Selling to the US without the CWB

[AdamSmith]

thalpenny, the fellow who started this thread was clearly a CWB fan, and that's great. But I noticed when he cited the reasons he supported the CWB, he didn't mention anything about price premiums and market advantage, he mentions the fact that he likes having a professional marketer market his grain for him.

In an open market system, the CWB or anyone else for that matter would be able to provide that service.

The point thalpenny is this, a voluntary pooling service would be one that would still be in high demand and the CWB could still remain an active and important participant in the grain business.

Pooling is the service farmers want, single desk is the service the CWB wants.

[Vader]

Is Ianben just blowing smoke when he talks about the demise of the Milk Marketing Board?

The Ontario situation is pointed to as a success. Bear in mind that they produce on average only 5% of Canada's wheat and virtually all of that is moves locally to millers in Canada and the US. One would think that given their exemption that they would prosper from this marketing opportunity. In fact that is what is said over and over on this post.

Check the OWPMB website http://www.ontariowheatboard.com/Basis.html They quote a cash price for Hard Red Spring Wheat of $7.26 on their Pool C. The market for this wheat is virtually on their doorstep where the majority of Canada's wheat is milled by Archer Daniels Midland. In this situation freight is not a significant cost.

Now check the CWB website at http://www.cwb.ca/db/contracts/pool_return/pro.nsf/WebPRPub/2002_20020926.html

The Canadian Wheat Boards September PRO for wheat is $308.00 per tonne. When an Ontario miller buys this wheat he will have to pay the freight from Thunder Bay to Ontario which adds to his cost. Ontario millers do purchase significant quantities of CWRS wheat to blend with poor quality Ontario wheat since Ontario growers do not grow sufficient quantities of Hard Red Spring wheat. So converting $308 per tonne gives $8.38 per bushel. It would appear that the Ontario miller has successfully purchased his Hard Red Spring wheat from Ontario growers for more than a dollar a bushel less than what it costs him from the CWB.

Now bear in mind that this comparison assumes that the CWB sells their wheat to the Ontario miller at the PRO. That is highly unlikely. In fact the PRO is a blended price reflecting all of the CWB sales in 70 countries. Obviously not all of these sales are done at equal values. Sales of CWRS wheat to Canadian and American customers are made at premium values for a number of reasons including a) customer demand for quality, b) proximity (which results in attractive freight options for the buyer), and c) the customers ability to pay. So that would imply that Ontario millers pay more than the PRO for the wheat they buy from the CWB. What is the premium that these miller pay for Canadian Wheat. We all have some impression of the differnce between the CWB PRO and spot prices in the US for equivalent quality.

Why have the prices in Ontario not arbitraged up to the premium prices one would expect from the US Customers? You be the judge.

What if these Ontario farmers produced 20 million tonnes per year instead of one million tonnes? What if we unleashed them on Canada's other premium markets? Could they have the same impact on our markets such in Japan, and Northern Europe? What about the countries that do not have the desire or ability to pay premiums. Could those countries also be successful in negotiating lower prices from individual farmers caught in the cost price squeeze of international subsidies?

There may be examples of marketing systems that would be an improvement on the CWB but the Ontario exemption is an example of what NOT to do.

[charliep]

Vader

Just a note to make sure quality characturistics are included in a the price comparison. The $308/t is a port based payment for 1CWRS 13.5 % protein - the best of the best. My understanding is that millers are not even being offered this (price so high they can't afford).

What is being sold to domestic millers is 3CWRS. Grain companies are very busy segregating protein in the elevator system - I know this from my brother who has 3CWRS 14.5 protein. This product is worth $15 to $20/t less (differential could be higher on miller level prices).

I would find it interesting to have a better understanding in quality characturistics between Ontario and western Canada. Is the price you are quoting for spring wheat or winter? Protein guarantee? Guarantee on falling number? Other characturistics?

[TOM4CWB]

Charlie and Vader;

Charlie, you are exactly right on the quality... OWPMB uses CERS standards not CWRS, and a different grade base reference... plus protien premiums on top of this price...

Vader, talking about apples to apples, why is Ontario sucessful in creating forward prices for the 2003 crop, minimum price contracts for the 2003 crop, Cash prices after Aug. 1 for the 2002 crop...

