CWB DILEMMA.

[StrawBoss]

The CWB should come out of hiding and explain in a newsletter to all producers how they could operate and compete in the open market and they will be there to serve the producers that want to support it.

The CWB could easily add a question to the permit book and make it mandatory to answer by the producers and landlords “ DO YOU WANT TO DELETE ALL COMMODITIES FROM THE CWB CONTROL” Yes____ or No _____.
This would insure that all farmers would vote.

The CWB could also delete all the commodities off their control without a vote and give the producers a choice without a delay.
CWB why is it so wrong to see happy farmers have a choice to market their own products?

[StrawBoss]

First - to Adam Smith - how can you argue that there is single desk selling in Ontario? There isn't anymore. There are multiple sellers of Ontario wheat.

But again I think StrawBoss has this figured out. The debate is about having an open market versus having single desk selling. If there ever is a producer vote, I'll be curious to see if the open market proponents would accept the democratic wishes of their neighbors, or if it would be like the Quebec separtisits and just keep going on and on and on.

Parsley's issue of wanting a no cost export license is a shell for what the true desire is - an open market. The reason things are couched that way is because to call for an open market doesn't sell politically, so then there is the call for the dual market, or no cost export licenses, to avoid having the debate about the merits of the single desk selling.

Regarding a daily cash price from the monopoly as tom4cwb suggests - the issue I see he is seeking is price transparency, so he can guage effectiveness. Ideally, he would like to pick the cash price or the pooled price on any given day. He wants it both ways.

How would the CWB operate a daily cash price and a pooled account? The pooled account is always disadvantaged - getting less grain when the price is rising, and getting more grain when the price is falling. You can see the impact on the pooled price.

How would the CWB show a daily cash price when it may negotiate different prices for the same quality of grain on any given day, depending on destination?

This appears to be an accountability measure more than anything. Except, which prices should be shown on any given day? The tradable value to Japan or the tradable value to China? I can assure you they are different values.

Hence what happens in the open market - the law of one price. You don't see a separate cash price at PNW for the Japanese, do you? Does that mean that the Japanese don't ever pay a premium for US wheat, only for Cdn and Aussie wheat? I don't think so.

So the cosmetic language of no-cost export license and cash pricing from the monopoly all camouflage and diminsh the real outcome - get rid of the single desk selling. These arguments are geared to have simplistic policitical appeal, and to diminish their impacts. Except, they can't go all the way and say "end the CWB and single desk selling", because they know that argument won't win farmers' votes.

I have heard no one argue that the CWB may not survive in an open market as an organization. But the single desk benefits will not survive. And does western Canada really need another grain marketing organization (ie privatized CWB) if there is an open market?

Tom

[charliep]

Does the above arguements apply to both wheat and barley equally. What value does the CWB provide the feed barley market? Similar question for malt barley. The August/July CWB Grain Matters article (page 8) highlighted some issues but I was not able to find it at the CWB web site.

[parsley]

thalpenny,

"The reason things are couched that way", as you put it, Moderator thalpenny, is because that is the way the legislation is actually written!

I don't have any difficulty having to follow what Parliament instructs; that is democracy, but I do have difficulty with the fact that the Canadian Wheat Board refuses to follow its'governing Act.

They deny licenses to Prairie farmers. PLUS...They dip out money,... dip, dip, dip, to pay for accredited exporters, corporations and non-DA farmers' licensing expenses , out of the farmers'pooling accounts even though Parliament says the Federal Government must pay! PLUS...They break their Code of Conduct by allowing Goodale's appointee to dip into the pooling accounts to donate to the Liberal Party of Canada. PLUS...They won't give a Prairie farmer a license until he does the buyback, even though Parliament does NOT require farmers to do the Board's 'Made-up-in-the-Backroom Buyback' to get a license. And on and on.

Chairman Ritter, without shame, told the Standing Committee of Agriculture that he wasn't sure whether or not the CWB can issue no-buyback export licenses and he'd have to consult with a lawyer to find out, but this directly contradicts the fact that they are issuing no-buyback licenses all the time. This reflects the Board's disdain for not only elected representatives, but for the law. And for farmers.

