I would like to respond to some of thalpenny's comments (I apologize for the length):
"The benefits of single desk selling would disappear under the proposal the Standing Committee put forth."
What ARE the benefits? This was the point I was trying to make earlier in this thread - the benefits of the CWB (if any) have not been demonstrated. Period.
"It's interesting that the list of attendees to the Committee's Prairie meetings would not have exceeded 100 people, and there was very little time devoted to the meetings by the Committee (max 2-3 hours)."
I'm confident that the committee based its recommendations on more input than just the country meetings. This committee has been hearing the problems associated with the current CWB for some time now; please don't try to condemn the process simply because you don't agree with the outcome.
"The best indication of farmers' desire for this type of change will be through the upcoming election of CWB directors."
What about the private surveys the CWB has commissioned that are rumoured to have indicated that 2/3rds of all farmers surveyed want either the end of the CWB or a dual market? Do these surveys not count? Aren't they "pretty good indications of farmers' desire for this type of change?
"Price pooling would have to change. Cash buying will diminsh the risk management value of pooling prices."
I've never seen how price pooling has "risk management value". So you sell all my wheat for me and I get the average of all sales that you make - export and domestic. But if you do a lousy job of selling my wheat (and you haven't proven otherwise) then I could get the average of a bunch of lousy sales. I still have risk - the risk that you may not perform very well. (And you haven't proven otherwise.)
"The principle of farmers receiving the same value for the same quality of grain (adjusted for their location) regardless of the timing of sale through the year will disappear."
Trust me Tom, this a good thing.
"As farmers receive all the revenue from sales net of costs, its pretty tough to argue the CWB is the buyer of the grain."
Tell that to the organic farmers who are trying to export their wares.
"A free market for CWB grains will introduce competitive bidding for rail capacity, and competitive undercutting of prices to customers to get market share."
I think you're saying that competitive bidding for rail capacity among the grain companies will drive rail costs higher. Part of the argument for the revenue cap for RRs (an argument that I think the CWB supports) is that the Canadian RRs were capturing higher rates than their US counterparts (who operate in an environment where there is "competitive bidding"). On one hand the US rates look good, but on the other, "competitive bidding" for freight doesn't look good. How can you argue it both ways?
You also suggest that competitive undercutting of prices to customers to get market share will drive prices lower. I don't buy this; along with competition for export grains will come enhanced price visibility and price signals to the farmer. If I'm an exporter, I will try to be as competitive as possible when selling, otherwise I shouldn't expect to get the sale. But I also recognize that my bids to farmers in the country will only be as good as my sale allows - if I have the "low-ball" sale, I will have the "low-ball" bid at the elevator. I know that my competitors will also be doing export business and if they do a better job at selling (getting higher prices or better terms), they will "kick my butt" at the elevator because they will be able to pay more than I can; to compete with them I will need to match their price and squeeze my margins.
What will really happen in the competitive environment that the CWB is afraid of is that the farm-gate market will gravitate toward the best sales, not the worst. According the Auditor General, the CWB is an effective marketer of grain on behalf of farmers; she also noted that the CWB is a "tough negotiator" when making sales. If this is true, shouldn't the CWB be able to compete with other exporters and still be effective in a dual market?
By the way - in my view, the benefits of effective price visibility and market signals far outweighs any benefit from a single desk seller. But that's just my opinion.
Regarding Directors attending political functions - do you really think that going to a fund raising dinner is an effective forum to "profile agriculture and these issues directly or indirectly to decision makers"? I think farmers who want the CWB to be their voice want to get bang-for-their-buck. (Even those that don't support the CWB and are forced to "use" it, want the CWB to spend thier money wisely.) Spending time in front of the Standing Ag Committee (as the CWB does many times in a year) enables the CWB to detail its positions on all these issues. At a fund raider you may get 5 minutes with one MP as you wait in line for drinks at the bar (and depending on how many times you see him at the bar, he may not even remember talking to you).
How does going to a fund raiser enhance what the CWB is already doing in Ottawa?
