CWB ship buying

[jdepape]

The railways were running out of old box cars because the oldest of the old were wearing out. So the govt stepped in to buy 2,000 cars.

Someone told me that when the first cars were purchased, there was some legal impediment to the government actually owning the cars, so the CWB was made the owner - at least in name.

I was also told that the CWB at the time did not want to own them and complained bitterly.

Without these cars, grain movement would have slowed to a crawl.

Totally different picture than the laker story. Whereas rail freight was in a stalemate back then and someone had to step in to do something, that is not the case in lake freight.

Lake freight is not regulated and a good business case should attract many investors / shippers.

[gustgd]

Feb 14th Hursh

The old debate over the Canadian Wheat Board has developed a new twist. The CWB is purchasing two new lake vessels at a cost of $65 million. The CWB says there’s a need to replace the aging fleet of freighters on the Great Lakes. The cost is equal to approximately $1 per tonne, paid over the next four crop years. Meanwhile, the transportation cost savings are supposed to amount to at least $10 million per year. CWB opponents have been quick to pounce noting producers were never consulted on the purchase. That’s true, but the CWB directors are elected to make decisions on behalf of producers. Although $65 million sounds like a lot of money, it pales in comparison to the money that is made or lost during the CWB’s regular marketing decisions on wheat, durum and export barley. And there is a precedent for the CWB owning transportation assets. It has long owned a fleet of 3,400 rail hopper cars. Some opponents also argue that the benefits of ship ownership, if any, will not necessarily accrue to those who finance the purchase. Producers who are planning to retire soon will end up paying the tab without seeing the longer-term benefits. Using that argument, the CWB shouldn’t invest in new computers or staff training either. The true, but unspoken reason for most of the opposition is probably the distaste for the CWB expanding its sphere of influence. I’m Kevin Hursh.

[gustgd]

Ag commentator Kevin Hursh has defended the CWB’s decision to buy lakers with farmer’s money by saying that the CWB directors are elected to make decisions on behalf of producers.



Yes, to a degree they are. However, very few farmers – even some supporting the single desk – ever expected the board of directors to make the decision to take the CWB outside of its conventional role as grain marketer. Even fewer expected the directors to make the decision to use farmers’ money to buy something not required to market grain – without even asking. (You can argue you need transportation services to market grain; but, you don’t need to own them.)



Mr. Hursh suggests that the price tag of $65 million “pales in comparison” to the money the CWB makes or loses in marketing decisions. His comments align with the CWB’s condescension that this is no big deal, since it represents only $1.00/tonne. To one farmer I talked to, $1.00/tonne over 4 years is equal to $16,000 – money that he would rather see come his way because of a total crop failure last year.



Hursh also suggests that buying vessels should be acceptable since the CWB already owns a fleet of 3,400 railcars. He calls it a precedent but it’s not.



The situation back then was completely different – the fleet was made up of broken down boxcars and they weren’t going to last much longer. Somebody had to buy railcars because the railroads refused, since there was no money in hauling grain under the Crow. It was the Federal Government that bought the cars and made the CWB the owner.



Back then, nobody took farmers’ money to buy the cars, like the CWB is doing to buy the lakers. Also, railcars had to be bought by someone but nobody wanted to. That is not the situation with these lakers; remember, Algoma and Upper Lakes are buying 6 lakers themselves.



Mr. Hursh likens the purchase of these lakers with the CWB’s investment in computers or staff training. The difference he misses is that computers and training are required to sell grain – the CWB doesn’t NEED lakers to fulfill its mandate of selling grain.



But he misses an even more important point. Farmers are being forced to pay for these lakers but they will never own them. The CWB will own them, but farmers don’t own the CWB.



I guess in an ironic way this is proof that you can actually benefit from something without owning it.



Hursh really misses the message in the tea leaves when he suggests “The true, but unspoken reason for most of the opposition is probably the distaste for the CWB expanding its sphere of influence.”



