Ending CWB Monopoly; Many Benefits

[jdepape]

The "multis" will work with the CWB if there is a value proposition. Since grain handling is a volume business and we have over-capacity, if the CWB brings volume to the table, the "multis" will want to deal.

Question the CWB needs to address: how does it "bring volume?"

[agstar77]

From what the U.S. millers say, they like the reliability and consistency of CWB deliveries vs the open market product. Controlling a large warehouse gives the ability to supply a uniform product the open market cannot. The specs may average out, but the unformity is not there.

[bucket]

jdepape

If the crushing plant is sourcing from the states, isn't that a bullish indicator? That means they can't source locally because the locals are out or the price has to be higher?

Same thing would happen in an open market for wheat. They are paying very well for wheat and durum in Montana right now, trying to source grain. Would it not make sense to let the southern canadian farmers push their grain in that market.

Board supporters and others have to start looking at a North American solution to moving and marketing grain instead of this "designated area" crap.

The freight system could be improved greatly by forgetting about that imaginary horizon line they see on a map.

Bill gates and Warren buffet didn't buy up the majority of railroads to run like they were in the 1900s.

[agstar77]

It won't be able to bring volume when the open market starts , because the line companies will cherry pick and give incentives to cash starved farmers who will sell to them for an extra nickel. How will the segregate CWB grain from their grain. The answer is they won't. The only answer would be for the CWB to have its own terminals or at least exclusivity with one operator,Viterra? One terminal in Manitoba ,two each in Sask and Alta.

[jdepape]

bucket:

Don't always just think spot pricing. It may well have been that Altona had some good forward pricing offers and some guys in Canada sold as did some Americans. Sometimes its just timing.

[jdepape]

Agstar:

"line companies will cherry pick"

Wow. First you say that farmers competing with each other will drive the price down and don't seem to listen when we say that the buyers will compete and hold the price up (they actually work together to find the price equilibrium point). And now you say that grain companies will pay more than the CWB (by a nickel) just to frustrate the CWB and get the business away from the CWB. But if they have a negotiated deal with the CWB to handle their business, why would they want to send them away?

"incentives to cash starved farmers"
You gotta ask yourself why they are cash starved in the first place.

Check this out:
[URL="http://cwbmonitor.blogspot.com/2010/10/is-this-deal-you-want.html"]Is this the deal you want[/URL]

In an open market, farmers will be able to sell ANYTHING to generate cash - even wheat. So if wheat prices are lousy, they sell canola. If they don't like canola prices, they sell wheat.

"How will the segregate CWB grain from their grain."

They don't now (feed wheat - CWB/non-CWB - all in one bin) why would they need to then?

The grain companies are very customer-oriented. Screw up once and you may never ship to them again. Tell me - why would they treat the CWB any different than any other customer?

[jdepape]

To clarify that last paragraph:
If a grain company screws up, they may lose a customer and not get to ship to them again. Why would they treat the CWB lousy and not get their future volumes?

[bucket]

Someone is missing the other part of the equation.

THE GRAIN COMPANIES MARKET A GOOD MAJORITY OF OUR GRAIN THROUGH THE "ACCREDITTED EXPORTER" PROGRAM.

The cwb does very little for us in the first place. And one retired director once told me the cwb relies on grain companies to make the logistics work.

We don't need 500 employees FTD in winnipeg.

[gregpet]

First board supporter I have heard saying the price will go up when the CWB does not have its monopoly powers any longer. Agstar, has the light bulb finally turned on and you realize the multis will have to compete and bid competitively for our grain?

[jdepape]

Here's a story about how the CWB relies on the trade.

Some markets are quite small. I know of one that buys barley but the receiving port is quite small - it can only accept and unload ships less than 30,000 tonnes.

Their imports tend to come in larger vessels delivered to a larger port in a neighbouring country. These vessels are "grocery" boats, loaded with a number of commodities - wheat, barley, canola, peas, by-products.

The CWB relies on the trade to execute this type of business (it's not that rare) because it doesn't do all the other commodities - needs someone who is set up to do it. Otherwise, the CWB would never sell into those markets.

Wonder how many other situations we miss out on because the CWB doesn't do that kind of business. Containers? Organics? Speciality IP grains?