Revised Marketing system II

[TOM4CWB]

Steve,

Good comments, I thought a new topic string would help.

I believe issuing, as you suggested, no-cost export licenses provides "Marketing choice" within the CWB “designated area” and we need nothing more. In fact the Western Grain Marketing Panel, with complete industry representation and consultation requested this solution for feed barley.

I was sad myself when we at the Alberta Barley Commission (ABC) saw no reasonable option but to vote at the annual meeting last week to remove barley from the CWB.

The CWB had a golden opportunity over the last 3 years to create new and innovative malt and feed barley contracts.

Instead the CWB directors did what they considered the minimum marketing options required, which for most of those who need to use these tools, was unacceptable.

Specifically a basis contract off the Western Barley Futures in Winnipeg could have saved the CWB from losing our confidence in barley marketing, if the CWB was disciplined enough to offer a good contract using this futures contract. It is unlikely the CWB can regain enough farmer confidence to retain its monopoly particularly on barley, even if they were to proceed with true marketing reform.

Other than CWB Director Art Macklin, it was clear that the expressions of everyone else at ABC’s annual meeting, was the CWB must be removed from barley marketing totally.

The ABC delegates and directors were unanimous in voting to remove barley from the CWB’s jurisdiction.

This was a sad day for marketing choice in western Canada, and could well mark the eventual total destruction of the CWB.

Why do I say this?

If marketers do not have “critical mass” and the opportunity of offering a supermarket of products, they are unlikely to survive. The CWB may well use this argument against losing the right to market barley.

However the slick advertising and media statements the CWB promotes, is working against the CWB.

Most of the 20% of grain producers, who I have talked to, who produce the 80% of wheat and barley in the “designated area” judge the CWB on marketing performance.

The CWB’s past history in achieving “premium prices” for our Farms do not match their propaganda on monopoly marketing performance. Sadly Our trust in the CWB has been crushed. This trust is very difficult to rebuild, just ask SWP how hard it is.

Would the CWB even consider changes of the magnitude the SWP has done to survive, because in the past the CWB has said if it doesn’t remain a total monopoly

On CWB wheat PPO and basis contacts:

I agree that those using the CWB wheat basis contract must absolutely be sure of supply and quality.

Being that our wheat quality and supply cannot be determined before July 31, it explains why the CWB does such a small % business with these programs, and begs the question of why the CWB set up these programs with this time restriction to begin with.

The only way to facilitate these programs with low risk for my farm is to hold over grain and deliver it into next years Basis Contracts. This obviously is very expensive for my farm and adds price, storage, and financing costs and risks.

If the CWB will not be competitive in marketing, wheat and barley will be grown less and less in the “designated area”. The CWB’s own production estimates over the next 5 and 10 years project and call for significant production declines.

Can the CWB renew the vision it has for our industry to create prosperous future?

In January 2002 I understand the CWB directors are to do a strategic planning session.

In my recent discussions with Mr. Jim Chatenay, District 2 CWB Director, is not at all optimistic that the CWB is willing or ready to tackle the change that will be required to create a prosperous future.

Thalpenny and the CWB, will you even discuss the above stated issues seriously in January?

[bob4choice]

Tom4CWB

Good post!

Too often I believe, we hear negative comments about 'others' in the Private Sector of the Grain Industry who happen to be essential for the whole system to work. Mostly these comments are not criticized because they are "politically correct" from the standpoint of the majority of farmers.

I think it is time that some farmers stop seeing these 'others' as the enemy and instead see them as just another player trying to make a living doing what they know best. Those farmers who fear losing the CWB monopoly sometimes resort to bashing these industry players when they have nothing of value to say about the CWB. After 3000 years of similar attitude, I think a change is in order. We now have the tools to see how the industry works.

