corporate performance results are reported to
 1999: Consultations begin with farmers to discuss plans for            are developed by the board of directors
                                                                                                                                           farmers via the 2005-06 annual report. The reported
       new payment options to provide greater pricing                   to annually assess CWB performance. The measures
                                                                                                                                           performance benchmarks include satisfaction indices
       flexibility	and	improved	cash	flow.                              continue to evolve over the next few years.
                                                                                                                                           for farmers, customers and employees, and opera-
 2000: The first Producer Payment Options (PPOs) are              2003: The Pre-delivery Top-up program is introduced,                     tional effectiveness indicators.
       introduced. For the first time, farmers can choose their         providing additional cash for farmers on top of their
                                                                                                                                     2007: The Delivery Exchange Contract is launched, under
       own wheat price outside of the CWB pool through the              cash advances.
                                                                                                                                           which farmers exercise greater control over the timing
       forerunner to the Fixed Price and Basis Price contracts.                                                                            of their deliveries.
                                                                  2004: The feed barley pool is split into two periods to give
 2000: CWB elected directors initiate annual accountability             better price signals to farmers.
                                                                                                                                     2007: An innovative new weather network is launched by
       meetings with farmers across the Prairies.                                                                                          the CWB and WeatherBug, designed to provide
                                                                  2005: An annual conference with farmer alumni of CWB
 2001: The board of directors initiates a process to determine          Combine-to-Customer courses is initiated as a means                farmers with better information for farm management.
       the value and performance of the single desk for wheat           of directly engaging producers in discussions about the
                                                                                                                                     2008: Online e-Service offerings for farmers are expanded,
       producers. Dr. Richard Gray, professor of agricultural           CWB’s long-term direction.
                                                                                                                                           featuring interactive management of permit books,
       economics at the University of Saskatchewan, is                                                                                     PPOs, delivery contracts and cash advances.
                                                                  2005: Direct links between corporate performance measures
       engaged to develop a methodology. Calculations are
                                                                        and employee performance and remuneration are
       done on two benchmarks for the 2000-01 wheat pool.                                                                            2008: The CashPlus program is introduced for malting barley,
                                                                        implemented.
                                                                                                                                           marking a fundamental change. It offers farmers a
 2001: The Early Payment Option is introduced, offering                                                                                    cash-price contract while retaining the benefits
                                                                  2005: The Value-added Incentive Program is created to
       farmers access to a greater percentage of the value                                                                                 of the single desk.
                                                                        promote the direct delivery of wheat, durum and
       of their grain at delivery.
                                                                        malting barley to mills and malting plants in Western
                                                                                                                                     2008: FlexPro, a new, year-round wheat pricing option,
 2002: The auditor general’s report is released, showing the            Canada.
                                                                                                                                           is introduced.
       financial accounting and reporting systems of the
                                                                  2006: A new future vision for the CWB is unveiled by the           2008:	GrainFlo	is	introduced	to	give	farmers	more	flexibility	
       CWB are well-managed, economical and efficient.
                                                                        board of directors. The vision outlines a transformation
       The CWB commits to an action plan for improvements                                                                                  and control over the timing of their deliveries.
                                                                        into a powerful global player, fully controlled by Prairie




  PPOs make cents                                                                                      making the pricing options easier
  The CWB is rolling out new initiatives to help make its         offering free interactive seminars. The seminars are               and are always ready to answer your questions one-on-
  Producer Payment Options (PPOs) simpler to understand           available at beginner and intermediate levels, and are             one or arrange a group workshop. To contact the FBR in
  and easier to use.                                              provided over the Internet and telephone. These                    your area, go to www.cwb.ca, click the Farmers tab, and
                                                                  interactive sessions are open to both farmers and                  then, from the left-hand menu, select Farm business
  The PPO Updater is a new weekly electronic newsletter           elevator staff.                                                    representatives.
  that is e-mailed to interested farmers every Friday. It
  provides a brief futures market snapshot and pertinent          Visit www.cwb.ca/webinars to register or for more                  For greater convenience, most PPO transactions can now
  program information. The Updater focuses on events              information.                                                       be conducted online through CWB e-Services, including
  from the past week that may affect your pricing                                                                                    locking in prices or setting target price levels. Farmers
                                                                  “We talk about the basis, we talk about the adjustment             can now sign up for e-Services online or by phone using
  contracts, as well as additional insights into markets and
                                                                   factor, force majeure, we go through all those things,”           their PIN and Producer ID.
  marketing options.
                                                                   says Mel Pawlyk, manager of CWB Producer Payment
  To sign up, go to www.cwb.ca, and click E-mail updates           Options. “We describe the benefits of the programs,               “We’re constantly looking for ways to serve farmers
  at the top of the page. There is no charge to subscribe.         but also the risks – because when you’re using these               better,” Pawlyk says. “When producers wanted options
                                                                   programs, you’ve got to know both sides.”                          besides pooling, we introduced the PPOs in 2001 and
  For farmers who are deciding whether to use the PPOs                                                                                have been refining them every year. Now that there’s
  for the first time – or those who looking for more              The CWB’s Farm Business Representatives (FBRs) are                  good awareness that these options exist, farmers want
  information on the various options – the CWB is also            another great source of information on pricing options              more help understanding how they work.”


