CWB

[bucket]

Not to argue with you on this Tom but who, then, would/should have been responsible for that huge loss a few years ago???

Maybe you are just paying back the loss you incurred?

Just an unbiased question not being argumentative.

[charliep]

The issue of who paid is in the 2007/08 annual report. The readers
digest version would be farmers who used both producer payment
options and the pooling system. In 2008/09, about $19 mln were
transferred back to the pooling system from the contingency fund of that
year to pay off the supposed debt of the 2007/08 crop year (a board of
director decision/policy). Again, documented in the 2008/09 annual
report. Since then, the contingency fund has built to $______ at the end
of the 2010/11 crop year (not public until the annual report) and so far
this year (2011/12) the contingency fund has built to $________. I would
hope there will be disclosure about the amount of money in the
contingency fund on January 1 or whenever so farmers know where the
new organization is starting from.

[bucket]

So the pools paid back some of the 250 million loss. Then the contigency fund belongs to everyone?

Even with a surplus of 60 million it would take the fund a number of years to pay back the loss considering interest, time value of money(ha) etc.

[Tom4Wildrose]

Bucket,

My understanding is that the management took the money it borrowed from the contingency fund and paid it back.

The 250M in losses was much much more than just PPO losses in the first place.

The CWB runs positions together and trades a package... NOT PPO trades and pool trades together. Hence the reasons I am told positive hedge balances cannot be returned to PPO holders. This is way more complex than it first appears.

I stand by my statements.

[Tom4Wildrose]

Bucket,

When the Contingency fund was positive in the first year after the fiasco... from then on it was a tax.
(the positive balance) and became an asset of the CWB that I was taxed to create.

The objective SHOULD have been a ZERO balance... not a buffer to cover mistakes.

Grainco's are not allowed this luxury in large part because a mistake only can be sucked back through the basis... if everyone makes that same mistake.

Otherwise the grower business will flow straight to those who didn't mess up... to a large extent!

The CWB has much to learn... and Chairman Oberg has done a massive dis=service to our grain industry in western Canada.

He helped reck AWpool... then Agricore... now finishes off the CWB with his worse performance ever.

A perfect record.

[charliep]

To highlight Tom's point, the $250 mln was for all trading losses that
year - producer payment options and the pricing pace model. It quite
right should have been covered by the 2007/08 pool returns (which
were extremely high to remind you). The losses were not a good
situation but maybe a reality of the high priced/volatile trading
situationn that occurred in 2007/08.

A challenge to everyone is to actually spend time in the offices you are
discussing reading the CWB annual reports and understanding the
financial reporting in them. They are the CWB accountability statement.
Also understanding the annual are divided in half. The first part a
corporate statement of affairs for stateholders and the second the
audited financial statements. Both are very different in terms of
purpose. No different than any other annual report.

[charliep]

I note Jeff's comments are a record of decision making. The board
recognized the need to increase the contingency fund this spring to
look after the risk associated with 6 mln tonnes of PPO contracts in
2010/11. From a risk standpoint, $60 mln is effectively $10/tonne of
contingency fund/tonne when spread over 6 mln tonnes. I would
question whether enough but not my call.

Again, it is farmers who participated in the producer payment options
plus various transfers into the system from other activities like profits
on cash trading and various transfers from the things like interest
earning on old barley sales.

If you want to allocate this money to farmers, it should be given back
the farmers who used the producer payment options. Open to
anyones ideas as to how this would be done fairly and inexpensively.

[Kodiak]

A question for those who have some knowledge of how things work in the trading rooms of the grain companies. Charlie, yes $60Million is $10 on 6 million tonnes. Doesn't maybe sound like much put that way.

But - would a commecial company leave its trading room untouched if it lost $60Million?

Or would some heads roll? I don't think that they would even contemplate that kind of a loss. Someone would pay with his job LONG BEFORE even $6Million was hit. I may be wrong on this, but I doubt it.

[parsley]

Heads would roll after they gouged out both
eyes. Who in their right mind rewards militant
cocky incompetence? Pars.

[charliep]

I'm going to leave history for others to analyze/second guess. $60 mln
would not have covered the 2007/08 deficit in the CWB trading activities.
The CWB requests to manage overall risk for the entire pooling process is
well over $1 bln (not saying needed but what they asked for).

Perhaps the note is 5 years have gone by since the first tries at reform and
the organization has not done things to modernize like develop an equity
fund to backstop operations or modernize/simplify their producer payment
options. Many of these things may have required a change to act but no
attempts were made to do this or at least consult with the federal
government/other stakeholders. A expression I heard at a recent meeting is
that the CWB culture likes to manage by confrontation - not collaboration.
Divide and conquer.

[parsley]

Confrontation was by far, the only farmer offense
that was effective AGAINST the CWB.

The alternative, which was working from within to
try and bring about change, meant trying to co-
operate with the lowest, slimey, lying, two-faced,
unprincipled band of thieves anyone could
possibly stuff into a building on Main Street in
Winnipeg. An unsophisticated farmer's
observation, Pqrs.

[Tom4Wildrose]

Charlie,

You wrote..."5 years have gone by since the first tries at reform..."

I remember 1996 like it was yesterday. Our family farm fought tooth and nail every step/year of the way for positive CWB reform. This was at great personal expense and cost for those around me as well. THE CWB could have easily been reformed in a civil manner from within...but the CWB power brokers chose a selfish religion that rational thought and logic could not fix from within. I learned much. As I am sure you did as well.

Just couldn't let you get away with the 5 year thing Charlie!

Grin! <(>;{)