But the Chairman is not the only one defending and condoning when the CWB ignores the law and bends the law and disdains the law. It is a common practice by the CWB staff, thalpenny.

Parsley

[parsley]

Parsley, below is the part of the regs that governs the producer direct sale.

What would you determine to be the 'pecuniary benefit' that exists by virtue of the prohibition of the export of grain? Obviously, the legislators understood that by granting the single-desk, it created benefits for farmers that would not exist if allowed to be cherry picked. An arbitrary no-cost export license would bid those benefits away for all, and therefore adversely affect the marketing of the organization.

Face it, you want to be able to do just that - access the US market unimpeded whenever the spot cash price looks better than the pooled price. You want to extract that value, even if it is less than the CWB may be capturing out of the US market and end up lowering the ability of the CWB to extract a premium. Again, then the North Dakota Wheat Commission will fire up the trade challenge machine for sure.


LICENCES


14. The Corporation may grant a licence for the export, or for the sale or purchase for delivery outside Canada, of wheat, wheat products, barley or barley products if

(a) the export, sale or purchase of the grain or products for which the licence is sought does not adversely affect the marketing by the Corporation, in interprovincial or export trade, of grain grown in Canada; and

(b) the applicant pays to the Corporation a sum of money that, in the opinion of the Corporation, represents the pecuniary benefit enuring to the applicant pursuant to the granting of the licence, arising solely by reason of the prohibition of the export of that grain or those products without a licence, and the then existing differences between the prices of that grain or those products inside and outside Canada. SOR/79-110, s. 1; SOR/86-160, s. 1; SOR/89-281, s. 4; SOR/95-338, s. 1; SOR/99-391, s. 1(E).

[StrawBoss]

Thalpenny

I realize that you are a moderator on this thread and also a Farm Policy Adviser to the CWB but this position doesn’t give you any authority to make policy change.

I would like to know if you are relaying to the CWB the farmers needs or just voicing your opinion what the farm policy should be?

I believe that the CWB can survive in the open market system with some minor changes. It is common knowledge competition is good in any industry.

I understand there is a lot of politics within the CWB to try and accommodate all farmers across Canada, which means rob the rich and give to the poor, but its not working very well so lets try something different. The Government should support the farmers in disaster areas not force the good farm managers to do so.

[TOM4CWB]

Thalpenny, when is Wheat Wheat, but Wheat not Wheat?

Thalpenny you wrote;

“What would you determine to be the 'pecuniary benefit' that exists by virtue of the prohibition of the export of grain (Wheat)?

This is an excellent question…, I will answer it with another question…

Why would the Ontario Wheat Board need to issue their own export Licenses, independent of the CWB?…

Well for a very good reason.

The CWB cherrypicks Ontario wheat Board sales information, and Ontario does not appreciate the CWB taking OWPMB’s “commercially sensitive” intellectual property.

SO, now we will talk about “the 'pecuniary benefit' that exists by virtue of the prohibition of the export of grain.”

Ontario and other non “designated area” sales of wheat and barley compete against CWB sales, and the arbitrary no-cost export licenses issued to producers outside the “designated area”,... as well as Seed Growers,... bid those benefits away for all, and therefore adversely affect the marketing of the organization…

Since the CWB licensing is universal to all of Canada, including Ontario, why does an Ontario wheat grower have the right to “cherrypick” the international market place, outside the CWB’s single desk, when Ontario is part of the CWB’s Single Desk Monopoly?

The CWB Act portions you quote (Section 14) apply equally to Ontario, yet the CWB does not extract the 'pecuniary benefit' from Ontario, CWB licensing is universal to all of Canada, including Ontario, why does an Ontario wheat grower have the right to “cherrypick” the international market place, outside the CWB’s single desk, when Ontario is part of the CWB’s Single Desk Monopoly?
WHY???

Further, Exporting our special Canadian planting seed varieties with NO-cost Export Licenses further undermines any premiums… You ask Why?

The CWB claims US wheat is not as high quality as Canadian, because of our special varietial quality.

