Interesting report from the CBC

[charliep]

Actually interesting questions.

Why any money at all? Crow if I remember right was to offset declines in land values/higher transportation costs. Would land values be impacted?

Dilution. I assume other provinces will want a cut of the action (why not). Also would be dilution across open market crops.

Extra risk/costs. Grain system bears these costs/likely passes along to the farmer. Having said that, the CWB bears no risk today as pays 60 cents on the dollar of a moving target of final payments. Farmers bear this risk. so if I compare the farmer risk costs of the CWB today to the open market, what is the difference and how would it be measured?

[LWeber]

If farmers bear this risk, how much is limbo today as upaid debt in the annual statements and how far does it go back?

How much was a farmer at risk for the former USSR's grain purchases?

How much are farmers at risk today if Saudi Arabia defaults and doesnt pay on all 550,000 MT?

[wd9]

Larry you know we as farmers pay for it in the end. Don't need a masters in economics to figure that one out.

Regardless of who does or does not pay, Whether it is check offs, support programs, the guarantee, CWB screw ups, using the pool as insurance for the cash advance, whatever, there is a room full of highly skilled actuarians and accountants carefully keeping track both at the CWB and especially government. Met with them enough times battling the Transportation Act and rail service review. They know exactly what is going on although it may seem they don't.

It (farmers covering the shortfall regardless even if it may take a few years) works with all the other crops, why not wheat and malt?

Still waiting to hear how the justification of 6 billion was derived.

Probably severance packages.

[Hopperbin]

Maybe a stupid idea but 6 billion would go further if we just pay out Manitoba farmers and a few durum growers from southern sask. How could they resist government money?

[LWeber]

I'd love to negotiate with someone who has something of value and wants to give it away without a whimper. Where do i sign up?

You are giving away the guarantee and what are you getting... Nothing.
And right now - you still have the same CWB.

FFS - if it is going to go - get a timeline for the CWB to go.

WD9: I dont think you, Charlie or Gerrid has an idea what it costs for receivable insurance to some of these countries.

And yes the costs will go back to the farm.

Ask any major bank if they are nervous. Whose grain company balance sheet can withstand the extra credit?

There is no cost today.

What's 3% of $300.00

Times that by 14,000,000 tonnes

Every year.

For ever.

It has nothing to do with the CWB - it is with the Feds. And you just gave it away for nothing.

Would you like some KY with that?

So I ask again - how stupid is that?

[gustgd]

Just back from a Kinsmen meeting, still awake and ready to learn.
So what does receivable insurance cost to some of these countries??
I really have no Idea where I would even go to ask.
Is it 40% of the value of the sale? That seems to be the risk premium that the govt is charging.

It seems to me that that's the business to be in, give a guarantee that you never have to deliver on. Yah I'd say that's worth about Six Thousand Million

[Zaphod]

Is there no risk with non-board sales? How do companies manage that risk? Why would wheat, durum and barley be any different? It's a red herring. The trade is perfectly able to deal with risk on sales of canola, peas or anything else. The only reason that it was an issue with the CWB is that they used easy credit to make sales and sold to countries they shouldn't have. It was food aid disguised as real sales. That's the stupid part.

[charliep]

Perhaps Larry point is the grain companies would have to finance and
take risk of all types (price, transaction, grade) from elevator
driveway to customers doorstep on wheat and barley. This would be
in addition to what they do today on non crops. The CWB deals with
this risk today on wheat and barley export sales with all CWB grains
providing a revenue on elevator/terminal elevation plus other costs
including interest paid on inventory (no price risk).

Also should ask how the CWB handles things like transaction risk.
When the CWB sells FOB (loaded boat Canada), I assume the
accredited exporter takes on transaction risk. The CWB also likely
uses things the EDC financing insurance for higher risk customers -
same as the trade does on open market crops.

Off topic, but if I was the CWB and someone gave me a massive
amount of taxpayer money, I would take the $1 bln and sock away to
handle transaction and farmer payment/pooling risk and take
whatever is left over to buy assets in the grain handling system.
Would this be a good use of taxpayers money?

[Choice2U]

If the CWB were to buy assets, it better be based on choice (at least I am consistent). Any payout is the farmer's money and if a farmer chooses to let the CWB use his/her portion, that is their perogitive. My guess is that if a payout were to be made through the CWB, as usual, my choice would be non-existant.

On a side note, Larry, how does one calculate who gets the $6B payout (hypothetical amount)? Acreage based? Owner? Renter? tonnes? permit book holder? What about the farmer who has not grown board grains in years but has still felt the CWB's wrath through car allocation, PRO's that move a market, minimal value-add in the prairies, commodity price limitations on non-board crops due to added supply pressure because most have moved away from King Wheat over the past 20 years, etc.

[dave4441]

It is almost impossible, as growers, to vote to get rid of the CWB becuase it is better for our farms and then turn around and negotiate a payout to CDN farms over the loss of this institution. You are either in or out on this one.

This is like saying you want gasoline taken off the market becuase of greenhouse gas accumulation but you want compensation becuase now you have to walk everywhere you go. Yeesh. I will focus on creating opps in marketing and will not worry about the trade credit costs. How many times would people be more then happy accepting USA pricing on this site?? Those costs are built into that system.

[Choice2U]

A payout for the guarantee and a voluntary wheat board MUST go hand in hand. For those that want to be part of a voluntary CWB (that could handle all grains), a farmer can choose to have his payout go to fund this purchase of assets.

If there is a payout for the guarantee under the same CWB laws as today, I am dead set against the CWB purchasing assets with my money without my choice.

[wd9]

At the very least Canada should get something back in the form of WTO talks. Export subsidies decreased whatever. But, reality is Canada will just give it away like the crow and get nothing on the world stage.

But at least it probably won't happen for another 20 to 30 years so why worry. In the mean time i will blindly go sign my series A contract without a clue of who my customer is, what they want, and what price i get.