Would you opt out of the CWB if it became a co-op?

[dmlfarmer]

Sorry about posting the following twice on Burberts list. I thought the questions following were important enough to start a seperate thread.

RE: Co-ops from Burbert's thread

Sunkist and Ocean Spray and every other co-op only works on behalf of their members. If the CWB was changed to a similar format, you have to assume it would only be responsible for marketing the grain of those are CWB co-op members. That means any growers who chooses not to market through the CWB would have to market ALL of their grain outside the CWB. Furthermore this means the 60% of the grain sales which are currently made by the CWB (assuming 40% are made by accrdited exporters) could only be filled with grain from CWB producers. Yet the CWB could still compete with non CWB farmers to fill the 40% sales made by the accredited exporters. (And given the massive amount of grain the CWB would likely still control, there isn't an accedited exporter who would refuse to allow the CWB to compete to supply the grain the exporter needs) Instead of supporting prices for individual producers, the farmers who opt out will have lost 60% of the market plus have to compete with the CWB for 40% of the market that remains. What will this additional level of competition for sales between the CWB and individual farmers do to prices and carryovers?

Second, once you opt out of a co-op you may not be allowed back in. Why would a group of people seeking to sell cooperatively want anyone in the coop who does not want to share high prices and only wants the coop to sell their grains when they cannot do it on their own? While the door is open to sell outside the board, it is likely a one way door - once you walk through it you will never be able to return. Would you opt out now, without knowing pricing and marketing risks that may arise from leaving, but knowing you likely will never be able to sell through the board again?

Third, if even only those producers who have voted to get rid of the board entirely in the plebicites opted out, could the Northern US markets and their published higher prices, handle that amount of grain flowing south without losing the price premium or causing an uproar by Northern US farmers and a resulting trade action to support prices and limit Canadian grain deliveries? (I have no idea, does anyone?)

Fourth, the dairy industry started as a quasi cooperative and limits entry by a quota system, the value of which is now worth as much or more than the actual production unit. As well many fruit and vegtable cooperatives have similar quota systems on production that have a monetary value. Do you forsee CWB membership actually gaining a value over time?

While the voluntary, co-op idea sounds good, I would really be interested in knowing how many of you would actually opt out of the CWB if it meant you could never sell another bushel of wheat, durum or barley through the board again.

[ry0972]

As i haven't grown any wheat or durum for a few years and only tried barley again when it looked like it might be out of board control I would be out in a second. The entire COOP idea would have to be built from scratch in west SK or east AB with absolutely NOBODY from the CWB past or present involved to work!!! Then i may be interested. Otherwise let me grow what i want, sell it to who i want when i want for the $$$$ i want. IT IS MY GRAIN TO MAKE THOSE CHOICES !!! ISN'T IT???????

[dmlfarmer]

Interesting. Without the board, ry would start growing wheat, durum, and barley instead of what he grows now. So here is a 5th question that needs to be considered. How much more (or less) wheat, durum and barley would you grow if the board was a co-op - Do you think western Canadian wheat, durum, and barley production would go up or down under a co-op CWB?

[bucket]

I think you would see more value added industries.

Canola crush increased because of the opportunity to access the canola and ship oil out - much more efficent.

Durum will be a dog until either the cwb learns how to market it as a specialty crop much like lentils or gets out of durum altogether.

If new people were brought in with no baggage I would give it a couple of years - if they could not prove themselves I would be out.

[chaffmeister]

The idea of a pool, coop or monopoly is to wield market power. Why in the world would a voluntary CWB refuse volume (extra market power) from new entrants?

[dmlfarmer]

Thanks bucket. Just one question, why do you think there would be more value added under a cooperative CWB? (ie Is it because the current CWB refuses to sell to local value added industry, or is the price the CWB is asking too high for value adding to occur, etc?)

[dmlfarmer]

Chaff, the purpose of a selling cooperative is to maximize returns to grower members. These coops will try to match production to sales and target markets which return the best prices.

As many on this site point out, the CWB is too small to set world prices, therefore selling grain for non members is not likely to increase profits. Just like your example of sunkist, and ocean spray, or the pools, a CWB cooperative would likely market quality rather than quantity. The CWB already has a customer base, branding, and name recognition which they could use to sell members grain. Why would they dillute the limited premium grain market by selling for a non member?

