The AgriPost
October 29, 2021
WGEA Responds to Contract Buyout Concerns
According to Wade Sobkowich executive director of the Western Grain Elevator Association this year farmers are short on their supply contracts which Photo by Harry Siemens in turn make grain companies short on domestic and export commitments.
By Harry Siemens Wade Sobkowich, executive director of the Western Grain Elevator Association (WGEA), is receiving numerous calls from farm associations regarding the problem farmers have with their forward-priced contracts, penalties and administration fees on any contracted but undelivered grain. Sobkowich said the WGEA could not interfere or mandate
what the grain companies can do and people would view that as being anti-competitive. The grain companies like farmers’ forwarded contracts to millers, domestic and international buyers. Farm Twitter community keeps this on the front burner with discussions from all sides and a recent quarterly Keystone Agricultural Producer’s (KAP) council meeting had a
focused discussion between council-member farmers. He said it is a tough question with no easy answers. Sobkowich described this year as a perfect storm with strong germination of all crops early in the growing season, optimism riding high about what the harvest would bring in the fall. Because prices were historically high producers forward sold in some
cases as any reasonable person would, to take advantage of the prices. This optimism caused grain companies to forward sell, locking up grain through the forward contracts. “They sold that grain both domestically and into the international marketplace, not only to take advantage of good prices but to create grain movement,” said Sobkowich. Continued on Page 3...
Favourable Commodity Price and Interest Rates Fuel Farmland Market Strong commodity prices combined with low interest rates continue to sustain farmland value increases in most parts of Canada, according to a mid-year review by Farm Credit Canada. “While the drought across most of western Canada and the pandemic have captured most of the headlines, strong commodity prices and low interest rates have been quietly supporting a vibrant farmland market for the first six months of 2021,” said J.P. Gervais, FCC’s chief economist. “Higher-than-normal prices for wheat, canola and corn have improved the profitability of many operations in the second half of 2020 and early 2021, putting them in a better position to invest in farmland as the opportunities arise.” Average farmland values in Canada are once again showing steady increases for the first half of 2021, although the full impact of widespread drought this summer has yet to be weighed. The average value of Canadian farmland increased by 3.8 per cent for the first half of this year, compared to an average increase of 3.7 per cent for the same time last year. This increase is in line with mid-year results over the past six years, which showed single-digit increases for the full year. In general, Prairie and Atlantic provinces reported the most modest increases, while Ontario, British Columbia and Quebec had the largest increases. Buyers from different sectors are competing for the limited amount of land on the market. Interest rates declined at the outset of the pandemic and remain historically low, which is also supporting the demand for farmland and weakening the supply of available land for sale in the market. Continued on Page 5...