WBGA builds support for agricultural commodity clearing

    CALGARY, March 31 /CNW/ - Support is growing for a proposed voluntary
agricultural commodity clearinghouse in western Canada. The Western Barley
Growers Association (WBGA) launched the AgClearing project two years ago with
support from Agriculture and Agri-Food Canada's Private Sector Risk Management
Partnerships (PSRMP) program.
    Project research indicates 70 per cent of western Canadian producers
support clearing for a range of crops.
    Originally proposed as a way for producers to improve default protection
when marketing their crops, the concept of agricultural commodity clearing
quickly revealed numerous other advantages in forward contracting; delivery
assurance; price discovery; operations and logistics; and margin captures
through strategic marketing.
    "Agricultural is changing and so are the ways crops are marketed," WBGA
president Jeff Nielsen says. "Clearing would bring improved business practices
to the agriculture sector. These practices are accepted and proven in
commodity and financial markets around the world. Clearing is fair, balanced
and it would protect crop producers and crops buyers from financial failures
and contract defaults."
    The AgClearing project team has presented and promoted the concept of
voluntary agricultural clearing to farm groups and other stakeholders across
Manitoba, Saskatchewan and Alberta over the past two years.
    Currently, the AgClearing project is considering clearing for non-Board
crops such as feed barley, feed wheat, flax, canola, oats, peas and lentils.
While these grains represent just a portion of the 50 million tonnes of grain
produced in western Canada each year, the project found they generate
sufficient volume for a clearinghouse to be a sustainable and profitable
    Nielsen emphasizes the WBGA is seeking a business entity to launch,
manage and oversee clearing activities. "We've built a solid business case
demonstrating that a business entity could operate a clearinghouse with an
expectation of profitability and a reasonable rate of return on investment."
    The WBGA's next steps are to work with farm commodity and policy
organizations to endorse clearing and then develop a joint proposal seeking
transitional federal government support for the initial start-up of
agricultural commodity clearing with a private-sector business entity.
    "Our focus now is to build greater understanding about clearing and its
many advantages and benefits," says Nielsen. "This is an exciting concept and
we believe agricultural and financial communities in Canada are ready for it."

For further information:

For further information: Russ Crawford, AgClearing Project, (403)
256-7522, or russ.crawford@shaw.ca

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