Returns to Prairie farmers through the Canadian Wheat Board were up nearly 57 per cent in 2007-08 to a record $7.2 billion, the CWB reported Wednesday.
Total pooled revenue was up 47 per cent for wheat and up 94 per cent for both durum and designated barley, the CWB said in its annual report.
The board also said it “far surpassed” its targets in topping its international competitors’ prices, getting a net $13.81 per tonne above competitors’ values for wheat and $48.84 for durum, compared to its targets of $6.90 for wheat and $24.50 for durum.
For designated barley, the CWB said it achieved $29.47 per tonne above competitors’ prices, below a target of $33.70.
Market volatility, however, led the CWB to take a hit in the contingency fund that underwrites the risks associated with its producer payment options (PPOs). The fund’s current deficit is $28.9 million, the CWB reported.
That deficit stems from the “extreme volatility” of futures and basis values, plus a forward inverse in market values from December 2007 to March 2008, which created risk-management issues for the PPOs.
The “often-poor” correlations between U.S. futures markets and prices in other markets into which the CWB sells, when coupled with volatile basis levels, were “particularly challenging,” the board said Wednesday.
“In these extraordinary market conditions, many grain companies chose to withdraw some of their pricing options, but we believed it was important to honour our commitment to Prairie farmers by continuing to provide these programs, ” CWB chairman Larry Hill said in the board’s release.
Nevertheless, Hill said, “not only was the CWB able to capture high international prices, its marketing structure allowed Prairie farmers to participate in price rallies when supplies were depleted in most other exporting nations.”
The CWB’s combined revenue for 2007-08 sits at $8.42 billion, up from $4.95 billion the previous year. Direct costs such as purchases, freight and terminal handling for 2007-08 were $2.86 billion, up from $1.66 billion the previous year.
Among other costs, administrative expenses were $75.3 million, up slightly from $71.8 million the previous year, and grain industry organization costs for 2007-08 were down at $1.46 million, compared to $2.02 million the year earlier.
That leaves 2007-08 net earnings of $5.72 billion, from which $5.24 billion was paid out to pool participants, compared to pool payouts of $3.5 billion surpassing net earnings of $3.46 billion in 2006-07.
Another $1.92 billion was paid out in 2007-08 to PPO participants, up from $1.06 billion the year earlier.
The CWB received a total of 13.37 million tonnes of milling wheat from producers in 2007-08, along with 3.58 million tonnes of durum, 2.44 million tonnes of designated barley, 455,500 tonnes of Pool A and Pool B barley and 1.21 million tonnes of grain via cash trading.