The following commentary from Weber Commodities says it all:

Against the Grain 12/14/2001

Broker. Mid. Eng., an agent, a witness of a transaction. An agent employed to make bargains and contracts between other persons in matters of trade, commerce or navigation, for a compensation commonly called brokerage. A Dictionary of Law – circa 1893

“I do not regard a broker as a member of the human race.” (Honore De Balzac)- 1799-1850

There are references to brokers in the Bible as early as 1200 years B.C. (Before Christ) trading grain and disseminating information between buyers and sellers. For as long as there has been economic trade, brokers have been there to facilitate the transaction between buyer and seller. I’ve been on all sides of the coin as a grain merchant with large and small organizations, with a small grain brokerage firm and now with my own small business as a grain broker. One thing has not changed in my analysis (and everyone else’s) is that brokers are a necessary evil in the business. Whether you have been brokering grain as a company for 15 years or 100 years – you are at the bottom of the ladder when it comes to hierarchy. It has not changed in 15 years – it has not changed in 2500 years and will not change in the next 2500 years. To think any different would be totally asinine.

Accurate information is the key ingredient that has been missing at the farm level since farming began. What are the issues affecting my farm and how will it affect prices. The best brokers provide the best price and the best information. You are not going to always have the best price but you can send farmers to the best price. Ethics is sending a client to the competition because your competition has the best price. There are no proprietary laws in the grain brokerage business. A customer is a customer until the next grain deal – and providing an acceptable level of service entitles you to the first phone call – nothing more – nothing less. To think that you own a customers allegiance is the first mistake a business can make.

The political spectrum in the western Canadian grain industry is mired in one debate after another with the left and right entities each claiming victory for the farmer. It too has been around since before Christ. Socrates was quoted in reference to wheat trade – “Let no man become a statesman until he understands the politics of wheat”. The political wrangling will never go away and fortunately for me and unfortunately for some – neither will the brokers.

Trickle down economics will not work in the grain industry. A mass knowledge transfer and information dissemination at the grass roots level will change this industry faster than any other way possible. The next time you phone anyone in the grain industry chain – and I do not care if it is me – to inquire about selling your grain, don’t just ask what the price is – ask why the price is what it is; ask what the price is doing 3 months from now; ask what government policies could affect the prices. The information flow has to start somewhere and I’m sorry but the onus is on the farmer to start the necessary chain of events to change this industry. Grain companies hate change; politicians hate change and unfortunately so do farmers. The best way to begin the rapid transformation of this industry is with the farmer – and everyone in this industry has forgot that in the last 75 years.

My wish for all farmers this year is to arm you with the knowledge required to make a difference and here is your challenge. Challenge yourself to learn more about the grain trade than your local grain buyer. In turn, your grain buyer will have to upgrade his knowledge and so will his boss and so on and so on. You can make a difference. Have the diligence to make a difference this year and we WILL change this industry.

[TOM4CWB]

Bob4choice,

I really appreciate your points Bob.

Upon reflection the "broker" side of the discussion is very interesting.

The CWB itself is a Broker, and the very subject matter that CWB "fear" uses is directly applicable back against the CWB!

The commercial broker is in competition with everyone else, if this party does not perform an useful service, then farmers can choose another broker or do the work provided by the brokerage service themselves.

However the CWB "monopoly" enforcement preventing the CWB from having competition prevents accountability from occuring within the CWB itself.

Now the charges the CWB bring against multinational brokerage marketers, instead must be applied against the CWB itself, with no mechanism, of competition or self marketing, to dicipline the CWB.

Peas and Lentils are a marketing system worth examining concerning broker involvement.

These pulse broker marketers are not priveleged with even a useful futures contract to back up positions, yet full competition diciplines this market.
Pulses have proven to be one of the most profitable for western Canadian farmers.

Yet Multinational grain companies have NOT been "monopoly buyers" that drive down pulse prices as the "CWB fear Tactics" would suggest should happen if no strong "farmer monopoly" exists to disipline these market players.

Therefore in a strong prosperous marketing system, choice and competition MUST be allowed to operate.

When will the CWB allow marketing choice and competition?