freight rates

[$short]

Has anyone given thought to what happens to freight rates in the post CWB world.

Today the freight deduction from your cash ticket for board grains is calculated by the CWB.

I assume it will be figured into the basis when you make a sale in a non CWB world but will it change enough to effect what you grow. In SE sask today the freight rate difference is approx. 30-40 cents per bushel between cwrs and durum.

Will this spread widen out even more because the graincos will booking freight on their own. Will it be enough of a difference that western sask wont grow durum.

[charliep]

Your freight rates will not change but some of your other parts of current CWB deduction process will.

For example, the CWB currently includes a FREIGHT ADJUSTMENT FACTOR on wheat and durum on the east side of the prairies to reflect the fact not all grain can move off the west
coast.

This is likely to disappear in the new world (at least for wheat and durum sold in the open market). Also suspect the orientation of deductions may change as well.

Deductions today are off west coast (Vancouver and Prince Rupert) or east coast. I suspect more grain will move south so the orientation will become more north south.

Basis levels/transportation deductions will get cheaper along the border as grain companies compete with US elevators.

Strangely enough, I used the Googe search tool on to provide a better explanation of FREIGHT ADJUSTMENT FACTOR and came up with a blank/no explanation.

This will be like canola which has basis variability around the crushing plants (Canada and US), west coast export markets and from time to time east coast.

Prices themselves will begin to reflect business opportunities for different companies and markets.

[URL="http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/econ8946"]FAF[/URL]

[charliep]

Likely made so complicated that I have killed the discussion. A good question though. There will be winners and losers in the open market with farmers in the south more likely on the plus side and farmers in the north negative. Farmers in the Minneapolis milling wheat/durum catchement area are likely to be on the plus side.

I would argue that the current east/west mileage based deductions used in pooling distorts the realities of the market and the new world will not allow this. Distortions equal ability for someone to make money on freight advantages. A more dynamic and free wheeling market will create opportunities versus a regulated one were all advantages and freight pain are pooled.

[$short]

Thanks Charlie. I agree that the freight distortion
we currently operate in won't be allowed in a
new world. They should reflect a more
commercial rate. The markets will sort this out.

We will be given true market signals and freight
will be no different. It could be all about location
location location.

There certainly will be a lot if changes happening
a year from now. Freight rates are just one of
them. CGC grading is another that will drastically
change. Minister Ritz has a lot of issues to
address.

[TOM4CWB]

$Short,

THis past crop was the perfect example of how Statutory grading that misses the main intrinsic value (Falling number) makes everyone look like fools in western Canada!

Selling unit trains to the US... of 300 falling #; 13 percent protein, CWRS... that was pay grade as feed? And the CWB stuffed the excess in the pools? Worth double what the CWB paid growers!!!

Talk about the greatest grain robbery... next to the fusarium fiasco of the early 1990's... and the CWB was in charge of it. Both times.