CWB Privatization Dilemma

[bucket]

Depape

Since it's all crown why are farmers paying pension liabilities and severance costs and discretionary trading losses for the last 60 years?

That's where our money went - to fund government responsibilities.

Good thing you mentioned the crown ownership thing. The employees and their **** ups were the crowns responsibility that farmers paid the bill on.

[jdepape]

cotton - I know you've been talking about CWB being a "broker" and, although I'm not completely clear on what that would mean, I tend to agree with you.

I threw out a similar idea long ago - but like your experience, no one really listened.

Instead of owning assets, I tossed the idea to Ian White (pre Aug 1, 2012) that the new CWB should leverage its real assets and leave the grain handling to the graincos.

My idea - CWB could provide professional grade pricing to farmers. Pricing meaning futures pricing. On the basis side, farms could deal directly with whomever they wanted to - negotiate their best delivery terms - their best basis for them individually. (To me, basis is not something that should be pooled - if a particular location has higher prices for some reason, why should that be shared with someone in the next province?)

CWB could provide much better than average pricing PLUS earn the carry in the market for its farmers. (Remember - they worked hard to get the average over the crop year but failed. As a volunteer organization, they could have gotten even better than average.)

CWB could also use their considerable customer list and remain involved in the export business. I suggested they could negotiate with their best customers to be their "buying agent" or representative in Canada. Sort of a broker of choice - everything that that customer bought from Canada would go through CWB. CWB would simply be a FOB buyer from the trade on behalf of their offshore clients.

The key was not to go to the trade and ask them to handle CWB grain. Instead, help farmers make better delivery decisions (basis decisions) - with the farmer dealing directly with the buyer. (The way to get better basis is to "short" the buyer - something the CWB never understood.)

I know this works because that is exactly what we have been doing. We are in the process of developing a form of regulated "commodity pool" or "hedge fund" to make this kind of value more available to more farmers.

For what its worth - we showed our plan to CWB (where they would do the futures pricing while assisting farmers with basis) with the idea that it would be the ideal organization to offer such a program. They turned it down on the basis it was "too novel".

[Digger]

"Depape

Since it's all crown why are farmers paying pension liabilities and severance costs and discretionary trading losses for the last 60 years?

That's where our money went - to fund government responsibilities.

Good thing you mentioned the crown ownership thing. The employees and their **** ups were the crowns responsibility that farmers paid the bill on."

AND THIS IS EXACTLY WHY THE CWB (as we knew it) IS NO MORE AND WHAT WAS WRONG WITH IT

[cottonpicken]

A brokerage is a firm that acts as an intermediary between a purchaser and a seller. More
commonly, a brokerage is referred to as a brokerage firm. To broker a deal is to
communicate with both the buyer and seller as to acceptable price on anything sold or
purchased.

A broker, a single person, or the brokerage firm completes any necessary legal paperwork,
obtains the appropriate signatures, and collects money from the purchaser to give to the
seller. Since the buyer and seller are employing the brokerage to complete the deal, the
brokerage may collect a portion of the money obtained. In some cases, a brokerage receives
money from both parties. In others, the brokerage receives a commission only from the
seller.

Brokerage firms are most commonly thought of in relationship to the sale and purchase of
stock shares. Fees are variable, depending on the degree to which the brokerage is involved
in decisions about purchase. Some stockowners give their brokers power of attorney to make
decisions about when to buy or sell stock and depend upon their brokers for researching
new stock for purchase. This type of brokerage firm usually assesses a fairly large fee, and
regardless of whether the owner loses or earns money, the firm is paid.


Other brokerage firms are employed by people who like to do their own research and make
all their own decisions about what and when to buy and sell. These firms have a tendency to
charge per transaction and can be quite reasonable to employ. In the past few years, several
brokerage firms have begun stock trading on the Internet, allowing their clients access to
information that will help them carefully research their decisions. These companies are not a
sound economical choice for clients who do not do adequate research or cannot consistently
read up on their stocks. Extensive involvement by the stockowner is necessary to hopefully
make the best deals.

In other areas of business, brokerage firms may be employed to acquire and sell real estate.
Brokerages exist to acquire art or antiquities. Also, restaurants and other service companies
may use brokerage firms to obtain meat and produce, restaurant supplies, or furniture.
Sometimes, employing a broker in this last sense is not initially expensive to the purchaser,
because the broker receives a fee from the companies used by their clients. However, the
price of merchandise obtained through a broker generally has a mark-up that makes up for
this lack of commission.

Brokerage firms can be helpful because they save their clients, whether buying or selling,
time. Not everyone has time to look at 40 real estate properties before purchasing. Not every
restaurant manager wants to interview a slew of potential food supply companies before
selecting one.

