How do you define Commodity Marketing?

[Vader]

If this discussion group is to focus more on commodity marketing how do you define commodity marketing?

In Jack in the Beanstalk, Jack took his cow to town and marketed it. He came home with four beans in his hand.

From the statistical tables on the CWB website, in 2000-01, American customers bought 1 million tonnes of spring wheat and 369,000 tonnes of durum. This represents 7.5 per cent and 10 per cent of total Canadian export sales respectively.

A few of the Asian countries that purchase Canadian wheat include in Alphabetical order:
Afganistan, Bahrain, Bangladesh, Cambodia, China, Cyprus, Hong Kong, Indian, Indonesia, Iran, Iraq, Israel, Japan, Jordan, Korea, Kuwait, Lebanon, Malaysia, Oman, Pakistan, Phillipines, Singapore, Sri Lanka, Taiwan, Tailand, and the list goes on.

How do we best market our grain in a fiercely competitive world market to maximize returns to producers in these parts of the world.

If you simply dump your grain in the elevator pit whether that be in Moose Jaw, Saskatchewan or Wolf Point, Montana are you marketing your grain? When you select a pricing option and hedge your sale, are you marketing grain? Where does the rubber hit the road? Who will travel to Bahrain to convince the customer that this product will meet his quality specifications. Who will convince him that this shipper will meet the delivery requirements of his mill? Who will broker the deal? Who is the marketer of that grain?

In a world that is generally oversupplied with wheat and with companies like Louis Dreyfus making large infrastructure investments in the Ukraine and Russia, marketing will take on greater and greater significance. Who will make the profit on those marketing efforts? How will the producers marketing efforts, working from his home computer, be rewarded in comparison?

Who wants to take a trial run at marketing into Tailand or Indonesia? That might be a good comparison to see if the CWB is doing a good job. Perhaps some of the more capable marketers on this list will put a boat load of grain together and send it over there. Perhaps the CWB would accept such a chalenge and grant a "no cost" export licence.

[TOM4CWB]

Vader;

Marketing often is an investment in the future, to meet the needs of the present for both the supplier and the consumer of a product.

I am always amazed at how the Canola marketing system, western Barley marketing system, and specialty crop marketing systems can blow CWB multi-seller theories out of the water.

There are closed co-operative marketing systems all around the globe that almost entiely operate by contract with loyalty, but without a single desk or monopoly.

How do you propose to create marketing choice at the CWB, although we know it will be kicking and screaming, so all of us can get on with our lives and feed a hungry world...that we know needs the food we produce???

[Vader]

If only the needs of the world would drive the system. That is simply not the case. Only those who can pay will get fed. It is not a hungry world for lack of supply.

[parsley]

Vader,

You state:

"Who wants to take a trial run at marketing into Tailand or Indonesia? That might be a good comparison to see if the CWB is doing a good job. Perhaps some of the more capable marketers on this list will put a boat load of grain together and send it over there. Perhaps the CWB would accept such a chalenge and grant a "no cost" export licence."

I'm sure that a lot of organic farmers would take the challenge, but would find after marketing was done, the grain sourced and the boat was loaded, that the CWB would deny the export license, steal the buyer, dump the grain at a discounted price to him, neglect to get the boat loaded in time and add demurage to the targeted organic levy that the CWB put in place.

The organic industry found their own customers....called consumers.....in many different countries in the world, and built an industry. One where farmers could make profit. They designed their own transportation systems, they designed 'identity preserved', they developed customer developed. Freight was downloaded on the customer.

Tell me about what a great job the CWB has done for the organic indutry. Good grief, CWB doesn't even market organic grain.
What you don't seem to recognize is that farmers ARE capable. Perhaps you think that there are hordes of stupid farmers out there that need an expert to supervise. I've think otherwise.

Experts don't necessarily have a monopoly on experience or initiative or creativity. CWB expert marketers were taking farmer grain and dumping it in the elevators and it was the farmers themselves who developed an organic market in spite of the Canadian Wheat Board. And from all reports, the CWB continues to be an impediment.

Shall we try another market as an example for you, for instance the feed wheat and barley that the CWB NO longer market or pools?

Parsley

[les]

Vader
Most farmers have equity worth over $100,000,000 today.I think they are capable of marketing their own grain.Farmers for years have marketed non-board grains on there own and do just fine ,just as the cattle guys market their own cattle with out help from a "canadian cow board."

[les]

And one more thing while i am spouting off......If the CWB is so sure they are the only ones who can get us a good price ,then why dont they let us have the choice and if we find out they are right then wont we coming running back to them?