A farmer in Sweetgrass Montana can grow the same quality as a Canadian grower at Milk River AB, if they use the same variety. Now a Seed grower from Alberta exports our special variety of wheat to Montana, using a No-cost CWB export License, cherrypicking all Canadian wheat and barley growers. Now after the Canadian seed grower got this seed out of Canada, then the one truckload of seed is reproduced and sold back the following harvest as commercial grain.

1000 bu seeded @1.5bu/ac is 750ac planted.

750ac at 30bu/ac is 22,500bu of Quality CWB grain ready to come back to any domestic Canadian or US miller.

10 truckloads of seed is 225,000bu...

Only 100, 5 axle truckloads, of wheat planting seed, creates over 2 million bushels of monopoly single desk destroying US grower competition.......

Thalpenny, if there was a real premium, don’t you think US wheat and barley growers would be smart enough to cash in on it???

And since US growers obviously normally don’t export wheat into Canada, shouldn’t this tell us another story?

Thalpenny, logic would tell me there is NO EXTRA PREMIUM… infact, the CWB must be a discounting heavily, or US producers would produce variety specific wheat for their own US millers who like our Canadian varieties.

Further these US Wheat growers should have the competitive economic benefit of transportation premiums being kept in their own pockets, because they live closer to the US Millers. Yet there is no premium for them. Why?

The most logical reason is that the CWB undercuts US Wheat growers.

So US wheat marketers as well as the OWPMB extract a premium from both domestic and the international market place, and continuously have the CWB following them around undercutting their sales efforts.

This has a ring of truth to it,… maybe… Thalpenny?

Are you absolutely sure the CWB Single Desk Monopoly is extracting a premium for the average “designated area” wheat and barley producer the majority of the time Thalpenny?

[TOM4CWB]

One piece of information that silences the ring that you describe is that the US own ITC recently found that in 59 out of 60 months, the CWB's price was higher than the corresponding US price to end-users. I think that finding speaks for itself.

Tom

[les]

I say get rid of the CWB period....

[parsley]

thalpenny, the answer to your question is quite easy.

You asked, "What would be the 'pecuniary benefit' that exists by virtue of the prohibition of the export of grain?"
and the answer is $0.00 $ZERO!

And that's because the "pecuniary benefit" is to be based "solely" on the price difference inside and outside Canada, as the legislation states, and there currently is no difference in price, inside and outside Canada.


Are you aware, thalpenny, that the licencing provisions you quoted apply equally throughout all Canada? Applies to all applicants? Remember, an applicant is not necessarily a famer. And the "pecuniary benefit" provision must apply to ALL applicants. And it does. For example, when the CWB grants a licence to a producer in Ontario, by law, the CWB must charge this price difference inside and outside Canada.......which is zero. Feed mills pay the zero cost when they get their licence to export processed feed grains; seed growers also pay the zero fee for their export licence. The "pecuniary benefit" equation is applied to every one of those applications.

If the CWB would grant StrawBoss a licence, I'll bet he will gladly pay the "pecuniary difference" tariff based on the difference between the price inside and outside Canada. $Zero.

thalpenny, that phrase has never changed since it was introduced in 1947 in order that the Government could set a price inside Canada that was independent of world prices.(which they did @ $1.55/bus) Now Canada does not have a government set price so there is no price difference.

Your statement that these are the regulations that govern the buy-backs could mislead Agri-Ville readers. As much as you would like, regulation 14(b) has NOTHING to do with your buy-backs. 14b was intended as a tariff for all of Canada. Even the original legislators refer to 14b (which was previously named 28c), as a tariff. In the archives, this is exactly how those Parliamentarians describe it: "It must be recognized and section 28(c) merely provides a device exactly corresponding to the operation of the protective tariff'", and I am not prepared to argue with what legislators say they intended. 14b was intended to operate, and continues to operate, as a tariff, not as a buyback.

Although you would like 14b to give the CWB the legislative teeth to force farmers to the pay the difference between the initial price and the world price (which is what the Board presently calls the buyback), it simply isn't true. All Canadian farmers are only legally required to pay the tariff charge which is the difference between the price inside and outside Canada. And that is zero because World Trade agreements require Canada / World prices of wheat to be the same.

Farmers can see the buyback is NOT a legislative requirement to getting a license and that presents a problem for the CWB. That is why they chose to deny licenses to Prairie farmers.