[parsley]

1. The farmers in Creston-Wyndell region, who previously opted out of the DA, and were subsequently removed as an entire area, by legislation from the DA. If they wished to become part of the DA once again, would you deny them, based upon your argument?

2. If Ontario wanted to become part of the DA, and voted to be included, would you deny them?

3. How about the ROC?

Parsley

[Fransisco]

If it were a voluntary co-op I would consider opting in because at that point performance would matter. If they wanted to keep my grain and my business they'd have to get me a competitive return or I'd be looking elsewhere. My grain and my voice would finally mean something to the CWB.

[dmlfarmer]

Parsley: your questions really are irrelevant because if the CWB did become a co-op (which was not my idea but one brought up on another post that intrigued me and that is why I am asking questions) there would no longer be a DA. Those farmers who choose to stay in the CWB at time of such change would be members, those choosing to leave would be outside.

As far as allowing anyone else membership, well I assume that would be the decision of the co-op alone. If a CWB Coop felt they had a market for the grains, could service those areas, and it would be profitable for the coop and the current members they may choose to extend their service to those areas. But like with Sunkist, those potential members would have to meet quality criteria I suppose, have a similar product that the CWB is selling, and agree to abide by the coop rules.

I would also challenge your statement suggesting people should be able to vote to get in. If you started growing oranges in Saskatchewan you could not vote to join Sunkist. It is up to Sunkist coop to decide whether or not you can be a Sunkist grower, not you telling Sunkist you are going to be.

[chaffmeister]

dml: “These coops will try to match production to sales and target markets which return the best prices.”

Really? How do you match production to sales? Do you have that ability? Wouldn’t it be easier to sell what you produce? (Which is what I’m pretty sure these guys do.)


dml: “As many on this site point out, the CWB is too small to set world prices, therefore selling grain for non members is not likely to increase profits.”

Why not? I may not be able to set world prices for anything, but I know that if I can make a buck selling one, I’ll make two bucks selling two and three bucks selling three. Hell, I’ll sell as many as I can for as many suppliers as I can. Bring it on. My sales program would be based on the number of suppliers and the amount they can supply.


dml: “Just like your example of sunkist, and ocean spray, or the pools, a CWB cooperative would likely market quality rather than quantity.”

Why not quantity? Ocean Spray didn’t grow from 3 growers to over 600 so they could market just quality.


dml: “The CWB already has a customer base, branding, and name recognition which they could use to sell members grain. Why would they dilute the limited premium grain market by selling for a non member?”

You seem to assume that the CWB controls the “limited premium market”. It doesn’t. If a voluntary CWB pool didn’t sell it, someone else would.

[bucket]

The reason for more value added is the same as for ocean spray. It would become a vertically integrated coop. More value for the owners.

The cwb is too set in there ways to think that way.

[dmlfarmer]

good point bucket.

You may be right that the current board is too set in their ways to value add.
I suspect there would be lots of producers who would be opposed to the current board entering the value added market too. Look at the backlash to the pools when they bought livestock enterprises and donut shops.
And I wonder if the current board even would have the mandate or the ability to source financing for such enterprises even if they thought it was a good idea and that farmers would not go ballistic if they did that.

[dmlfarmer]

Chaff, the dairy industry has matched production to sales for years. You overproduce your quota it goes for manufacturing rather than milk. Sunkist directs lower quality produce to concentrate production rather than trying to sell this as fruit. It can be done.

Ocean Spray did not grow from 3 growers to 600 overnight. As more production was needed, they accepted more growers. Again matching production to demand.

Of course the current CWB does not control the premium market. Neither did Sunkist or Ocean Spray when they started. You grow a brand and market. That is why the Sunkist brand name is worth an estimated 1 billion dollars to the Sunkist coop. Even now the CWB name is worth something - I have no idea what. There are single deskers who believe the amount is high. There are those who say the board has no value.

[charliep]

If the cooperative route were chosen, what would the governance structure look
like? Traditional cooperative (one share/one vote)? New generation cooperative
(share structure reflects ownership business interest)? Where does the equity
come from to support the cooperative operations, provide a contingency fund
and allow for investment in other activities.