 December 2008/January 2009                                                                 Grain Matters                                                                                             5
                          In the opper
                                h                                                       MEET    YOUR CWB FARM BUSINESS REP
    In the Hopper is a new feature that’s designed to introduce you to your Farm Business Representative (FBR). Sixteen FBRs are in the field
    across the across the Prairies. Your local FBR can help you with any questions you have about the CWB and its programs.



                                    CRAIG DOUGLAS                                                                             VIC SCHAPANSKY
                                     Director, Farmer Service                                                                  Home base: Saskatoon, SK
                                     Home base: Saskatoon, SK
                                                                                                                              The region I cover:
                                    The region I cover:                                                                       Region 11, which covers the area bordered
                                    As director, I am lucky enough to be able to                                              by Shellbrook, Beechy, Elrose, Davidson
                                    meet, mingle with and most importantly serve                                              and Watrous.
                                    farmers across a wide swath of the Prairies
                                    from Manitoba to eastern Saskatchewan.                                                    A little bit about my roots in farming:
                                                                                                                               I was born and raised on a mixed farm (dairy
                                        A little bit about my roots in farming:
                                                                                            and grain) in the Swift Current area. I spent my summers on horseback herding
    My family’s roots in farming go back two generations. My grandparents
                                                                                            cattle – this was before the days of quads! After our family farm was sold,
    homesteaded on a farm in Manitoba between Franklin and Minnedosa in the
                                                                                            I started my career in the grain industry. I worked for UGG for 19 years, starting
    early 1900s, and I spent a lot of time on the farm when I was growing up. As an
                                                                                            as an elevator manager in Abernethy before moving to Moose Jaw. I was later
    adult, I was part of a mixed farming operation in southern Saskatchewan, near
                                                                                            promoted to district manager of the Wilkie region before joining the CWB.
    Lumsden. I later worked as a policy analyst with the Western Canadian Wheat
    Growers in Regina, and as general manager for Keystone Agricultural Producers           Where I am and what I am doing:
    (KAP) in Winnipeg. I then experienced a bit of wanderlust: I went to South
                                                                                            I have a lot of things on tap during January. I’m organizing Durum Customer
    Africa to teach computer skills for two years, before returning to Canada to
                                                                                            Connection meetings on January 28 in my home region of Elrose and January 29
    work with farmers at the CWB.
                                                                                            in Medicine Hat. We have a great line-up for these meetings, including a guest
    Where I am and what I am doing:                                                         speaker from Primo Foods who will talk about their recent branding initiative
    During the winter months, I’m busy meeting and talking with farmers at trade            with the CWB. Another important event I will be attending is the Crop Production
    shows, forums and PPO meetings. You will almost always be able to meet me               Show in Saskatoon (January 12-15). I am also a volunteer on the organizing
    and your local FBR at these meetings. I look forward to talking to you at Crop          committee for this event. Please stop by and say hello.
    Production show in Saskatoon January 12-15. The following week, I will be at
    Manitoba Ag Days in Brandon, where you can meet our two Manitoba FBRs –                 What I want to hear from you:
    Patrick Elazar and Bert Dupasquier. The winter months give me an opportunity            I am always wondering how the CWB’s programs are working for you.
    to learn about the issues that matter to you. At the shows and meetings, we             What do you think of our new delivery contract, GrainFlo? Your feedback helps
    have the opportunity for longer chats because you’re not seeding, spraying or           shape the future of the CWB’s programs, so don’t hold back. I also want to hear
    harvesting.                                                                             from people who are interested in our Combine to Customer courses. If you
                                                                                            want to find out what they are all about, give me a call.
    What I want to hear from you:
     I want to hear what the CWB is doing right and what we can do better. My job           my favourite part about being FBR:
    is about service to farmers and I want farmers to see the CWB as a valuable             It may be a cliché, but it’s really the people that make this job worthwhile.
    resource to their business.                                                             I like talking to farmers and being part of the grain industry. It’s satisfying to me
                                                                                            to ensure farmers have the best programming in place for their agri-business.
    my favourite part about being on the Farmer Service team:
    One of the things I value about my job is the contact I have with farmers and the       my new year’s resolution:
    opportunity to work in rural Western Canada. I am an avid photographer, and
                                                                                            Like everybody else, I want to lose some weight. But the other thing I wouldn’t
    sometimes this hobby can help me in my work. When I am on a farm taking
                                                                                            mind doing is learning a little bit more about the cutting edge technology that is
    photos, many of you have opened up about what’s important to you and your
                                                                                            in some of this new farm machinery. The last time I drove a tractor, I had a bit
    business. I really value the opportunity to have those talks and have walked
                                                                                            of trouble driving it straight. With $900 a tonne nitrogen, that could be costly.
    away with a lot of good ideas that ended up on CWB management’s “To Do” list.
                                                                                            Good thing there is GPS.
    my New Year’s resolution:
                                                                                            my contact information:
    I don’t really do New Year’s resolutions. When I want to change something
    I don’t wait until New Year’s to make it happen. I do it now.                           Phone: (306) 975-6938    Cell: (306) 221-3989
                                                                                            Fax: (306) 975-6937
    my contact information:                                                                 E-mail: vic_schapansky@cwb.ca
    Phone: (306) 975-6999     Cell: (306) 227-2169
    Fax: (306) 975-6966
    E-mail: craig_douglas@cwb.ca