For those who are cost conscious, however, employing a brokerage firm may mean added
expense. Buyers and sellers who come to an arrangement between each other �cut out the
middle man,� and are thus able to save money. On the other hand, employing a reputable
brokerage firm generally means that the firm assumes liability for the seller�s claims. Should
any portion of a sale be conducted illegally, the brokerage firm must often compensate the
purchaser and take legal action against the seller.

[cottonpicken]

Novemeber 25 2011

Step 1-privatize and initiate an ipo

Step 2-appoint an interim board of directors

Step 3-two week quick transition for
employees,everyone re-applys

Step 4-apply for/demand cdic coverage

Step 5-Itergrate current crop year pooling and
pricing systems currently in place

Step 6-Fascilitate and intergrate
speculator,producer and commercial interests

Step 7-expand employee base to every major
exchange

Step 8-expand international capabilities beyond the
current scope of wheat and barley

Step 9-cross over to insurance pools

Step 10-cross over into mortgage pools

[jdepape]

No offense but I'm pretty familiar with what a broker is/does. (In the grain trade, by the way, they don't get involved in the transference of money between buyer and seller - they just put the deal together and get paid a fee.)

My question was how do you see CWB as a broker? Why would they be a good addition to the brokers out there?

[cottonpicken]

So if 5000 farmers in a block in the brokerage said we want an offer for 1 million tonnes of nitrogen fertilizer,think about the market dynamics.

Who is now setting the price?

The market is now working because the most competitive nitrogen producers will set the floor.Reverse it for selling.

Unless you completely believe the current buyers and sellers of everything and anything you deal with are acting in good faith and that current market forces are in fact working,just ignore all this.

In case you missed it,the brokerage handles 2 trades,between the farmer to processor and processor to buyer

[cottonpicken]

jd,just posting for others i know you know your shit,thanks for your previous posting still digesting it,cant comment.

Initially i viewed it as an established organization that had people,basic infrastructure,client base,etc,etc...then mf happened.

I never believed in the forced sales part but when it was going into transition it could take this route to satisfie everybody,the die hards could still do what ever they want through them,others could satisfy themselves through them and as it morphed the inherent leverage we would gain would become clear.

Like grandad said "we didnt form it for no reason",they just did it wrong and it turned into a monster.

But i'm open to the fact i may also completly wrong.

[jdepape]

I think its semantics.

You say "brokerage".

From your description, I think "aggregator". (Could also be a "commodity pool operator".)

Where you can apply pressure in the grain trade is on the handling system. Get 5,000 farmers following market signals that say "store - don't sell" and watch basis improve.

If its through an "aggregator" like CWB - or each farmer on his own - it doesn't matter. Follow market signals and watch basis (price) improve.

[cottonpicken]

So your telling all us farmers everything is a ok and everything is functioning properly?

[jdepape]

Not at all.

But farmers acting according to market signals would have the greatest market impact in the shortest order.

The reason we get to 60-70 under basis because farmer selling puts it there - they keep selling and delivering even though the market is telling them not to. Change that behaviour and we will have a completely different market.

You want to do it via CWB as broker or aggregator - I don't disagree, but I also see other options.

Farmers have more market power than most give themselves credit for. It's just a matter of how they wield that power.

[mbratrud]

JDepape, I like the Canada post reference perfect and I agree.

I dug up this from a post I put on here back in Oct 2011. These were areas I thought the CWB could have a roll to play and Certainly Marketing/Brokering has a fit.

Is it too late for any of this? If so blow the ****er up because its just another Grain Company...

From my Oct 2011 post on CWBII

Transportation - One common concern and one shared by me would be access of Grain Transportation to all areas and companies. The current Car allocation system, gives the CWB control over many cars that they try to distribute fairly. Instead of looking at this as a problem, maybe it is an opportunity to fix our transportation system. Some ideas that would go a long way towards to ensuring equal service opportunity would be opening up the rail running rights. Let the CWB II Transportation arm control the Cars the Farmers and the Government own. CWB II could be very key in a new Rail Allocation System.

Cash advances; there is no reason that CWB II Finance could not operate a Bank where producers could deposit Money into an account that makes a little better than Bank interest. Other services they could offer would be Cash advances or operating lines, to Grain Co's and Farmers. Would need seed money from Government, and if 50000 farmers had on Average of $5000 on deposit with them that�s $250000000 they could put to work. Of Course it wouldn't be interest free, but it could be low interest.

Grain Inventory Financing, a major concern is Grain Inventory Financing for Grain Terminals. Solution, more Condo Storage units, Companies can sell some of there storage to Farmers and Even the CWB Marketing Arm. Why Couldn�t CWB II buy or Lease space from Grain Companies to help them do business in the future? There is no way that most of the Grain Companies could finance their own inventories, and as a result have extra Capacity. For Example In Weyburn alone if the Terminal Capacity was full it would take more than 50 million to Finance the Inventory. Why would some of these companies not Lease some Storage to CWB II and establish a throughput agreement.