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UPDATE 2-CWB signs deal with Cargill to handle 2012/13 grain
March 1, 2012 / 8:22 PM / 6 years ago

UPDATE 2-CWB signs deal with Cargill to handle 2012/13 grain

* Allows access to 30 elevators, 3 port facilities

* CWB looks to start buying grain in a few weeks

* CWB seeking deals with other grain handlers (Adds farmer comment)

By Rod Nickel

March 1 (Reuters) - The Canadian Wheat Board said on Thursday that it has agreed with Cargill Ltd to move the CWB’s 2012/13 grains through its grain elevators and port facilities, the first such deal as the board moves to compete in the open market.

The Wheat Board will lose its wheat and barley marketing monopoly in August for the next harvest, leaving it to compete to buy farmers’ grain against companies like Cargill, Viterra and Richardson International.

The CWB lacks country elevators and port storage space, while grain handlers are eager to secure as much volume as possible.

Canada is the biggest exporter of spring wheat and durum.

“We can now move ahead to provide farmers with an exciting package of programs they can use with confidence in this new era,” said Wheat Board CEO Ian White.

The board will begin buying farmers’ 2012/13 grain through cash and pool contracts for autumn delivery within a few weeks, he said. The CWB is also seeking similar deals with other grain handlers.

“Farmers will be pleased to hear this because they’re wanting to start making some (planting) decisions and lock in some prices for 2012,” said Manitoba farmer Doug Chorney, president of Keystone Agricultural Producers.

Farmers in Western Canada begin sowing crops as early as mid-April.

The CWB’s expertise in pooling - a marketing method that captures prices over a defined period of time - is also attractive to farmers, Chorney said.

“(It‘s) really tough to time your sales at the peak (price) all the time.”

The president of Cargill’s Canadian subsidiary, Len Penner, said its deal with the Wheat Board allows growers to use more marketing options through Cargill.

U.S.-based Cargill, the third-largest Canadian grain handler, has 30 grain elevators across Western Canada, along with port facilities at Vancouver, Thunder Bay, Ontario, and Baie Comeau, Quebec.

The Canadian government is backstopping the CWB for up to five years with financial guarantees, after passing a law in December to scrap the 69-year-old monopoly.

“The CWB’s first grain handling agreement is further proof that the CWB can be a viable and competitive marketing option for farmers,” said Agriculture Minister Gerry Ritz in a statement. (Reporting by Rod Nickel in Winnipeg; Editing by Marguerita Choy)

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