Revised marketing system.

[TOM4CWB]

There are long term supply agreements that the CWb enters into. I note Japan as an example.

The guaranteed availability of supply is part of what allows premiums to be extracted over other markets.

These higher values are pooled together and improve the return to all farmers who participate in the annual pool.

So the risk of not having the right grade for the year, or of not being one of the 'selected' suppliers to a premium market and being left with lower priced markets is minimized. All farmers enjoy this risk management tool.

The CWB acts as the sole supplier and has the ability to engage in supply agreements at a high level, or direct to a mill.

Tom

[TOM4CWB]

thalpenny,

If what the CWB seems to do in these long term contracts locks farmers into on average a loss, how do any of us benefit from them?

If we were required to pool specialty canola returns, and returns on our long term product contracts, why would we even grow these specialty products?

Is not lowering all of us to the lowest common denominator destructive to the industry you attempt to serve?

The CWB refusal to understand risk, reward and profit issues, just simply stating pooling makes it fair for everyone just doesn't cut it when the CWB locks us many times into prices below the cost of production, without even telling us!

When we must borrow and invest huge sums to grow the products you market, why cannot the CWB extract benefits for us like other grain marketers do, like production contracts that specify acerage but not volume, and prices that average the highs and lows of the markets over the longer term, say 5 years at an amount the gives a reasonable return on our risk and investment?

[Steve]

Ian and Tom : I sure agree with your good management to sell straw because I did the same over the years and it worked, but was also accused for selling too cheap in shortage years.

This year some farmers are asking two to three times last years price for straw. Their excuse, you got to do whatever it takes to pay the bills not realizing they shouldn’t bite the hand that fed them in other years. What goes around also comes around.

We could apply good straw management ideas to our domestic grain sales. I think global sales would be more difficult.

The computer and internet is a very good tool, but the same problem as was with the tractor, because a big majority thought it wasn’t needed, the hoarse could do the job.

This means our ideas and debates are very limited to just a few farmers, therefore all we are doing is expressing our frustrations to each other.

It would be nice if all farmers had computers and we could have morning meeting like big corporations do, to plan and organize our planting and marketing ideas. Maybe we should promote this idea first and then the marketing.

Comments.

[Steve]

It looks like the agriville computer uses eClean program to PERFORM WORD WRAP, which deletes the paragraph indent. You have to double space to get a break. I see most are already doing this because it makes it easier to understand other people thoughts.

[Steve]

TOM4CWB - A discussion could be had about the classes of wheat that exist in the wheat pool account - should they be in separate pools, etc. There are advantages for the smaller classes of wheat being in the same pool account as CWRS - lower admin costs/tonne, less demurrage risk/tonne. Therefore, there is a lower 'basis' overall compared to if each class stood alone.

However, again you make the point that pooling the high and low value periods of the market, and high and low value markets, is a good risk management strategy. I'm glad that the value of pooling has been pointed out by you.

Everyone's cost of production is different. So the CWB sales strategy strives to make the biggest pile of money out of the pile of grain for sale each year (maximize sales to the best return to pool buyers). And in some individual cases, the total return may not exceed that farmer's total cost of production. But if a cost of production figure was to be the baseline, whose cost of production would you use? a farmer from Killam, Kindersely or Killarney?

It's folly to argue that the higher cost, less efficient producer needs the opportunity to capture these high value markets as a reason to get rid of single desk selling. This is because the lower cost producers are much better equipped to capture market share than the less competitive guys. Market share will accumulate with those players (supply chains) who can remove their competitors from the market, by cutting price or improving service.

Tom

[Steve]

I read the June thread: Vanclief’s Fantasyland 1&2 and found long but very interesting.

I also came to the conclusion that no problems were solved but a lot of ideas were kicked around and the same problems still exist. We ALL have the same problems that no one wants to change and accept the good ideas that we presented.

It is amazing how we ask the same questions over and over again and never seem to get the right answers. The biggest reason is that we already know the answer and want it confirmed, and if someone disagrees we accuse him for not answering or not understanding it in the first place.

I think this is learned at home from our wives “ I know I told you last month but you never listen.”

Comments

[ianben]

I agree we mostly talk in circles but at least we are talking and all see there some is room for change or improvement.

I attended a meeting today in Chester,you can find what they told us at www. agriknowledge.co.uk. Their message was "know your own costs" and "be prepared to change but do not change for changes sake."

Poorly attended though. There is a lot of apathy over here as incomes bounce along the bottom.

I personnally very much enjoy our conversations.We might not have changed anything but I have learnt that the grass might not be any greener over there. In fact I am amazed how similar our farming problems are.

