Keystone Agricultural Producers and the
Manitoba Canola Growers Association Have Major Concerns
with Electronic Trading

Keystone Agricultural Producers (KAP) and the Manitoba Canola Growers Association (MCGA) are calling on provincial regulators to delay the Winnipeg Commodity Exchange (WCE) from moving to a system of electronic trading.

The two farm organizations say swapping open-outcry trading for an electronic system could push down trading volumes and destroy the system farmers rely on to provide price discovery for their crops.

The groups have made a joint submission to the Manitoba Securities Commission, which regulates the Exchange. The Manitoba Securities Commission is gathering input from interested parties about the WCE's plan to shut down the trading pit. The WCE wants to have the online platform in place before the end of 2004.

"This move could result in a perilous drop in the volume of trade, possibly even causing the flagship canola contract to fail," said Bruce Dalgarno, chair of the Marketing Committee of the MCGA. "We strongly disagree with the WCE's position that online trading will increase volumes."

"Farmers cannot afford to lose this important risk management tool," said David Rolfe, President of KAP. "Without effective price discovery, we have no way of knowing the true value of our crops. Even before the threat of electronic trading came along, problems with canola price discovery were creating serious difficulties for farm business managers."

WCE futures already suffer from a lack of liquidity, and there is no assurance that new interest will materialize from international players following this change. Yet, the market is certain to lose local and speculative interest once the trading floor is closed. In farmers' minds, the WCE's desire to cut costs does not justify putting the viability of the entire institution and its price risk management function in jeopardy.

Keystone Agricultural Producers (KAP) is a democratically controlled general farm lobby organization which represents and promotes the interests of agriculture and agricultural producers in Manitoba. KAP is wholly run and funded by our 5,000 members, with policy set by producers throughout Manitoba.

The Manitoba Canola Growers Association is a non-profit organization made up of about 10,000 members, eight Directors, and four staff whose mandate it is to enhance the profitability of Manitoba canola growers through research, marketing and policy.

For more information, please contact the Manitoba Canola Growers Association at (204) 982-2120, Keystone Agricultural Producers at (204) 697-1140, or Brenda Tjaden Lepp Consultant 204-997-0347.

Bill Ross, Executive Manager
Manitoba Canola Growers Association
204-982-2120
Email: rossb@mcgacanola.org