The Conservative Party’s Fair-Weather Democrats

[chuckChuck]

Charlie. The short answer is the CWB is political/social issue as well as in the business of selling farmers grain.
Just as supply managed industries such as dairy and poultry are clearly marketing board examples designed to protect farmers from cheap imports that would clearly run many of them out of business as it has in many other countries. Protecting farmers is social and economic policy. So are subsidies and safety net programs.

You can argue one way or the other whether the CWB has been successful in assisting small and medium sized farmers, but clearly it was designed and supported as a marketing agent on behalf of and responsible to producers. You can also argue that it restricts farmers freedom. I would also argue that without the CWB there is also going to be a loss of farmer power and perhaps less competition as the industry consolidates. There are no guarantees that many farmers will not be left at a disadvantage in an open market.

What would happen if the Conservatives opened up the market to cheap dairy and poultry products? Many farms would go out of business. And you can bet that they will compensated for quota.

[mbratrud]

If I hear one more person compare Dairy and Poultry to Grain Again my head is going to explode... You cannot compare short shelf life commodities with Grains and Oilseeds. Fresh produce, Milk and Eggs are a different animals. The Dairy Quota system is not even remotely close to the CWB Single Desk. Give your head a shake for even bringing it up! If you think it is comparible you truly are out of touch.

[charliep]

Supply managed industries produce for the domestic market and are protected from the export market by tariffs. They control supply to set price. Production is based on a manufacturing system. Put feed in the cow to a certain level and milk comes out.

Wheat is mainly grown for export market (about 60 to 70 per cent depending on the year) with farmer decisions and mother nature the determining factor. Prices are established by factors outside Canada. The new reality is the Ukraine, Russia and Kazakstan can produce wheat for the mid quality markets - the bottom end of the returns to pool table referred to in the August CWB meetings. If you use supply management as a model, you would cut Canadian wheat production by a third.

Barley is about 85 to 90 percent domestic and 10 to 15 percent export. Should give Canada control over prices (at least for feed) theoretically but corn/distillers grains cross with no limits and other feeding alternatives soon work in if feed barley/wheat gets out of line. From customer side, livestock feed industry has to be competitive with the US. The 20 percentish decline in livestock numbers is directly reflected in a similar decrease in feed consumption.

Politically, you can carry on the conversation. In the real world, two different industries.

[mbratrud]

Agreed Charlie,
Also very important to acknowledge the fact that the Dairy Market for example would be much more difficult in an non regulated system, because producers are forced to market their product in a short timeline. Grain as long as cashflow permits I can store until Market conditions are more favourable to my situation.

[chuckChuck]

Charlie and MB, I well know the differences with grain compared to supply management, but the question you posed is the CWB a business question or a social policy question and it can be argued it is both.

I am not suggesting in any way that we can supply manage the grain industry like we do poultry and eggs. But at one time we had a two price wheat policy. One price for domestic and the world price for the rest. Is our domestic market still around 20% or so? In any case we gave it up under CUSTA or NAFTA. But it provided price benefits to producers like import tarrifs do for dairy and poultry.

Any arguments about dairy and poultry being perishable products are not really relevant as almost all countries have gone to an open market and their markets function reasonably well. But you seem to agree that supply management works well? And I would agree it is good policy. But it is not good policy just because the products are perishable. It is good policy because it provides stable predictable incomes that are based on the cost of production. This has clearly kept smaller producers in business longer. Which must be social policy.

So from a policy position how can we support one group of farmers with a regulated market and import controls while removing the marketing boards of another group without raising some questions about ag. policy in this country. Why does one group get so much protection and not the other?

And if you are going to use the "freedom" argument which many politicians and farmers use, don't you think that should be applied consistently and not only for obvious political reasons?

[blackpowder]

Good points. I say keep supply mgnt as long as people are aware of the reason their products cost double. And, Canada is losing it's food processing industry at a brisk pace, how would that look without supp. mgnt.? I don't know.
Ag policy is often a mix of social and business policy.
What you do not want in some ways is what Europe has.
Powerful value added industry to be sure, and ag policy in the forefront. But a farm population so subsidized they themselves have become a social issue. Quebec dairy farmers perhaps?
I've been told they want us to keep our board.

[mbratrud]

Chuckchuck you've tired me out....

Independance day Aug 1 2012, I will buy you a beer!

[blackpowder]

I'll get the second round.

[craig]

Supply management has a visible benefit because it
provides a profit margin over the cost of production.
When could that be ever said of the CWB.

[charliep]

Perhaps the thing both supply management and crop sector have in
common is a farmer has to be good at what they do - particularly if
they any level of debt involved. Average to poor management doesn't
pay for much quota or land. Size of both dairy operations and farms
are increasing to allow for economies of scale and what effectively has
become a tight margin business. Sitting at 90 % plus equity and the
story changes.

Perhaps you chuckChuck will agree that running a business is not a
democracy. Its making tough decisions everyday and being right
more often than a farmer is wrong.

[chuckChuck]

If farmers aren't making money from wheat and durum why are they growing it and selling it through the CWB system?

US farm gate prices may be higher simply because of higher domestic usage at 50% which gives them an advantage over our export dominated sales.

If you can hold your inventory and sell into a market peak you can easily out do a pool return. But in periods of over supply will the collective returns of all farmers from a single desk be higher than multiple sellers. I would argue yes.

Why did Brad Wall get concerned when BHP said it might not use Canpotex? Lower prices for potash and les royalties. Brad saw the benefits of single desk selling didn't he.

Craig, do you support governments intervening to lock in a profit for farmers? Which is what they do on behalf of poultry and dairy. The Conservative government sure does.

[craig]

Chuck chuck
It is not my place to take a position on supply
management because I'm not a poultry or dairy
farmer, re your comment of the single desk doing
better in times of over supply I would question
whether anyone can extract premiums out of the
marketplace in this situation. The only time there are
premiums for Western Canadian is when there is a
shortage of high protein wheat.