Canada Slips on CWB

[TOM4CWB]

November 24, 2010


Letter to the Editor
Globe & Mail

Dear Editor,

In his article, writer Paul Waldie correctly notes that Canada’s market share in the global wheat trade has declined from 23 per cent to 15 per cent in the past 15 years. (The growing problem: Canada slips from agricultural superpower status, Globe & Mail, November 24, 2010).

However, what he did not mention is that this loss in market share is primarily due to the stifling presence of the Canadian Wheat Board monopoly. The monopoly prevents Western Canadian farmers from selling our wheat directly to flour millers and other buyers. The resulting low prices have contributed to prairie farmers shifting eight million acres out of wheat and into more profitable open market crops such as canola, peas, oats and lentils.

Ontario farmers do not suffer from a wheat monopoly. For the past seven years, farmers in Ontario have been free to export their wheat or to sell it directly to millers. As a result wheat acreage in Ontario has been increasing at the expense of western farmers.

Growing wheat on the prairies will become more profitable as soon as Parliament ends this discriminatory policy and gives prairie farmers the same marketing freedom that Ontario farmers now enjoy. When that day arrives, Canada will be on the path to restoring its rightful place as a global superpower in agriculture.

Sincerely,

Kevin Bender
President
Western Canadian Wheat Growers Association

[parsley]

"Liberal candidate and young businessman Scott Sarna said he's heard a mix of views from farmers -- most prefer the wheat board but some would like reforms or alternative marketing options. He said the party is toying with the idea of allowing farmers to decide riding by riding on the issue."


Read all of it:
http://www.winnipegfreepress.com/local/dauphin-politics-grain-and-guns-110900739.html

Pars

[burnt]

In a really big year, Ontario can seed about 1 million acres of wheat. That's it. The west will not soon be replaced by what Ontario grows, in quality or quantity.

However, I think that the dual marketing option would do the west a lot of good.

[cityguy]

In the mid 90's the US share of the world wheat market was over 30%. Last year it was under 20%. Am going to guess it wasn't the stifling impact of the CWB that caused the US to loose share but maybe the stiffling impact of GMO corn/beans, stiffling impact of the FSU as an exporter. It's funny that even in their monthly supply and demand analysis the US doesn't even include Russia or the Ukraine as a "major" exporter. Fact is that all of the "major" exporters have last market share over the years, with the US being the biggest loser.

It's fine and easy to blame the Canadian share loss on the CWB. But what do you want to blame the US market share loss to?

What's Canada's marketshare of world canola trade done over the past 15 years?

[agstar77]

Decrease in wheat production has nothing to do with poor global prices or lack of research dollars put into quality and disease problems in Western Canada or the horrendous shipping and handling costs we pay! Remember the Crow. Good thing you have the CWB to use as a whipping boy.

[jdepape]

Agstar77:
"horrendous handling costs" - you mean like these:

In 2008-09, Western Canadian average “net-backs” (handling, cleaning, CWB expenses, etc - excluding freight):

CWRS = 28.91
Durum = 48.47
Canola = 5.65

The reason canola is lower – competition and no CWB costs.

You're right - when the "open market" is willing to handle/trade canola for under $6.00, you gotta wonder why it costs close to $50/t to handle durum (that doesn't include freight).

How can we correct this?

[TOM4CWB]

Agstar77,

Can I lock in a basis for my 2011-12 wheat? NO.

I have Canola done... and would have had wheat fully hedged IF there had been an opportunity.

I am not even allowed to lock in a basis on CWB feed wheat (that is fine milling wheat) till the day it is delivered & settled.

It goes on and on... grade spreads based on initial prices; instead of transparent market prices;

I do not know what rose coloured glasses you folks got... the CWB must have a very special secret deal for you... they sure have not offered to any of us!!!

So domestic ethanol/livestock users laugh all the way to the bank.

WHAT a FARCE... the CWB/CGC made twice the feed wheat there is actually out here... and collapsed the western Canadian feedgrain prices.

And you in your bliss close your eyes and chant... the CWB... makes money for me...

the CWB... makes money for me...

the CWB... makes money for me...

If the CWB can outsell and get better prices... then every grower that can find a better price than the CWB offers... should be given a no-cost export license

Just like those (No-Cost CWB export Licenses) given to 'designated area' seed and manufactured feed producers; BC grain producers, Atlantic grain producers... Quebec and Ontario grain producers!!!

Every other producer in the world (the other 90 plus percent of global wheat producers) are smart enough to decide when to sell.... just not us Eskimo fools who grow wheat in the 'designated area'.

When we grow and sell Canola in 2010... the price goes up!