Farmers are angry because the CWB is taking their money to spend it on something they don’t see as necessary and without being asked; they would rather invest in their own farm operations or their local communities – or pay bills. It’s like being forced to pay for a B-train even though you’ll never own it and you prefer to use custom haulers anyway.



As one farmer put it, “I don’t even let my kids spend my money. And I love them.”



I’m John De Pape

[gustgd]

part of my reply to John on his survey about the lakers.

So how ever you want to count put us down for this is a bad idea.
Although not for financial reasons ( heck it might even make the CWB money)
Its for all the "intangible detriments/drawbacks"
Bad precedent of allowing them to expropriate money with no defined ownership.

a)It's $1/tonne this project would the next be $2-3-4-10
b)They never consulted ever...... I go to more meetings than most and this is the first I've heard of it. Maybe I should have said something when they got into their own quality assurance lab, but they said they had a good business plan.
c) The portion of the BOD who voted for this have a bad history of business management. There is a long line of poorly managed organic farms and need we mention the Sask wheat pool?
d) The ability for them too cook the books so to speak.
e) All the thoughts of owning depreciating assets.
f)The tie in with mission terminal, and the overcapacity out there.
g)Did I mention that we will be charged approximately $8000.00 a year and never get a payback. kind of like a co-op with no dividends.
h) This is more than we as farmers spend on research for new varieties which btw has a 14:1 return on barley and 5:1 on wheat.

This is just off the top you had good ones as well.
all the best

Gerrid Gust

[checking]

I'm no more in favor of the CWB owning a laker fleet than I was in having railway overcharges of an equivalent amount sent to the WGRF.

After awhile these $65 million farmer cookie jar extractions tend to add up, but certain people only complain about specific missing cookies. I guess it might have to do with what Board chair you occupy, right gustgd?

[gustgd]

@checking

January 19, 2009: Wheat Growers Support Return of Excess Freight Charges to Farmers


The website won't let me bring it up but I'll dig through my saved folders.

Can you show me where you protested back in the 90's when the legislation was drafted putting the freight overages to the WGRF.

[gustgd]

Found it!

Media Release
For Immediate Release: January 19, 2009

Wheat Growers Support Return of
Excess Freight Charges to Farmers

The Western Canadian Wheat Growers Association has written to the federal government asking that the excess rail freight charged in the 2007/08 crop year be returned to farmers.

"This is money that belongs to farmers who delivered grain in the 2007/08 crop year," says Mike Bast, Chair of the Wheat Growers. "The amount, plus interest, should be refunded to farmers."

In the 2007/08 crop year, the Canadian Transportation Agency determined that CN and CP overcharged grain shippers by $59.8 million due to the failure of the railways to properly adjust their freight rates to reflect the decreased car maintenance allowance embedded in the revenue cap calculation.

The Wheat Growers have asked the federal Ministers of Transport and Agriculture to ensure the $59.8 million plus interest is returned to farmers and to review options with farmers and shippers as to how this might best be achieved.

The Wheat Growers also ask that the 15 percent penalty amount of $9.0 million assessed against the railways be allocated to the Western Grains Research Foundation (WGRF) and added to its endowment fund. The Wheat Growers note that this amount is approximately twice the amount the WGRF receives in check-off payments in a typical year.

The Wheat Growers also ask the federal government to consider increasing the 15 percent penalty, given that the existing level does not appear to be a deterrent to excess freight charges. CP has exceeded its revenue cap in four of the past five years and CN has exceeded its cap in three of the past five years.

The Wheat Growers also support a railway costing review, so that the revenue cap is set in such a manner that the railways are appropriately compensated for the service they provide and have sufficient incentive to invest in the rail system to meet future needs.

For further comment, please contact:

Mike Bast
Chair
Mobile (204) 330-0053

[checking]

So you agree with me that to make me whole, two cookies must be returned to my cookie jar, and it is wrong for Boards to either accept, or take money that belongs to farmers to spend on Board pet projects.

It's too bad that rural party lines was the tech of 1990's. Perhaps many things adopted in that age should be reviewed in the light of the internet world.