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1998 September Report of the Auditor General of Canada

September 1998 Report—Chapter 11

Exhibit 11.2—Product Marketing

Approach of Producer Organization

Description

Examples of Producer Organizations

Single Desk Selling

The product is marketed and sold by the producer organization. Revenues are generally pooled and producers are paid based on the grade and quality of their product. Producers receive payments from the producer organization, after a pro rata deduction has been made to repay a portion of the advance.

In the case of the Canadian Wheat Board, elevator companies issue advances upon completion of an application by the producer. The elevator companies also pay producers a net amount at the time grain is delivered to them, after deduction of a pro rata repayment of the producers' cash advance. The Canadian Wheat Board reimburses the elevator companies for the moneys advanced and interest costs.

Canadian Wheat Board
BC Tree Fruits

The crop is sold by the producer under terms of a contract with a specific buyer

Prices are generally negotiated by producer representatives, while quantity and delivery dates are generally negotiated by individual producers. Payment is made to the producer by the contractor. Contractors often will withhold a portion of the sale price and remit this to the producer organization directly, representing repayment of the advance.

Keystone Vegetable Producers (Manitoba potatoes)
PEI Potato Board (process potato sector only)

Producers find their own customers

Customers may be elevator companies, dealers, wholesalers, processors, feed lot operators or livestock producers. Prices can fluctuate on an hourly or daily basis and may vary between similar buyers. Some buyers may withhold repayments on behalf of the producer organization, but in some cases the producer is responsible for repayment of the advance directly to the producer organization.

Canadian Canola Growers
Ontario Corn Producers
PEI Potato Board (seed and table potato sectors)

Source: Discussions with producer organizations and individual producers