Regulation 14a provides the Board with some reasons for denying licenses. Regulation 14a is used by the CWB to force farmers into selling soley to the Board. They refuse to grant export and interprovincial licences to Prairie farmers, and producers then have no choice but to sell to the CWB. The CWB begins to market the grain "offered" to them under the Marketing Section of the CWB Act. Farmers then buy their own grain back, and that is the buy-back. Make note that farmers buy the grain back in the marketing part of the CWB Act, thalpenny, and NOT the regulatory part of the Act.

For years, farmers have been told by the CWB that they have to do the buyback because the buyback is described in 14b and is therefore a licensing requirement, but that is simply not true.

Parsley

[Kasro]

Tom Halpenny

My comments are made not withstanding the issues of the mechanics and legality of the scheme of buybacks the CWB is operating. The single desk concept by itself, needs elaboration.

Tom, you are obviously a very staunch supporter of the current CWB, and its so-called single desk selling system. However, in your zeal to support your opinion, you may be as guilty of camouflage language as you accuse others of. In reality, the CWB does not operate a single desk selling system.

First, the CWB has to compete in the international marketplace with wheat from all over the world. In the majority of markets, wheat is wheat, and the CWB has no extra-ordinary ability to capture premiums. It can’t because the buyer willingly substitutes. There is no “single desk” for this market. So, certainly no single desk premium here.

Second, the CWB uses accredited exporters in some cases, and therefore Canadian product is sold through someone else’s desk as well.

Third, domestic millers or maltsters can make their own, albeit very limited, price arrangements with growers. Another desk involved.

Fourth, not all market premiums are pooled at the CWB. Warburton’s is an example of that. Single desk? Well maybe, if you stretch the definition a bit. But then shouldn’t those premiums be pooled?

So Tom, be straight up about it. There is no real single desk selling of Canadian wheat and barley. So what is there to get rid of? Certainly no single desk selling system. We don’t have one anyway. The only single desk is on the buying side…the CWB. It is the desk the CWB says farmers must sell to before they get any access to the export or domestic milling markets.

For what its worth, I prefer the term Voluntary CWB. To me it is more accurate. I don’t want to take anything away from those farmers who prefer to have their grain pooled through the CWB. I only wish those that do would develop the same attitude, and quit taking away my preferred method.

[TOM4CWB]

Thalpenny;

I was astounded last year when I found out that many of your CWB Agents, to get US sales and shipping, were required by the CWB to Ship #1CWRS, while calling it #2CWRS on the official grade for export paperwork. I understand this was not isolated, and handlers were required to keep their mouths shut about it, or lose shipping priveledges.

Further, would I as a US Miller report to the USITC that I was getting a steal of a deal from the CWB on Canadian Wheat? I think not. This would have been the fastest way to cut their own throats...

Since the CWB would not co-operate with the USITC investigation, US Millers knew it was impossible for the USITC to confirm the survey results, and find out if they were accurate.

THEN there is the opportunity for the CWB to give substitute discounts... in kind... on other products, ...in other markets, or be given "CWB price discrimination" premiums (discounts from "designated area" pooling accounts)...,
since almost all these processors are connected with international trade and barter is some way or another.

The CWB Act was supposed to put a profitable price in for "designated area" grain producers.

If there was a set price of let's say $250/t CWRS#1 13.5, all farmers were to be paid this price this year.

Now if the price went to $350/t, the CWB was supposed to extract the $100/t out of the CWB Agent and return it to the Reciever General's account.

Then when prices went to $200/t, the Reciever General was supposed to put the money back to ensure the farmer was still paid $250/t.

This was the pecuniary benefit enuring the applicant, as well as the reference about the difference between the price inside and outside Canada.

Thalpenny, You are in a tuff spot, I admit this...

Now, personally, how many loads of grain have you actually hauled to the US?

Further, what about when the Pooling accounts pay money to subsidise sales to the US, to growers being issued export licenses, where does the CWB Act authorise this???

[eatmorewheat]

Morally wrong

As we approach Remembrance day it would be prudent to freshly remember and reflect that our soldiers fought and died for freedom.

