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2009
CashPlus concludes its first year with additional payment
December 11, 2009
Winnipeg – Participants in the CWB's 2008-09 CashPlus program for malting barley will soon receive the first additional payment from the program after its first full year of operation.
A total of 1,236 Prairie farmers who sold malting barley through the program can expect to receive an additional payment of $12.89 per tonne in late December. This payment represents the spread between the upfront payment farmers agreed to when their contracts were signed and the actual sales revenue achieved by the CWB through this program, minus costs of $6.26 per tonne. Costs include administrative expenses (including risk management) and country inventory storage and financing.
Total CashPlus returns achieved from all markets throughout the crop year averaged $19.15 per tonne higher than the total amount paid to farmers in guaranteed, upfront prices.
"Many farmers have appreciated the opportunity to secure a guaranteed upfront price for their malting barley through this innovative program," said CWB president and CEO Ian White. "CashPlus combines the strength of the single desk with the flexibility and price certainty that farmers want."
The upfront price paid to producers represented 93 per cent of the total return. The 2008-09 CashPlus program marketed just over 400 000 tonnes of malting barley. Roughly one half was sold to domestic maltsters, with the rest exported to U.S. and offshore bulk customers.
Spreads between the upfront payments and the final CWB returns from CashPlus barley varied widely from contract to contract, depending on market and timing of sales. The international price structure for malting barley fell dramatically at the end of 2008, creating a significant difference between contract cash prices at the beginning and end of the selling period. While farmers' contract prices varied over the marketing year, all sales were made at prices that exceeded their upfront payment and costs, resulting in net positive contributions to the additional CashPlus payment.
An additional payment is not guaranteed under the program each year. It only occurs when total revenue, minus program costs, exceeds upfront payments. Going forward, reporting of CashPlus revenue and costs will be provided each year in the CWB's annual report.
CashPlus is a cash-buying program that operates outside of the CWB pool accounts. It is one of a series of programs designed to give farmers more options in pricing and delivering their grain, rolled out since elected farmers took control of the CWB in 1999. CashPlus works as a three-way transaction. The CWB negotiates sales prices and volumes with selecting companies and a guaranteed in-store price for farmers is established. Selecting companies and farmers then directly negotiate a contract between themselves.
Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. One of Canada's biggest exporters, the Winnipeg-based organization sells grain to over 70 countries and returns all sales revenue, less marketing costs, to Prairie farmers.
For more information, please contact:
John Lyons
CWB media relations manager
Tel: (204) 983-3101
Cell: (204) 223-4281
john_lyons@cwb.ca