6                                                                                    Grain Matters                                        December 2008/January 2009
 Canadian wheat makes it good
Promoting prairie wheat at home and around the world
Prairie wheat and durum are becoming the centre of             Makes it Good,” says David Burrows, CWB vice president
attention in such far flung locales as Montreal and Tokyo.     of communications and government relations.

In Montreal, one million people each day are seeing            Closer to home, the CWB and Primo are planning a major
French-language billboards with the Canadian Wheat             in-store promotion across Canada with a national grocery
Makes it Good logo. The billboards are part of a national      chain. In addition, the partnership has been prominently
co-branding campaign with Primo Pasta. In the first leg        displayed on the Web site of CBC’s Steven and Chris
of the campaign this fall, billboards were placed in 42        lifestyle show. The Canadian Wheat Makes it Good logo
locations throughout Montreal. The second leg of the           continues to be prominently displayed in Primo’s
campaign gets underway in mid-January.                         GrainWise pasta commercials.

On the other side of the world in Tokyo, the CWB is            Primo and the CWB officially launched their branding
promoting Canadian wheat and barley with large banners         partnership in October to promote the high-quality of
that proclaim the “good taste, safety and high quality” of     western Canadian durum.
western Canadian wheat and barley. The CWB’s Tokyo
office is also partnering with the Tsuji Cooking Academy       Almost half of Canadians (47 per cent) are unaware that
to promote the wholesome goodness of Prairie wheat.            most pasta and bread in Canada is made with Canadian
                                                               wheat, according to a 2008 industry survey. Yet use of
“In whatever language you say it – English, French or          Canadian wheat was ranked as important by 89 per cent
 Japanese – the message is clear: Canadian Wheat               of respondents.

                                                               At the October kickoff to the CWB and Primo campaign,
                                                               CWB president and CEO Ian White noted that Canada is
                                                               the main exporter of durum in the world.

                                                                “There are 10,000 Prairie durum farmers who dominate
                                                               the world market, growing more high-quality durum
                                                               wheat than anywhere on earth,” White said. “We want
                                                               Canadian consumers to value this wheat as much as our
                                                               export customers do – including those in Italy.”