We start turkey plucking tomorrow, 400 by hand, so I will take the opportunity to wish you all a happy christmas and a more prosperous WET new year while my fingers are not sore.

Thank-you agri-ville and seasons greetings

Regards Ian

[ianben]

Forgot to mention straw.

Very very expensive over here too.
Barley straw £120/tonne
Barley £66/tonne

Nearly twice the price of grain!!!

Still trying to maintain our prices and yes being accused of selling too cheap.

Regards Ian

[TOM4CWB]

Ian,

I wonder if we should be breeding new varieties for higher straw production, This "byproduct" may infact become the most profitable part of grain production for those close to consumers of straw.

thalpenny,

As I have said earlier, I pool most of my non-board sales of grain, however this is a voluntary pool with willing participants.

If the CWB were to offer an exemption like Ontario does, the pressure would disappear instantly!

What is the CWB so worried about?

It is clear the CWB has an unbelievable advantage over all other players in the Canadian wheat and barley marketing system, and for instance if "a Canadian grade name" could not be used in exempted producer export sales, the CWB would not be at risk to any significant extent on market share loss, on large volume sales, if they were at all efficient.

Change is assured, isn't it in the CWB's best interest to lead change in a courageous manner rather than being always viewed as the problem, why not be part of the solution?

[Steve]

This thread has slowed down so I better put in my two cents worth to keep it going.

I think one reason the grain prices on the commodity markets change so rapidly because there are too many experts analyzing their research on weather, supply, demand and recent sales to other countries.

These experts voice their option and they really don’t know where the market is going because they get paid to give a daily report.

The speculators like these signals because they don’t care if the market goes up or down as long as they make money. If you play the futures markets there is money to be made on someones misfortune.

In a way I do respect the speculator because he puts his money down and has to risk loss or gain, but the expert analyzers or advisors never practice what they preach.

To be fair to the expert advisers they don’t hold a gun to your head to take their recommendations and also try to feed their families by working in the marketing chain.

Lets take a positive look at today’s commodity marketing. The farmer still holds the upper hand because if we use the system I suggested, you don’t have to sell if the buyer doesn’t meet your asking price or you to take his offer.

Now I will open a can of worms on the dreaded CWB.

I would like to start with the positive side of the CWB first and maybe the negative will shrink, but I am sure it wouldn’t for all.

The CWB works with a large variety of farmers that produce wheat and malting barley for the export market. The board is a nonprofit origination and all it’s members take part in the major decisions.

Mother nature forces extreme weather conditions on us worldwide to try and make us work together and share our food.

The CWB by pooling wheat or malting barley is trying to help the unfortunate and maybe the inefficient farmer to feed their families, also assure their customers a good supply of grain, as they too want to keep the food chain going.

The CWB has a hard job to try and satisfy both the producer and the buyer in this competitive market. Some of the farmers are using hindsight and suggesting we should have gotten a better price for our wheat.

May I ask the same people did you sell all your canola, feed barley and peas at the top price for the year? I also know your answer no I didn’t but had a chance to try.

I think we should better see the trees before analyzing the forest. [ this expression was used by Pandiana on another thread ] What this is saying lets work together because the food chain is very long and unpredictable, therefore one has to give and take a little.

The CWB did change over the years to the better and will keep changing or may be illuminated some day. Sure would make Tom4cb happy.

The good changes were that feed barley, oats and feed wheat were taken off the board because we have a good domestic market. Canola and peas I believe where never on the CWB. The board is not trying to take that freedom back.

I still believe that wheat is easy to grow and hard to market.

The contract replacing the quota system is better for the CWB because they know how much wheat they can sell. I know some farmers don’t like it because they have to commit their wheat or malting barley, but how can the CWB sign a contract to supply a customer if they have nothing in the store. I like the idea that you only have to deliver 85% of the contract and can change the grade.

Now the new CWB contracting on price and bases contracts I don’t fully understand because I never used my self. The way I see it when you buy a bases contract you are also putting un-priced wheat on the market therefore the CWB or it could be any other grain company has to cover their handling cost on the market price side.

Also the big deal about canceling the bases contract the rule goes never sign one if you don’t understand or mean it and that rectifies the problem.

I think that the CWB should issue export permits to grain producers and grain companies with no buyback because this is the same reason the board is there, to sell what the farmers are producing. The CWB is a nonprofit organization so they really don’t have to make money and time will tell if it is needed.

Also open up the domestic wheat market and get value added started and will also prove if we can export these products.

This will also prove if we have a good free agreement with the USA.

Now if this all doesn’t work the farmers can lobby the Government for subsidies like the rest of the world to insure cheap food.

Comments