What exactly are you defending here, are you saying that the present operations at the CWB are acceptable, and the CWB doesn't need to offer more risk management tools?

Did you actually make a reasonable living by physically selling Board wheat and barley to the CWB in the last 5 years?

[parsley]

thalpenny,

Before we get off track, would you please answer my question:

Does the 14(b)requirement, which is the pecuniary benefit phrase, lie in the Licensing Part IV or in the Marketing Part III?

Parsley

[parsley]

ianben,

I wanted to reply to some of your comments. As it turns out, I'm not one of the farmers who went across the U.S. border, but I do have tremendous respect for what they did and what they are doing, and I want to do everything that I can to help them.

Ghandi was a similar type of protester. The British set up a salt tariff at the ocean front and the Indians, who really needed salt to preserve their food, were required to pay a levy on the salt they got from the ocean... to the British! The group of British schemers thought it was a wonderful idea. Ghandi didn't, so he protested by not paying the tax, and running the ocean border. He got jailed. He did it again with more brave souls. They got jailed. It took over 400,000 Indians running the salt border before the British simply packed up their tariff tent, and declared, "No more tax".

Of course, that particular lot of British monopolists are not any more representative of the British people, than the Wheat Board levying monopolists are representative of Canadians.

Unfortunately, every nation has a group like them, but they mostly get ignored until they become so out of control, and so arrogant, and so demanding, that they get dumped.

I want all farmers to do well, because I respect all of them immensely. In every country. In Canada, farmers provide 400,00 jobs in primary production. 8.5% of Canada's GDP. $24 billion in exports. 1.2 million dairy cows. 15 million beef cattle and calves. 24 million laying hens producing. 6.5 billion eggs. 12 million swine. England is the same. Farmers create wealth. And every bloody one of them deserves to put some of the wealth they create into their pockets. You are one of those fellow farmers in another country, ianben, and just by your writng, I'll bet that there isn't any one of us on Agri-ville who doesn't feel as if we couldn't e-mail you and say, "Hi ianben, I'm Parsley and I'm coming to England, can I look you up? You might get a little surprise, but that's the bond farmers have, and will continue to enjoy even if they disagree on what church to attend, or what school to attend, or what woman to marry, or what marketing system to use. Farmers like talking about farming.

At Christmas time, we will celebrate thirty five years of marriage and we have lived all of them on this farm. Farm life is a good life, but it bears protecting from predators. When you are snozzing, another tax goes on the land. Or more school tax. Or higher fuel tax. Or another regulation. Or another expert goes on the payroll that you are picking up the tab for. It will happen if you snooze. When it comes to the Wheat Board, a lot of us are wide awake, but the nightmares will return as long as the CWB operates as it does.

Cheers, ianben,
Parsley

[ianben]

Hi Parsly
Yeah. I would be pleased to meet up with any agri-viller who was over here. In fact I would be disappointed if they did not give me a call.
I was married 30yrs last July and farmed all my working life. Farming has been good to me and I still love what I do.
Things are changing now though, as I am sure they always will.

Some people see change as bad, I see it as a way to make things better.

There are ways to change things which make things better for everyone.
Farmers could change the way we market and treat our customers which would be better for us both.

These are the changes we should go for in my opinion

[eatmorewheat]

Cdn millers pay a premium for cwb wheat.

We are overpaying and the oppressed western farmer is getting under paid.

visit www.hayhoe.com for current cwb prices eastern millers pay

Real simple economics--- overcharge your captive market and discount the rest. End result, captive market only takes 15% of average crop soooo the other 85% draaaaaaags down your final return.

Break free the western farmer and pasta, bagels, frozen dough leaves the prairies NOT RAW wheat. This is how you combat US farm bill an EU CAP. Think harder than your competitor and you beat him.

Ontario now about to begin to set up cookietown.

Free wheat in the west.

[Vader]

Eatmorewheat,

Obviously you haven't heard about the US challenge to imorts of Canadian bread and other baked goods from Canada, similar to the challenges to wheat imports.

US Millers have excess milling capacity that is currently not utilized which is greater than the total milling capacity in Canada. In other words if Canada's milling industry could be shut down then American mills could run at capacity and supply all of Canada's requirements.