"The benefits of single desk selling would disappear under the proposal the Standing Committee put forth."
What ARE the benefits? This was the point I was trying to make earlier in this thread - the benefits of the CWB (if any) have not been demonstrated. Period.
"It's interesting that the list of attendees to the Committee's Prairie meetings would not have exceeded 100 people, and there was very little time devoted to the meetings by the Committee (max 2-3 hours)."
I'm confident that the committee based its recommendations on more input than just the country meetings. This committee has been hearing the problems associated with the current CWB for some time now; please don't try to condemn the process simply because you don't agree with the outcome.
"The best indication of farmers' desire for this type of change will be through the upcoming election of CWB directors."
What about the private surveys the CWB has commissioned that are rumoured to have indicated that 2/3rds of all farmers surveyed want either the end of the CWB or a dual market? Do these surveys not count? Aren't they "pretty good indications of farmers' desire for this type of change?
"Price pooling would have to change. Cash buying will diminsh the risk management value of pooling prices."
I've never seen how price pooling has "risk management value". So you sell all my wheat for me and I get the average of all sales that you make - export and domestic. But if you do a lousy job of selling my wheat (and you haven't proven otherwise) then I could get the average of a bunch of lousy sales. I still have risk - the risk that you may not perform very well. (And you haven't proven otherwise.)
"The principle of farmers receiving the same value for the same quality of grain (adjusted for their location) regardless of the timing of sale through the year will disappear."
Trust me Tom, this a good thing.
"As farmers receive all the revenue from sales net of costs, its pretty tough to argue the CWB is the buyer of the grain."
Tell that to the organic farmers who are trying to export their wares.
"A free market for CWB grains will introduce competitive bidding for rail capacity, and competitive undercutting of prices to customers to get market share."
I think you're saying that competitive bidding for rail capacity among the grain companies will drive rail costs higher. Part of the argument for the revenue cap for RRs (an argument that I think the CWB supports) is that the Canadian RRs were capturing higher rates than their US counterparts (who operate in an environment where there is "competitive bidding"). On one hand the US rates look good, but on the other, "competitive bidding" for freight doesn't look good. How can you argue it both ways?
You also suggest that competitive undercutting of prices to customers to get market share will drive prices lower. I don't buy this; along with competition for export grains will come enhanced price visibility and price signals to the farmer. If I'm an exporter, I will try to be as competitive as possible when selling, otherwise I shouldn't expect to get the sale. But I also recognize that my bids to farmers in the country will only be as good as my sale allows - if I have the "low-ball" sale, I will have the "low-ball" bid at the elevator. I know that my competitors will also be doing export business and if they do a better job at selling (getting higher prices or better terms), they will "kick my butt" at the elevator because they will be able to pay more than I can; to compete with them I will need to match their price and squeeze my margins.
What will really happen in the competitive environment that the CWB is afraid of is that the farm-gate market will gravitate toward the best sales, not the worst. According the Auditor General, the CWB is an effective marketer of grain on behalf of farmers; she also noted that the CWB is a "tough negotiator" when making sales. If this is true, shouldn't the CWB be able to compete with other exporters and still be effective in a dual market?
By the way - in my view, the benefits of effective price visibility and market signals far outweighs any benefit from a single desk seller. But that's just my opinion.
Regarding Directors attending political functions - do you really think that going to a fund raising dinner is an effective forum to "profile agriculture and these issues directly or indirectly to decision makers"? I think farmers who want the CWB to be their voice want to get bang-for-their-buck. (Even those that don't support the CWB and are forced to "use" it, want the CWB to spend thier money wisely.) Spending time in front of the Standing Ag Committee (as the CWB does many times in a year) enables the CWB to detail its positions on all these issues. At a fund raider you may get 5 minutes with one MP as you wait in line for drinks at the bar (and depending on how many times you see him at the bar, he may not even remember talking to you).
How does going to a fund raiser enhance what the CWB is already doing in Ottawa?
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