Western Grain Elevator Association

[charliep]

Note the following article on the stance of the Western Grain Elevator Association.

[URL="http://www.marketwire.com/press-release/wgea-responds-on-future-of-the-cwb-1529058.htm"]WGEA[/URL]

Does the CWB have a good relationship with grain elevators today? Why won't this relationship carry on into the future? Particularly if the CWB can package farmer deliveries coming up that grain companies drive way/provide a price risk management and inventory financing alternative on the one hand and generate sales/customer support on the other end of the supply chain?

[charliep]

I note the comments about grain companies providing handling services for third parties - crushing plants would be a prime example.

I note a grain company (including farmer owned inland terminals) generates money by handle and efficiency versus profits on trades. An inland terminal that turns itself 10 times (handles 400,000 tonnes in the case of a 40,000 tonne terminal) is likely to be a lot more profitable than one that turns itself 5 times. If the CWB offers programs that can efficiently move wheat into and out of their terminals, then I suspect these grain companies are going to be all ears.

[Prairiefire]

Charlie.....why would the wheat board be needed. Vitera this past winter enterred into some sort of arrangement with CN and CP . It,Vitera also picked up some thing in the port of Montreal. More spouts?Hmmmm

[charliep]

If a renewed CWB brought forward 2, 5, 10 MMT of contracted/committed grain, wouldn't the grain companies be interested in handling? The CWB simplifies life for a grain company in many starting with risk management. Grain companies have no concerns about futures market moves - the CWB and farmer stakeholders take on this risk. They will have concerns about the impact of a new CWB on throughput (board grains that sit dormant in inland terminals with no movement don't do much for handle) but they will be paid interest and storage.

At port position, the grain companies will likely continue to utilize CWB services to make sales realizing that even in the current world these same grain companies are accredited exporters - i.e. the grain company and not the CWB has the relationship with off shore and US buyers.

[charliep]

I should add elevation on CWB grains contribute to grain company bottom lines. To remind everyone of what is on your cash ticket (CGC posted so yours may be different). Wheat elevation - $14.50/tonne. Wheat cleaning - $5.75/tonne. Barley elevation - $15.50/tonne. Barley cleaning - $8.50/tonne.

[charliep]

How many of you looked at the CGC to find out tariffs at your local elevators.

[URL="http://www.grainscanada.gc.ca/statistics-statistiques/tariff-tarif/pp/pp-pp-eng.htm"]primary elevator tariffs[/URL]

You can find out tariffs at terminal and process elevators as well with a little digging.

[Prairiefire]

So Charlie getting rid of the board would get rid of all costs at the elevators ?

[charliep]

No. Just pointing out that elevators are fairly paid for services in the current system. Just highlighting that it is efficiencies and cost reduction based on competition that keeps elevator costs down to the farmer. A re-newed CWB in an open could work with grain companies in similar fashion to how things occur today. You are the one saying that the CWB only contributes additional cost and no benefit given you see no future in CWB not backed by government legislation.

[tipsy]

The Elevator Association release really points out once again how far and outdated the cwb and its present bod are.