[TOM4CWB]

Vader;

Ever heard the story about the CWB Monopoly being a hoax?

If the CWB had been following the CWB Act, over the past 10 years, think how much money farmers in the "designated area" would have saved on trade challenge defence funding, CWB funding to prop up the magicians monopoly that appears out of nowhere and yet creates endless strife and problems for everyone...

When are we going to respect each others property, and allow our neighbour to operate his farm, as this neighbour chooses...

Vader, are you doing your part to create a free and democratic society, or are you finding it is much easier to... to ignore personal responsibility.. to fight for a free and democtatic society that respects all citizens of Canada.

Will the CWB monopoly survive, without marketing choice, or do you believe the CWB should be dismantled if marketing choice is offered to "designated area" producers?

[Vader]

In regard to trade challenge defence spending. One lawyer said in regard to the current challenge that this challenge would arise with or without the CWB. They are challenging all things Canadian.

Do you blame them. They produce twice as much wheat as they consume and they accounted for 26% of world trade in wheat last year. When we make a sale to a miller in the USA for 10,000 bushels of wheat, that sale displaces 10,000 bushels of American farmers wheat into world markets that simply do not have the same premiums as the domestic sale would have earned for the American farmer. Of course he is going to complain to his congressman just before the election and get them firing off trade challenges against Canadian wheat. This may go on for years and years.

Defending this challenge will cost millions of dollars. Should we defend at all or should we allow the US to put a 44% tariff on wheat and simply walk away from one of our most lucrative markets?

I believe that we live in a free and democratic society, perhaps more so than the the USA considering how they honor their free trade agreement. Is this simply a question of principals or is this a question of economics.

Farmers are going broke. Will earning less money for Canadian wheat to satisfy some percieved injustice solve the problem or make it worse. If we all agree to compete with each other for world markets we can do that. The framework is in place for that to happen. You simply have to prove that it is a majority decision. And to do that you simply have to prove that you have a better mouse trap. Farmers that are going broke probably don't care about your principals. They may not even respect you if you cause them to lose revenues.

[TOM4CWB]

Vader;

You stated, "One lawyer said in regard to the current challenge that this challenge would arise with or without the CWB"...

I thought that you knew enough about Lawyers by now, that you would have understood that they will do anything to convince you that they are worth a handsome ransom, and no-one can survive without their help!

Canadian beans go into the US market, Cannary Seed, Canola Oil, Canola Meal, Flax, an endless stream of Autos, Aircraft, Hydro, Oil, Natural Gas, Steel products, Vader many industries have learnt to get along with the US.

I agree with the US on the CWB monopoly.

Why?

Cause when it suites the CWB, it does undercut the US Market.

I know, I got the CWB US subsidy check, and you know I got that check.

I have heard every argument in the book about the US, from the US being the culprits that lower international wheat prices, to the US being the premium market of the world... all in the same situation... and practical experience proved that The CWB premise that it holds up world prices is flawed… The opposite is unfortunately the truth.

It is altogether obvious that too many farmers at the CWB are too busy telling their neighbour how they should be running their farm...

Too many directors that have no real commercial interest in what decisions they make... to the point where CWB Directors are not allowed to use any PPO contracts. How Absurd.

Vader, if the CWB had known what was the prudent thing to do in marketing this summer...,

the CWB would not have been saying silly things like...

" The CWB has not sold this year's entire crop at last year's Prices. " (Update from the CWB with my long overdue 2001-02 cheque)

The CWB didn't have any wheat to sell till the first wheat was delivered August 1st, and the CWB had no business pricing any pooled wheat until that wheat was in store and available for the CWB to price.

This is the point of pooling to begin with!
Since weather is the primary driver that creates supply, which in turn determines price...

It is obvious to any really experienced marketer that grain prices are not predictable... they are a result of chaotic environmental and political events.

Now Vader, who should be responsible for making the decision about the profitability of my farm...

A CWB salesperson in Winnipeg, that almost never will talk to me, and who despises ... my very existence...

Or my business partners and myself who must pay the bills and provide the resources for many families so they can put food on the table and have a roof over their heads?

Think for a second Vader, what would be respectful and fair to my farm?

And is this not exactly what the US has been saying for the last 10 years?