Vol. 145, No. 3 — February 2, 2011
SOR/2011-4 January 24, 2011
CANADIAN WHEAT BOARD ACT
ARCHIVED — Regulations Amending the Canadian Wheat Board Regulations
P.C. 2011-21 January 24, 2011
His Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food, pursuant to subparagraph 32(1)(b)(i) (see footnote a), subsection 47(2) (see footnote b) and section 61 of the Canadian Wheat Board Act (see footnote c), hereby makes the annexed Regulations Amending the Canadian Wheat Board Regulations.
REGULATIONS AMENDING THE CANADIAN WHEAT BOARD REGULATIONS
1. Subsection 26(3) of the Canadian Wheat Board Regulations (see footnote 1) is replaced by the following:
(3) The sum certain that the Corporation is required to pay producers on a per tonne basis under paragraph 32(1)(b) and section 47 of the Act in respect of the base grade of barley sold and delivered to the Corporation during the pool period beginning on February 1, 2011 and ending on July 31, 2011 and known as No. 1 Canada Western is
(a) $130.00 for straight barley;
(b) $123.00 for tough barley; and
(c) $116.50 for damp barley.
COMING INTO FORCE
2. These Regulations come into force on February 1, 2011.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issue and objectives
Pursuant to the Canadian Wheat Board Act (the Act), grain producers receive an initial payment upon delivery of grain to the Canadian Wheat Board (CWB) pool accounts. Revenues from the sale of grain are pooled by the CWB and any surplus over the initial payment minus marketing costs is distributed to producers after the end of the pool period as a final payment. The initial payment is guaranteed by the federal government and any pool account deficits are paid by the federal government. The CWB operates a pool account for each of the four classes of grain for which it has responsibility. The wheat, amber durum wheat and designated barley pools run from August 1 to July 31, while the feed barley pool is divided into two six-month pool periods, running from August 1 to January 31 and from February 1 to July 31.
In accordance with the Act, the Governor in Council establishes, by regulation, the initial payment for a “base” grade for each of the four pool accounts following a review of recommendations made by the CWB and approves the initial payments for other grades, established in relationship to the base grade, as recommended by the CWB. The initial payments are set at the beginning of the pool period and are adjusted throughout the pool period as the CWB makes additional sales and as the market prices dictate. The CWB’s recommendations are based on relative market returns expected for each grade during the coming pool period.
The objective of this regulatory action is to establish the initial payment for the base grade of barley for the second barley pool account of 2010–11 that begins on February 1, 2011.
Description and rationale
Section 26 of the Canadian Wheat Board Regulations establishes the initial payments to be paid upon delivery for grains delivered to the CWB. These Regulations amend subsection 26(3) of the Canadian Wheat Board Regulations in order to establish the initial payment for the second feed barley pool account running from February 1, 2011 to July 31, 2011. Compared to the initial payment for the first pool period set on August 1, 2010, the amended payment for the base grade of barley is higher by $42 per tonne.
The price of grain in Canada is largely determined in world markets. Global barley supplies for 2010–11 are decreased due to lower production and reduced carry-in stocks. Barley production in Canada for 2010–11 decreased due mainly to a lower seeded area that resulted from excessive rainfall on the Canadian prairies during seeding time. Feed demand, however, is forecast to remain strong for the remainder of the marketing year due to continued demand from the Middle East and Asia, particularly Saudi Arabia and Japan. Feed barley prices for the second half of the 2010–11 year are, therefore, expected to be higher, on average, than for 2009–10.
The initial payment established by this amendment relates to the return anticipated from the market and thus transmits the appropriate market signals to producers. This allows both large and small producers to make their marketing decisions more efficiently based upon anticipated returns to their individual farms. Initial payments can only be increased during the pool period, depending on international market prices and conditions.
As of December 21, 2010, none of the barley pool B had been priced. The initial payment recommended by Agriculture and Agri-Food Canada (AAFC) implies a safety factor of 38%, which is set jointly by AAFC and Finance Canada, and is based on the gross value of the unpriced portion of the pool (i.e. the total pool return outlook over all grades). This safety factor accounts for market uncertainties and ensures that, even if pooled returns are significantly lower than expected, a deficit would be unlikely to occur in the pool account.
The initial payment, set by this amendment, is not expected to create the risk of a deficit in the barley pool account. Even under worst-case market assumptions (i.e. lower market prices, a stronger Canadian dollar, and lower grain quality than expected), the safety factor is positive, implying that there is negligible risk of a deficit for the federal government since market returns are expected to exceed the recommended initial payment levels.
The initial payment level has been recommended by the CWB. The Finance Canada has been consulted and concurs with the recommendation.
Implementation, enforcement and service standards
These Regulations come into effect on February 1, 2011. There is no compliance and enforcement mechanism. This amendment governs payments made to grain producers for deliveries made under the Canadian Wheat Board Regulations.
Crop Sector Policy Division
Agriculture and Agri-Food Canada
1341 Baseline Road
S.C. 1995, c. 31, s. 2(1)
S.C. 1995, c. 31, s. 4
R.S., c. C-24
C.R.C., c. 397