Freedom of markets was part of this. Canadian blood soaked many a fields in northeastern France. French farmers today enjoy this freedom.
Who will now step forward and Liberate the prairies? Who will put an end to the oppression of the Canadian Wheat Board?

You will! You who toil the black soil of the prairie grassland. You who own the land, you who own the equipment, you who purchase the inputs and you who put the crop in the ground.

You do not have to turn your efforts over to the state. You can market your wheat yourself, in your own country.

If enough of you step forward the communist ideals of the CWB will fall.
It is 13 years ago this month that the Berlin wall came down for the same reasons.

"a producer who puts a crop in the ground should have an inalienable right to harvest it and sell it." Ontario Agriculture, Food and Rural Affairs Tribunal.

Free wheat in the west

[bobn]

Thalpenny,

You stated: "What would you determine to be the 'pecuniary benefit' that exists by virtue of the prohibition of the export of grain? Obviously, the legislators understood that by granting the single-desk, it created benefits for farmers that would not exist if allowed to be cherry picked. "

This statement shows your ignorance of how the monopoly came about! The purpose of the monopoly was NOT to benefit farmers at all. It's only purpose was to ensure a cheap supply of wheat to Britain in 1943!

See:http://www.prairiecentre.org/intro.htm

An Act of War
Documenting the War-time origins of the Canadian Wheat Board

Chapter 4 - AN ACT OF WAR

By Allan Levine

In his book "The Exchange, 100 Years of Trading Grain in Winnipeg", Canadian author Allan Levine does an excellent job of setting out the historic conditions which led to the establishing of the 1943 Wheat Board Monopoly.

By the end of July 1940, the government had reaffirmed its earlier decision that the [Winnipeg Grain] Exchange would remain open.

"The announcement from Ottawa that wheat futures trasding on the Winnipeg Grain Exchange will continue," [Exchange president] Mathieson commented in the press, "is welcome as indicating a realization of the importance of the wheat futures as a true index of the world value of Canadian wheat, and which has the confidence of both buyers and sellers.

The government’s decision was not made as economic principle or in response to the Exchange’s pro-open market manifesto at all; instead, it was considered by [Trade Minister] MacKinnon to be a practical short term solution. It was supported by the British Cereals Import Committee which believed that a functioning futures market would enable Britain to secure shipment of the maximum quantity of Canadian grain through normal trade channels.

The Exchange was granted a reprieve, although the war took its toll in other ways; high overhead costs required the release of Arthur Darby as secretary and in the fall of 1941 he was appointed secretary of the management committee of the Wartime Prices Control Board. Relocated in Ottawa, Darby kept the Exchange informed on all government decisions related to grain marketing.

Between September 1940 and September 1943, the Exchange was unrelenting in its efforts to keep the open market in operation.

1942: Wheat Board is given powers over the Grain Exchange

The exigencies [pressing need] of war made the struggle increasingly futile. With Britain as Canada’s sole grain buyer, the federal government’s power was further extended. Quotas were implemented which determined the amount of wheat a producer could deliver to the Board, and prices were kept in check by government committees. In addition, a shortage of vegetable oil among the Allies in the spring of 1942 compelled the government under the War Measures Act to close the flaxseed futures market at the Exchange and take over all existing supplies.

The government’s action most indicative of future developments was enacted on March 9, 1942. It gave the Wheat Board the power "to order any grain exchange&ldots; to do or refrain from doing any act, as the board may deem desirable." A major step toward the creation of a compulsory Wheat Board had been taken.

Although in theory the Canadian Wheat Board was still voluntary, by January 1943 it had assumed the features of a compulsory one. The large crop of 1942 pushed the open market price below the Board’s initial payment of 90 cents so that for the first eight months of the crop year virtually all deliveries went to the board. This situation was reversed by May 1943. Increased demand, primarily from the United States where grain supplies had decreased, pushed the open market price in Winnipeg above the Board’s 90 cent payment. With the price of No. 1 Northern reaching $1.23 in September, farmers preferred the open market over the Wheat Board. The Board then received less than half a million bushels of wheat (out of total deliveries of more than 125 million bushels) during the six month period between April and September, 1943.

