Changes to the CWB Delivery Programs

[charliep]

Interesting changes to the CWB delivery programs. Was at two CWB district meeting last and the lottery nature of grainflo was definitely a topic. Note the change from 4 periods to 2 and the paying of interest.

Also found the changes on the alternative wheats to an "A" signup and from there Guaranteed Delivery contracts. Very interesting. Look forward to comments. My two bits would be to add a price to the Guaranteed delivery contract and then maybe we could talk change. Perhaps the other insite (look for others comments) is no one should sign an "A" seriess contract for alternative wheats - wait for the GDC and contract when appropriate.

Begin quote.
The CWB will increase use of Guaranteed Delivery Contracts (GDCs) for smaller-volume, specialty wheat classes. This is an an efficient way to take advantage of marketing opportunities throughout the year.

GDCs will replace Series contracts for Canada Prairie Spring White wheat (CPSW) and Canada Western Extra Strong wheat (CWES). For Canada Western Red Winter wheat (CWRW), Canada Western Soft White Spring wheat (CWSWS) and Canada Prairie Spring Red wheat (CPSR), Series A contracts will be available at the start of the crop year with storage payments being paid to contract holders. If more grain is required after the Series A contract period has expired, GDCs will be used to source the additional grain.
end quote.

[URL="http://www.cwb.ca/public/en/farmers/contracts/"]changes alternative wheat class delivery contracts[/URL]

[charliep]

This announce is a significant change to how your single desk buyer - oops - seller handles delivery signals and need to be paid attention.

Does this mean better autonomy for the alternative wheats and potentially better market signals or more ability to manipulate the alternative wheat classes not necessarily to their benefit?

If the CWB goes this route, why not separate pricing pools for the alternative classes? They do it already for the producer payment options (use different futures). A bonus for the CWB is it would reduce risk on their FPC contracts. Have done it for domestic soft white spring sales.

Why not a straight cash pricing option (or as close as the CWB gets) similar to the cashplus for malt barley?

Pay attention to this.

[charliep]

I missed the fact that CWES and CPSW are only GDC contracts. Lost markets on the one hand and zero farmer confidence to grow on the other to point the CWB can't put together enough supplies under the pooling system to develop a sales opportunity. Sad comment on things. If the CWB wants to handle these classes, then they need to go all the way and put a direct cash price signal in the terms. Or do like with feed barley and cash trade on behalf of the organization with profits going to the contingency fund. Anything would be better than today.

[Hopperbin]

Charlie this should give us better market signals. Without the distortion of the pool affecting fixed prices. Should get rid of the pool for all minor classes.

[TOM4CWB]

Hopper,

I do not agree.

GDC do nothing if the CWB does not offer them in your area.

I do not get how the CWB knows what to sell... from the 'designated area' growers' bin... if it hasn't been contracted to the CWB!

Isn't THIS is backwards? Now with GDC sales... the CWB knows everything (on sales to come)... CWB tell us nothing... and does not even know what we need to market in the crop year!

What a monopoly system... very nice if you are the CWB and farmers serve the COrp... with NO CHOICE.

[Hopperbin]

I think you may be wrong. I think the GDCs come from the grain companies and are they not usually offered all over.
Viterra may have a different price than say Richardsons just a couple miles away.
In fact the CWB is almost out of the game here, is it not???

[oneoff]

All a complete and utter waste of bandwidth.

[charliep]

hopperbin

A good question on execution. Grain companies for the most I suspect put
together the feed wheat GDC business, present it to the CWB and if they
can put together a package, take it forward to farmers for consideration.
Grain companies have also had the ability to cash source feed wheat from
the non board and use it to top up whatever couldn't be sourced via normal
CWB delivery/contract options. Don't know if it will work this way for the
alternative wheats.

The CWB has also used tendering processes over time to allow them to
package business through their facilities to farmers. Business would come
forward to the CWB and grain companies would be allowed to bid on the
tender. Again, don't know what the execution side looks like for the new
system - not explained in the press release. As highlighted by TOM4CWB,
it be interesting to see how the CWB matches sales opportunities to
customers with farmer willingness to deliver and grain company desire to
develop the logistics.

[charliep]

winter wheat programs from 2009/10 provide an indication on how the program might. There were 50 contract offered through various grain companies.

<a href="http://www.cwb.ca/public/en/farmers/contracts/guaranteed/">GDC CWRW</a>

Googled the website to find out what information is available on CWB tendering process with grain except for this old position paper from 1999. Can't remember
the details. Happens all the time as indicated by their weekly releases in the Bulletin.

Begin quote
Continue to use tendering to source grain to meet certain customer requirements when it results in increased returns for farmers and improved efficiency. The
CWB has used a tendering process to source grain in particular circumstances. For example, the CWB has tendered for durum with certain protein levels for the
Japanese market. There is a benefit to farmers in the CWB having this ability to tender for grain when it results in increased returns to the pool accounts or when it
enables the CWB to offer a unique service to customers.

Although it may be beneficial for the CWB to look at tendering as an alternate strategy for sourcing for grain and implement it in situations when it adds value to
the pool account and increase efficiency, tendering for 100 per cent of its supplies would result in increased costs and reduced return for farmers and negatively
impact capacity. For these reasons, it is critical that the CWB have the option of sourcing grain through both tendering and non-tendering mechanisms to respond
to a wide range of customer and marketing needs.
End quote.

<a href="http://www.cwb.ca/public/en/library/publications/popups/farmers_Linking_Farmers.jsp">CWB</a>

[charliep]

From the banner on top of this site, I see the following flashing at me paid for by the farmers.

We've taken your suggestions to heart. Grain deliveries are changing. You called. We answered.

Are these statements accurate?

[charliep]

Maybe oneoff's answer is the best one. Who cares.

My concern is the pooling system has never given alternative wheats a
chance. Going the easy route on marketing CWRS and CWAD has been
policy for years in spite of years of research and development in
alternative and the marketing efforts of CIGI and even the CWB itself
(which cost millions of dollars). I fail to see how these changes address
any of these issues.

But maybe the answer is just market CWRS and CWAD in export markets
and grow alternative wheats specific for the domestic market. Should
would reduce segregation in the elevator system thereby reducing costs.
Maybe this is the strategy.

[charliep]

To put into practical terms for this year, a lot of farmers will be considering
winter wheat on land that they weren't able to seed this past spring. Will the
current system respond to this change? I could even start back further and
ask whether past breeding programs have provided varieties based on
agronomics and consumer traits that position farmers to make this decision
with a reasonable expectation it will be a profitable one?

[TOM4CWB]

Charlie,

THe CWB has it backwards.

If there is a market for 5-7mmt of high quality wheat... and we usually grow 22mmt... that means we will continue to discount market 15mmt of wheat.

How in the world can a pool based system ever provide a premium price... when 3/4 of it is going to discount markets.

In Montana... they supply premium markets. Why shouldn't Alberta be any different?