Canadian kids love their spaghetti farmers
 Kids from Halifax to B.C. participated in the CWB’s World Pasta Day contest.                       love pasta and have great respect for the farmers who grow their food,” said David
                                                                                                    Burrows, vice president of communications and government relations.
In honour of Western Canada’s durum farmers, we asked Canadian kids to draw us
a picture of a spaghetti farmer or tell us what makes their pasta perfect. More than                Many spaghetti farmers were drawn to look like they were made of spaghetti, but one
100 kids responded from seven provinces. The majority of responses came from                        entry noted that “spaghetti farmers are everyday heroes who look like you and me.”
right here on the Prairies.                                                                         Several children wrote short essays to describe their favourite pasta. One entry said,
                                                                                                   “No sauces or creams for me. My spaghetti is perfect the way it is. I’m spaghetti’s No. 1 fan!”
 “There were so many great entries. What was clear in them all was that Canadian kids
                                                                                                    Nine-year-old Lucien Stratton of Winnipeg was the grand prize winner of a Wii system
                                                                                                    and Wii Fit Balance Board for his image of a spaghetti farmer surrounded by a field
                                                                                                    of pasta. Stratton glued real pasta into his fields, incorporating 10 shapes and types
                                                                                                    of actual pasta into his multimedia image.

                                                                                                    More artwork is posted at the CWB’s consumer Web site,
                                                                                                    www.prairiewheat.ca.




                                                                                                                                                                rah Kidd
                                                                                                                                                   Runner up: Sa
                                                             Grand prize winner: Lucien Stratton


December 2008/January 2009                                                                   Grain Matters                                                                                           7
Questions farmers are asking
    What 2009-10 pricing options are available?                     I have heard there is a new policy on pool year              Elevator staff can make this arrangement for you, or you
    Sign-up for December futures under the 2009-10 Basis            transfers – what do I need to know?                          can call the CWB at 1-800-275-4292 or contact your
    Price Contract (BPC) has been available since September 2,      The CWB recently introduced changes to its guidelines        local Farm Business Representative with any questions.
    2008. The December basis will be available for sign-up or       regarding grain switching or pool-year transfers (settling
    to lock in existing contracts beginning February 23, 2009.      old crop deliveries in the new crop year).                   Why have I been selected for a durum bin audit?
    Additional futures and basis months will be offered as                                                                       Farmers are randomly selected for durum bin audits.
                                                                    On wheat and durum, there will be a per-tonne fee and
    market liquidity allows.                                                                                                     This relatively new process came about after extensive
                                                                    an advance notice requirement for farmers who deliver in
                                                                                                                                 consultations with durum farmers, who specifically
                                                                    the current crop year and then choose the following
    I have good quality malt barley – why isn’t more                                                                             requested the CWB implement a process to ensure
                                                                    year’s pool return.
    of my crop being selected?                                                                                                   the integrity of the durum delivery contracting system.
    Western Canadian farmers have enjoyed a high-quality            Switching grain from one year to the next creates
                                                                                                                                 Third-party audits are carried out by crop insurance
    barley crop this year. However, other regions of the world      uncertainty regarding pool size and affects the pool
                                                                                                                                 agents who will make an appointment to visit your farm
    have also enjoyed bumper barley crops and the general           returns of both the old and new crop year because CWB
                                                                                                                                 at a time that is mutually convenient. When they visit
    market down-turn has many buyers waiting on the sidelines.      sales must be re-allocated. The program fee will offset
                                                                                                                                 your farm they will inspect your bins to verify that the
                                                                    these impacts and will be regularly updated to reflect
    The size of the worldwide barley crop is expected to                                                                         quantity you have contracted through your Series A
                                                                    changes in the Pool Return Outlook (PRO) and market
    reach about 145.8 million tonnes (MT) this year, up from                                                                     contract with the CWB matches your on-farm stocks.
                                                                    conditions. Farmers who wish to price their 2008-09
    131.3 MT last year. Western Europe had an excellent             deliveries of wheat or durum into the 2009-10 pool return    Only producers who fail a bin audit are responsible for
    quality crop, which resulted in a 1.5 MT exportable             must advise the CWB between February and June 2009.          the audit costs. Each bin audit costs about $300. Other
    surplus of malting barley. To put this in perspective, the                                                                   costs such as liquidated damages of $6 per tonne and/or
    total world malting barley trade is expected to be no           Meanwhile, deliveries of malting barley for the 2008-09
                                                                                                                                 in some cases contract cancellation may be applied due
    more than 4.2 MT.                                               crop year must be settled in the 2008-09 pool. Cost and
                                                                                                                                 to a failed audit.
                                                                    sign-up details will be available in February when the
    While supply is strong, demand is uncertain in the face         new crop PRO is released.                                    Audits start in January and run until the end of March 2009.
    of international economic downturn. The result is a very                                                                     Similar audits are also done for the federal government’s
    competitive market. A positive recent development for           Will I be assessed liquidated damages on my                  cash advance program.
    demand has been the quality deterioration of the                GrainFlo contract if I don’t deliver the quantity
    Australian crop due to rains. While we are now hopeful          and quality that I contracted?                               How can I find out the tariff rates that different
    for increased market share in markets such as China,            For delivery period one, if your delivered quantity and      elevators charge?
    farmers should be cautious about holding on to their            quality did not match your GrainFlo contract, you would      The Canadian Grain Commission (CGC) publishes
    unselected barley in the hopes of getting it selected,          be subject to a $6 per tonne rate for liquidated damages     the tariffs charged by primary elevators for elevation,
    particularly if it is of less than excellent quality, and       at the end of the delivery period (December 31, 2008).       storage, cleaning and drying. Rates are published at
    should be wary of missing good feed marketing opportu-          Liquidated damages rates will be available on our            www.grainscanada.gc.ca for wheat, durum, barley
    nities over the winter.                                         Web site at www.cwb.ca before the start of each              and other crops.
                                                                    subsequent GrainFlo delivery period.
    The CWB continues to pursue all malting barley                                                                               It’s essential to consider all the tariffs when making
    sales opportunities that are a decent premium                   To avoid liquidated damages, you may transfer your           a comparison. For example, comparing only tariffs for
    to feed barley. The fact remains that total selectable          GrainFlo contract to another producer who has the            elevation does not show where you will get the best
    barley exceeds demand.                                          quantity and quality specified in your contract.             overall deal. Company A may post a higher rate for
                                                                                                                                 elevation than Company B, but Company B may have
                                                                                                                                 higher storage, cleaning and drying rates, making