[Vader]

parsley,

First you say,

"I'm sure that a lot of organic farmers would take the challenge",

then you completely negate the possibility by the following contrivance

"would find after marketing was done, the grain sourced and the boat was loaded, that the CWB would deny the export license, steal the buyer, dump the grain at a discounted price to him, neglect to get the boat loaded in time and add demurage to the targeted organic levy that the CWB put in place"

Put your money where you mouth is. Find a buyer in Thailand. Find enough farmers willing to throw in with you for whatever price you might get. Negotiate the shipping terms. Insure the cargo. Guarantee the payment. Instead of worrying that the CWB will steal your customer, (That is one you currently do not have) perhaps you could steal the CWB's customer. Now there is a thought. How would you go about doing that? Perhaps you could offer them a better deal?.........

[TOM4CWB]

Vader;

All these hypothetical examples are interesting... but there is good reason the CWB does not market to these people now... the answer is simple, if we produce an expensive high quality product, giving it away to those who do not need or even want the quality we produce is a total waste.

Now Let us take Japan...

If Canadian wheat is so good, and US/Ausie wheats so poor, in a quality conscious market like Japan, just why do they buy US and Ausie wheat?

And if the US multi-marketer system discounts so badly, why does the CWB use US Portland wheat prices to determine all the CWB Canadian domestic milling prices?

Except when the CWB decides to price discriminate and give domestic millers cheaper than US Portland prices...

Simple economics would dictate that if the CWB were charging more than US suppliers for the same service and quality wheat, CWB market share would go down.

And if as the US has pointed out, CWB market share increases, then obviously the economics has been better for these North American millers to buy from the CWB.

Obviously This is why North American market share has increased for CWB sales of wheat and durum over US products!

Now Vader... where are we back to?

The magician has once again tried to trick those hard working souls, out of their property!

A trick that is neither legal or ethical... yet the magician is able to keep on performing... because the hand is faster than the eye, especially when the magician can distract, use trick lighting and sound effects, confusing the most logical and reasonable person into believing the impossible is possible!

Unless this person knows how the magician does the trick, and then anyone with a little practice can do the same thing!

Vader, the CWB monopoly is a magician’s trick, and some would go so far as to call it a cruel hoax...,

What do you think Vader, do you see why?

[parsley]

Vader,

The Americans would probably say it is the CWB who retains the infamous "State Trader of Undercutting" title!

In my observation of the organic industry though, farmers are not undercutters, they have built a premium market directly from consumers. They get top dollar. Many of them co-operate with each other, they ship together, they insure together, they find new markets together, and they primarily co-operate locationally because it is the most economical.And not because someone threatens to throw them in jail if they don't!

It must be very difficult for a world of marketing experts at the CWB to give credit to a bunch of farmers, for heavens sake, for building a whole new ocean of organic markets from the ground up.

Cattle people have been marketing internationally for years. So have the forage people. This isn't a new idea.

Seeking markets in Taiwan or Japan or Mexico would not be a "novel" idea for organic farmers at all,(or for many conventional farmers either), but a common practice, in many cases. My observation of them is that they put their money exactly where their mouth is, and they have built a solid base from that money, to make money. And they did it. A bunch of farmers.

I don't think any of them would want to 'steal' a CWB customer though, because the CWB sells only into the conventional market and cannot capture organic premiums. Poor pickins, so to speak.


On the other hand, I see the CWB drooling when they eye up the organic markets. Perhaps that is why they hired an organic marketing specialist to market organic grain in spite of the fact they do not market organic grain.

les noted that many farmers have over $1Million invested in their farms, so you can bet that farmers want to make sure they have some decision-making powers over their farm investment. A smart conventional farmer would not hire someone to market his 'organic' grain if he doesn't grow it.

No smart farmer will go to Taiwan, make the deal..... , and then find out he is denied a CWB export license. And that is the hurdle. No sense putting together a contract if you cannot identify the hurdle, Vader.

Parsley

[Vader]

Why does Japan buy wheat from Canada, USA and Australia?

First they have a policy to not rely on any one of these suppliers and compels them to buy from multiple sources.

Second mills have a target protein level which I suspect is somewhere around 13.5%. If they use only 14.5% protein it does not suit their baking requirements and likewise neither does 12.5 or 11.5% protein.

What is the best way to meet the millers and bakers exact protein requirements? They purchase a range of products and blend to their exact specifications. Does Canada supply the higher end of Japan's protein requirements? You bet we do. Do you think that puts Japan in a situation where they might want to pay a premium to satisfy both their policy and quality demands? You bet.