Flexible Pricing and Payment Alternatives on Canadian Wheat Board Pooling for Wheat

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  • This research investigates flexible pricing and payment alternatives (FPPA) that can be incorporated within the CWB pooling system for wheat. FPPA allow the CWB to remove some or all of the price uncertainty within a crop year to participating farm managers and let them arrange cash inflows more suited to their business. More specifically this research: 1. Investigates the practical and theoretical issues involved in providing participating farmers with forward contracts or full pay outs on wheat sales during the crop year while insulating the current pooling system from FPPA. 2. Investigates the practical and theoretical issues on the level of risk the CWB is assuming by providing FPPA and examines ways to quantify and manage this risk. The project reviewed CWB pooling. Different FPPA products were examined and requirements for successful products presented. Two models for measuring risk and valuing FPPAs based on the Pool Return Outlook (PRO) and financial models were used to illustrate the CWB risk associated with FPPA. Methods for managing CWB risk were also discussed.

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    Attribution-NonCommercial-NoDerivatives 3.0 International