          GrainWorld 2009 to examine economic crisis
                                                                                                                                 Company A less expensive overall.

                                                                                                                                 Charges, discounts, premiums and other terms can
          Make the most of upcoming opportunities and               GrainWorld brings the grains, oilseeds and livestock         vary widely from company to company. It’s important
          learn about upcoming trends at GrainWorld 2009,           industries together with farmers, academics and              to your business to compare all terms and rates.
          Canada’s leading annual grain-industry conference.        government policymakers. In addition to the
                                                                    economic crisis, panellists and speakers will discuss        The published tariffs are the maximum rate that
         A major focus of this year’s conference, which runs        the high cost of farm inputs and provide an in-depth         a company applies; companies have the discretion
         Feb. 22-24, will be the global economic meltdown.          look at the Canadian economy. The conference also            to charge less. To see all the primary elevator tariffs,
                                                                    provides detailed outlooks on wheat, barley, oilseeds,       1. Go to www.grainscanada.gc.ca
         “It’s in the news everyday, and it’s affecting virtually
                                                                    pulse and special crops, beef and pork.                      2. In the left-hand menu, under Information sources,
          every country and every sector,” says GrainWorld
          chairperson Bruce Burnett.                                                                                                click Statistics.
                                                                    GrainWorld takes place at the Fairmont Hotel in
                                                                                                                                 3. When a new page opens, click the
                                                                    Winnipeg. Register online at www.cwb.ca/grainworld.
         “We’ll be getting to the bottom of what it means for                                                                       Tariff Summaries link.
          agriculture – how is the crisis affecting farmers and     Questions?                                                   4. Click Licensed Primary Elevator Tariffs.
          the grain industry.”                                      Send an e-mail to caroline_wiley@cwb.ca.                     5. Click the link for the most recent date.


                                      Grain matters is a bi-monthly publication distributed free-of-charge to Prairie farmers.
                                          (Also available online at www.cwb.ca. Disponible en français à www.cwb.ca)
                                                    If you have questions or comments, please submit them to:
                          Grain matters, c/o Corporate Communications, CWB, P.O. Box 816, Station main, Winnipeg, manitoba R3C 2P5
                                             Phone: 1-800-275-4292 Fax: (204) 983-4678 E-mail: questions@cwb.ca

8                                                                                       Grain Matters                                         December 2008/January 2009

				
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