CWB Early Pricing Option

[charliep]

Just a note to high the CWB early pricing option.

http://www.cwb.ca/corp/apps/ppo_prices.nsf/epo/2002_index.html

I wouldn't sign the "A" series CWB contract/deliver any wheat outside of this program. Cashflow is too critical for most. The local feed alternative is also there and it pays all money on delivery.

Comments on the $4/t (a dime/bu) discount to reflect administration, time values and risk?

Are EPO contracts covered under initial payment guarantees? If not, how is the contingency fund handled?

[TOM4CWB]

Charlie,

So much for ALL the money being returned to farmers...

5.5mil for contingency fund from barley;

EPR funding;

PPO funding;

It should be obvious the CWB is planning for capital spending on capital assets in the future... with the contingency fund as a backstop.

Empire building is an expensive business...

Funny, I didn't remember voting to allow the CWB to tax and grab, did anyone else?

[parsley]

tom4cwb,

Maybe the Wheat Board Directors are building up an imaginary honeypot dripping straight from the Contingency Fund so that it is overflowing just in time for campaign coffers for the Liberal leadership ( that isn't really taking place).

Parsley

[parsley]

Regarding the initial payment guarantee, as the initial increases, the federal govt. guarantees that value. The EPO guarantee for any difference between the final return (ie final govt. guarantee) and the EPO value is guaranteed by the CWB.

Regarding the contingency funds, any money directed to the contingency funds are accounted for and held separately.

Tom

[TOM4CWB]

Thalpenny,

I have not been able to get an answer on how money taken from us is distributed back to the contingency funds.

1. If I do a PPO cash price on wheat I sell you, is the profit from the futures returned to the pooling account, or to the contingency fund?

2. On the day I price my cash contract, does the CWB hedge the C$ and Minneapolis futures and keep record of these transactions?

3. On the day I deliver my flat priced wheat, does the then reverse the specific hedge transactions that should have been made on the day I flat priced the grain?

Now, last year I hedged when the futures was about $3.60US and delivered when the futures was $3.10US.

Now the Pooling accounts are returning the same approx. amount as what I recieved cash, but the CWB kept the $.50US/bu, so where did this money go, to the contingency fund, or to the pooling account?

If farmers who did the PPO contracts last year all asked for an accounting would the CWB have the audit trail to show what was, contributed to/paid from, transacted and balanced with the contingency fund balance?

Can the CWB show me the daily balance that is in the various contingency funds, and how many exactly are there?

Same needs to be asked for the 90% PRO EPO contracts, do the profits/losses for these funds flow from and to the contingency funds, or the pooling accounts, both, and can the CWB track each purchase from farmers through to delivery/sale to customers/endusers, with the balance in the contingency fund?

I have not got a straight answer on any of these questions, would the CWB answer them now?

[parsley]

thalpenny,

You tell farmers, "Regarding the contingency funds, any money directed to the contingency funds are accounted for and held separately ", and that is probably true. The adding and subtracting will most likely be done correctly.

But in the case of the Winnipeg Liberal Fundraiser, money was taken from the pooling accounts, put into the Communications Budget, (most likely), and farmers' $$$$$$$$$$$ ended up in Liberal coffers. Probably the accountants all stamped AUDIT OK because the adding was done correctly. But what is the real problem here , thalpenny?

Well, thalpenny, the Code of Conduct was broken. Money was taken out of farmers' pooling accounts to send Mr. Goodale's appointee to a partisan function, and that is outside the boundaries of the Code of Conduct guidelines. Staff went with Directors and that is a breach. The money was all accounted for, but the point is the money should never have been spent in the first place.

Mr. Goodale has not addressed this break in the Code even though he said he would. The Directors pretend they didn't break their own Code, and swear up and down they didn't do anything wrong, even though their own Code states otherwise. CWB Staff even went on the defensive to the press. They got caught.

Because these are the kind of 'partners' farmers are supposed to embrace as their business associates, farmers are becoming critical thinkers because we have gradually come to recognize what we are dealing with here.

When it comes to the Contingency fund, why would farmers think things will be different? It is being built up from farmers' pooling accounts and this contingency money will be re-directed. Somewhere. By the same people.

Will the adding be right? Probably. Will the re-directed money be within the confines of the Code of Conduct, or worse yet, within the CWB Act itself? Farmers must conclude, " Why would it?"

How will we ever find out? We won't without change.

You can have done a good job, thalpenny, of reassuring farmers that the adding will be done right, and of representing the Wheat Board so well.

Parsley

[parsley]

Thanks for the compliment parsley. The issue of the contingency fund regarding the payment options is relatively simple, yet complex.

Although Tom4cwb describes a perceived gain on the hedge regarding his pricing option. The hedge is lifted in relation to the progress of the CWB sales program, not to when Tom4cwb's delivery was received. The hedges are lifted on an ongoing basis over the whole marketing period based on the percentage of firm sales of the CWB.

Tom

[TOM4CWB]

Thalpenny,

The only way I can describe the Contingency fund contributions... they are simply CWB taxes.

If the CWB can't match sales hedges to deliveries, then the whole Producer Pricing Option system is pure politics, and nothing else.

The need to have the CWB facilitate grain producer's sales decisions with the legitimate sales signals from end users has not been achieved in the PPO system today.

My hope in pushing for flat pricing options was not to create more risk, but mitigate risk.

CWB risk management of our assets through an accountable sales system has not been advanced at all via the PPO pricing system.

Therefore I consider Producer Pricing Options a failure, as the CWB fails to understand the simplest reason to risk manage.

THE CWB must match and facilitate the transactions between willing buyers (Endusers of our products) with willing sellers (the Farmers who actually put there own blood sweat and tears into producing the product), and complete the transaction in an accoutable efficient manner.

If the CWB can't understand our need for risk management through a responsible accountable marketplace, I am afraid all CWB reforms have been in vain.

It is obvious that the contingency funds were simply set up to be slush funds that give the CWB more latitude to be even more reckless when selling "designated area" farmer's grain.

My farm cannot survive in the 21st century without efficient effective risk management systems.

Are you telling me the CWB is above the laws of simple econmics, accountability, and common sense?

[parsley]

Tom4cwb, isn't this actually fraud?

Parsley