Summer of 1943: Under a dual market, farmers refuse to deliver to the Board

This switch by producers from the board to the open market, along with rising prices, placed the federal government in a difficult predicament. Two factors were critical. First, the increase in the price of wheat meant that the government’s support payments to millers were also increasing. Second, and more worrisome, the decline of wheat deliveries to the Board threatened Ottawa’s position with respect to its wheat commitments to Britain.

At the Finance Department Mitchell Sharp warned the Minister J.L. Ilsley, that unless something was done soon British buyers would have to enter the market themselves and bid for their supplies "in competition with Canadian mills, neutral buyers and speculators." This would lead to further price advances.

Moreover, in order to fulfill its wartime contracts the Canadian government would also have to become a major buyer of wheat on the market. "In other words," Sharp predicted, "there may soon be the spectacle of the British and Canadian governments actively bidding for wheat in competition with private buyers." For practical reasons he suggested that the government either impose a ceiling on Winnipeg wheat prices, or close the market in favour of a monopoly board.

By September 21, 1943, the cabinet wheat committee was prepared to decide. A decision finally was reached and the Minister of Trade and Commerce sent out a telegram to the [Winnipeg Grain] Exchange Council advising:

September 27, 1943: The government suspends wheat trading on the open market "The government is ordering the discontinuance of wheat trading on the Winnipeg Grain Exchange&ldots; All purchasing of wheat from producers on an open market basis will be discontinued."

Under the government’s plan, the Wheat Board was to assume control of all existing stocks of cash wheat at the closing price of September 27, and an initial payment to producers was set at $1.25 per bushel.

Members of the Exchange "upheld the action of the council in complying with the instructions of the government, recognizing that the order of the government was no reflection on the marketing system of the Exchange." The mayor of Winnipeg, Garnet Coulter, hoped the closing of the wheat market would be temporary, "owing to the importance of the Grain Exchange to the city."

Farm and labour leaders thought differently. The three pools hailed the move as "a complete vindication of the attitude of organized farmers." Labour officials celebrated too. G.A. Brown of the Canadian Brotherhood of Railway Employees said, "I am heartily in favour of discontinuing wheat trading&ldots;"

On October 12, the government passed P.C. 7942, officially suspending the wheat trading [the legislation was retroactive to September 27].

Hasty decisions taken to meet special circumstances sometimes become entrenched and this proved to be such a case. Historians and economists who have studied Canadian agriculture policy generally agree that the government’s action in 1943 was wise at the time in light of rising inflation and the Canadian commitment to supply the allies with wheat for the duration of the war. Many members of the Winnipeg grain trade undoubtedly concurred but they believed it to be a temporary measure. Officials close to the cabinet decision-makers such as George McIvor certainly did. "I thought it was temporary," he recently recalled, "I thought it would be fully for the war and one year after that, but I never thought it (the free market) would be closed for all time."

The end of the war in 1945, however, gave rise to further Canadian [government] commitments in Europe, and the re-opening of the wheat market was postponed.

Source: The Exchange, by Allan Levine. Published by Peguis Publishers. Used by permission.

[TOM4CWB]

Bobn;

There is no question about why the CWB was given the monopoly.

Further, the Courts have ruled the CWB has no obligation to maximise "designated area" farmers returns from grain handled by the CWB.

It is hard to imagine that over half a century later "designated area" grain farmers are still paying for WWII!

The Parliamentary debates in 1947 promised a prosperous future for farmers in the west, under a CWB that would pay back "designated area" grain producers for some of the money that had been extracted from them during WWII.

Eatmorewheat is right, it disgusting that in 2002 farmers are going to prision and fighting the injustice that caused WWII to begin with...

it is sick that we have not respected the freedom that so many courageous Canadians fought and died for...

simply to maintain a cheap food policy for Canadians, who already have the best and least expensive food costs in relation to income on this planet.

It is clear Canadians have become very comfortable with this policy... do you really think urban Canadians even care?

Obviously the Liberals trust that the CWB PR Spin and this very complicated issue will stop any real objection to the CWB in Ontario and Quebec.

It is comforting to see that someone in Ontario has understood the real issue freedom... eatmorewheat, maybe there is still hope?