[cityguy]

jdepape - where do the "net-back" numbers you quote come from? Virtually impossible to believe that grain companies will handle canola through the system onto a boat for $6.00 versus durum at $50.00. Not saying you've misquoted someone, it's just that suspect there's something missing in the original analysis.

[jdepape]

cityguy - "net back" data is from Federally Appointed Grain Monitor Annual Report 2008-09. I netted out the freight since freight rates are pretty similar. Also, this cost does not include fobbing at the port (does not get it onto the vessel) - just to instore.

[cityguy]

jdepape - so in your opinion, it makes sense that grain companies make $50 handling durum versus $6 on canola at the primary elevator given that these costs don't include terminal elevations or rail freight?

[jdepape]

The grain companies DON'T make $50 handling durum.

Here's the breakdown:

CWB costs (gross)....30.09
Trucking.............8.09
Primary elevation....13.00
Cleaning.............5.08
CGC weighing/insp....0.38

CWB trans svgs.......(1.70)
Trucking prems.......(6.47)

Total................48.47

BTW - before you question the CWB costs, unfortunately they are not from the annual report so they can't be tested. The CWB provides its numbers directly to the Grain Monitor based on what it believes its costs to be.

The grain companies' revenues total about $18/tonne - I left out the trucking premiums they pay out because they also get multi-car shipping incentives from the RRs that aren't factored here.

[cityguy]

so the $30 is what - the cost of going from thunder bay to the st.lawrence? Appears as though it's a durum specific cost as the wheat is a lot "cheaper". Guess that's why there isn't a lot of canola that goes out of the east coast. Also - what's the $8.00 trucking? And does the canola $6.00 revenue also including the cleaning that companies charge on canola?

[chuckChuck]

If you look at a long term comparison of USDA prices paid to US farmers and the historical CWB prices you will likely find that US and Canadian average weighted prices are fairly similar. Keep in mind that US farmers have the advantage of larger domestic usage and lower freight costs in many areas, that increase net returns to producers. The US is often a higher value market than many of the other world markets in Asia and South America that we also sell to. It is such a joke to read some of the BS that is written in Agriville. Without detailed data from the world market on a day to day basis it is not possible to know what the hell is going on. Not to mention most of you have little or no experience on the sales desk of any international grain trader. Just look around your neighborhood to see the numerous management/marketing errors that farmers make yearly. 1.Monopoly sellers have an advantage. 2. The CWB pool returns will lag cash spot prices. 3. We can't sell all our grain in the US.

[bucket]

chuckchuck

Anytime you would like to provide proof of what you have just said - post it.

A couple of years back when the cwb forcibly held back durum through the calls, when I finally hauled durum it was $20.00 a bushel.

And I could only haul in a portion. The american farmers that had held it for that long would have been getting $20.00 a bushel and hauling 100 percent of their contract.

I don't think your comaprison is sensible for my farm.

[TOM4CWB]

Chuckchuck,

Western Canada produces canola... and the price day after day is higher than in the US.

Plus we have a domestic crush industry... that has increased competition to the point where this value added industry arbitrages UP international prices.

Your excuses for a system that depreciates competition and costs 'designated area' growers to hold and store grain for millers everywhere... is more than frustrating.

A 'Single desk' monopoly with bottomless pockets.... is just like CN when the Gov of Canada when owned it and the people of Canada paid the bill. CN lost Billions... when a B was a T. CP was stuck with CN killing them.

Before 1990 the CWB single desk allowed 'designated area' grain growers an opportunity to market on their own. If higher value was available outside the 'designated area' grain handling system... arbitrage occurred and growers prospered.

Organic growers are allowed to market and export wheat, barley, and durum with only a service charge... and the sky has not fallen in on the organic grain market.

Wheat prices have not fallen through the floor in Ontario since they deregulated.

There is more than ample evidence that what the CWB 'single desk' does... EXTRACTS value from 'designated area' grain growers pockets... which is exactly why organic growers were allowed to market their own 'designated area' CWB grains.

Even the Canadian Federation of Independent Business agrees that market arbitrage will prosper our local economy... not lower values.

It is SICK that ORGANIC growers are allowed be directors and to hold the balance of power at the CWB... and wreck my farm and local community.

If I could grow all Canola... I would. I can't... I must grow wheat /barley to keep disease down in rotation of broad leaf crops. If I grow corn the fusarium will wreck my wheat/barley.

Your excuses to take the easy way out... and fail to market FOR 'designated area' grain growers... instead making us your slaves... burns me big time.

'CANADA SLIPS on CWB' IS BOTH FACTUAL... AND TRUE.

wE wILL nEVER SURRENDER.

MAY dON REST IN pEACE...

gO rIDERS gO!!!