This week farmers received a flyer from the NFU explaining what it sees as the benefits of the CWB for producers.
It requires a response; I will focus on the most glaring errors:
• Wheat and barley premiums: the NFU says the CWB gets big premiums, referring to two studies – a 1996 study by Kraft, Furtan & Tyrchniewicz and a 1997 study on barley by Schmitz, Gray, Schmitz and Storey. Long ago, the approaches used in both these studies were shown to be seriously flawed, as were the conclusions. I’m happy to give more detail – just drop me an email to cwb@monitor.ca.
• Interest earnings: beyond having their facts dead wrong, they also contradict themselves. They say the net interest earnings were $104 million per year and the 5-year average is $29.8 million; can’t see that happening plus both these figures are wrong. First, the net interest earnings have never been as high as $104 million. Net interest earnings are currently around $2 million; the 5-year average is $26.4 million. So eager were they to update this sheet, they included this gem about the average interest earnings of $29.8 million (their number): “These earnings more than offset the cost of staffing and administrating the CWB.” Staffing and administration costs last year were $79.1 million and the 5-year average is $72.3 million – a far cry from $29.8 million.
• Revenues from terminal rebates: the NFU didn’t even bother updating the figure from the last time they used this sheet two years ago. Under the circumstances, I won’t comment on the figure. But, I will say that it’s a stretch to give credit to the CWB for something the grain companies do. Sure the CWB tenders to the grain companies for railcars of grain, but it’s the grain companies that respond with discounts to their typical charges. This shows what competition would do to costs if the CWB system wasn’t in the way.
• Despatch: either the NFU doesn’t get it or they are intentionally misleading. Please read my last commentary about despatch to see that it is a false-economy to pursue despatch like the CWB does. Whereas the NFU suggests despatch is a gain, in actual fact it’s a substantial cost.
• Rail freight rates: the CWB was only one voice among many in the discussion. To give credit to the CWB like the NFU does, unfairly trivializes all the work many others did on this issue.
• Perhaps most glaring is that the NFU doesn’t consider everything that the CWB does and its impact on farmers:
1. High cost of handling CWB grains compared to non-CWBs. If they want to show how tendering provides revenues for the CWB, it’s necessary to also talk about the high cost levels to begin with.
2. Affect on cash flow due to lack of full-cash-on-delivery options. Durum is a perfect example this year.
3. Affect on non-CWB crops like canola. Prices are pressured as farmers sell these crops to pay for their bills from growing CWB crops.
4. Affect on domestic feed grains. Export prices aren’t transparent and so are not allowed to help raise domestic prices.
In general, with this flyer the NFU show gains where there really aren’t any and they don’t show where there are true losses, or drains on the farmer and farm economy.
I find it truly sad that the NFU went to all the trouble to put this together and all they showed was that they don’t understand the topic.
Farmers are smarter than the NFU gives them credit for. Presenting a document like this, expecting farmers to accept it as presented, is an insult to the collective intelligence of farmers.
<a href=www.cwbmonitor.blogspot.com>The CWB Monitor</a>
It requires a response; I will focus on the most glaring errors:
• Wheat and barley premiums: the NFU says the CWB gets big premiums, referring to two studies – a 1996 study by Kraft, Furtan & Tyrchniewicz and a 1997 study on barley by Schmitz, Gray, Schmitz and Storey. Long ago, the approaches used in both these studies were shown to be seriously flawed, as were the conclusions. I’m happy to give more detail – just drop me an email to cwb@monitor.ca.
• Interest earnings: beyond having their facts dead wrong, they also contradict themselves. They say the net interest earnings were $104 million per year and the 5-year average is $29.8 million; can’t see that happening plus both these figures are wrong. First, the net interest earnings have never been as high as $104 million. Net interest earnings are currently around $2 million; the 5-year average is $26.4 million. So eager were they to update this sheet, they included this gem about the average interest earnings of $29.8 million (their number): “These earnings more than offset the cost of staffing and administrating the CWB.” Staffing and administration costs last year were $79.1 million and the 5-year average is $72.3 million – a far cry from $29.8 million.
• Revenues from terminal rebates: the NFU didn’t even bother updating the figure from the last time they used this sheet two years ago. Under the circumstances, I won’t comment on the figure. But, I will say that it’s a stretch to give credit to the CWB for something the grain companies do. Sure the CWB tenders to the grain companies for railcars of grain, but it’s the grain companies that respond with discounts to their typical charges. This shows what competition would do to costs if the CWB system wasn’t in the way.
• Despatch: either the NFU doesn’t get it or they are intentionally misleading. Please read my last commentary about despatch to see that it is a false-economy to pursue despatch like the CWB does. Whereas the NFU suggests despatch is a gain, in actual fact it’s a substantial cost.
• Rail freight rates: the CWB was only one voice among many in the discussion. To give credit to the CWB like the NFU does, unfairly trivializes all the work many others did on this issue.
• Perhaps most glaring is that the NFU doesn’t consider everything that the CWB does and its impact on farmers:
1. High cost of handling CWB grains compared to non-CWBs. If they want to show how tendering provides revenues for the CWB, it’s necessary to also talk about the high cost levels to begin with.
2. Affect on cash flow due to lack of full-cash-on-delivery options. Durum is a perfect example this year.
3. Affect on non-CWB crops like canola. Prices are pressured as farmers sell these crops to pay for their bills from growing CWB crops.
4. Affect on domestic feed grains. Export prices aren’t transparent and so are not allowed to help raise domestic prices.
In general, with this flyer the NFU show gains where there really aren’t any and they don’t show where there are true losses, or drains on the farmer and farm economy.
I find it truly sad that the NFU went to all the trouble to put this together and all they showed was that they don’t understand the topic.
Farmers are smarter than the NFU gives them credit for. Presenting a document like this, expecting farmers to accept it as presented, is an insult to the collective intelligence of farmers.
<a href=www.cwbmonitor.blogspot.com>The CWB Monitor</a>
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