chuckChuck:
First – throwing new questions at me without addressing mine isn’t what I consider to be “rebuttal and informed discussion”. Rebuttal requires you address an argument already presented, not counter with a different topic; that's deflection and avoidance.
Be that as it may, I will address your items that relate to my earlier comments – but then I expect you to “rebut” mine.
You ask: <b>Where is your evidence that the CWB dosen't earn premiums in a single desk pooled price environment? </b>
My approach to CWB premiums has always been to argue that IF they get premiums, it is for reasons other than the single desk. But also there is no evidence of premiums – quite the opposite.
Talk to the buyers - they will tell you that they don't pay premiums for Canadian wheat because of the single desk.
When I look at CWB performance, I look at the cost side of the equation too. The CWB reported that in 08-09 it got premiums on wheat amounting to $6.65/tonne on every tonne sold. The Federal Grain Monitor data shows that in that same year, the CWB “cost” was $10.14/tonne. This is a number the CWB provides the Monitor – the CWB insisted that it would provide this information rather than have the Monitor pull it out of other reports or estimates – it includes CWB administration costs plus direct marketing costs. So if you’re going to take issue with it, talk to the CWB.
So, according to the CWB, it cost 10.14 to get a premium of 6.65. The net is negative $3.49. This does not include the increased cost of handling over what the non-CWB markets charge. That’s a different argument we can have at another time.
The other way to look at it is to look at the price the CWB got in comparison to "the market" over the crop year. I can’t speak for you, but if I’m going to hire someone to market my grain for me, I expect them to get me better than average prices. When you compare the final pool return to whatever relevant market you want, it is lower than the crop year average for the crop year. In fact, if you compare CWB farmgate returns to US prices over a crop year, in most years <b>the CWB pool return is lower than the lowest US price of the year</b> and never is it much higher than the lowest US price. The US farmer can sell his whole crop at the lowest price of the year and still get a better price than you through the CWB.
Then start adding up the added cost of on farm storage, interest, etc because you had to store CWB grain longer; plus the added interest because you weren’t paid until months later.
On a net basis, the CWB’s performance (premium) is negative and the more things you include in the analysis, the more negative it becomes. Put another way, the CWB is going to have to come up with much, much larger premiums than they are currently reporting for you as a farmer to get a net premium.
Question back at you: Where is your evidence that the CWB does earn premiums?
First – throwing new questions at me without addressing mine isn’t what I consider to be “rebuttal and informed discussion”. Rebuttal requires you address an argument already presented, not counter with a different topic; that's deflection and avoidance.
Be that as it may, I will address your items that relate to my earlier comments – but then I expect you to “rebut” mine.
You ask: <b>Where is your evidence that the CWB dosen't earn premiums in a single desk pooled price environment? </b>
My approach to CWB premiums has always been to argue that IF they get premiums, it is for reasons other than the single desk. But also there is no evidence of premiums – quite the opposite.
Talk to the buyers - they will tell you that they don't pay premiums for Canadian wheat because of the single desk.
When I look at CWB performance, I look at the cost side of the equation too. The CWB reported that in 08-09 it got premiums on wheat amounting to $6.65/tonne on every tonne sold. The Federal Grain Monitor data shows that in that same year, the CWB “cost” was $10.14/tonne. This is a number the CWB provides the Monitor – the CWB insisted that it would provide this information rather than have the Monitor pull it out of other reports or estimates – it includes CWB administration costs plus direct marketing costs. So if you’re going to take issue with it, talk to the CWB.
So, according to the CWB, it cost 10.14 to get a premium of 6.65. The net is negative $3.49. This does not include the increased cost of handling over what the non-CWB markets charge. That’s a different argument we can have at another time.
The other way to look at it is to look at the price the CWB got in comparison to "the market" over the crop year. I can’t speak for you, but if I’m going to hire someone to market my grain for me, I expect them to get me better than average prices. When you compare the final pool return to whatever relevant market you want, it is lower than the crop year average for the crop year. In fact, if you compare CWB farmgate returns to US prices over a crop year, in most years <b>the CWB pool return is lower than the lowest US price of the year</b> and never is it much higher than the lowest US price. The US farmer can sell his whole crop at the lowest price of the year and still get a better price than you through the CWB.
Then start adding up the added cost of on farm storage, interest, etc because you had to store CWB grain longer; plus the added interest because you weren’t paid until months later.
On a net basis, the CWB’s performance (premium) is negative and the more things you include in the analysis, the more negative it becomes. Put another way, the CWB is going to have to come up with much, much larger premiums than they are currently reporting for you as a farmer to get a net premium.
Question back at you: Where is your evidence that the CWB does earn premiums?
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