CWB Privatization Dilemma

[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.