Cash and Pooled CWB prices

[charliep]

I did a dictionary search of marketer (didn't know if the word existed) and found the following.

One that sells goods or services in or to a market, especially one that markets a specified commodity: a major wine marketer.

Ownership is a key issue in this debate. Does the CWB ever take ownership of wheat/barley for export or domestic human food use or does it always belong to the farmer who produced it? One factor I always look for in ownership is risk. Who carries the price risk of CWB transactions?

[parsley]

Steve,
On the contrary, Steve. I think it is important for farmers to read their grain contracts, their insurance policies and read the legislation that governs them.

Ownership is crucial in selling and buying.

1. The Act states the CWB is legally obligated to buy the grain OFFERED to it:

32.(1) "The Corporation shall ....
(a) buy all wheat produced in the designated area and offered by a producer for sale and delivery to the
Corporation..."
CWB policy allows no other option than farmers to "offer" their grain to the CWB

2. The CWB cannot give away the grain they now own, according to Parliament. They cannot store it for forty years either. They have a legal obligation to sell this grain and this is described in the Act:

7.(1)
"The Corporation shall sell....grain acquired by it......for such prices as it considers reasonable."

Selling grain at cost is reasonable, Steve. Discounted selling is reasonable, Steve.

You say, Steve,

"My answer was the CWB is basically set up to sell ( market ) the wheat and barley for the producer...."

I disagree. my answer is that the CWB is a government agency set up to source all the grain it could get its hands on in order to service the Federal Governments financial obligations. ie..grain to war-torn England, current trade imbalances, foreign aid, etc.

And the points of view are contingent upon ownership, doesn't it?

Parsley

[Steve]

Charliep and Parsley

The CWB has to take legal ownership of the grain and with that comes the risk factor, before the board can resell it, and I am not disputing that part of the act or law.

Yes! Parsley one should read and understand any contract before you sign it.

A contract is a gentlemen’s agreement to carryout a transaction but is also backed up with a legislative law to protect each party from abusing each other.

The grain buyers and producers in most cases take it for granted that the contracts are just gentleman’s agreements. A few will try to take advantage of others on technicalities, but if you plan to say in business the gentlemen’s way is much easier.

I am not backing the CWB monopoly and I think we need change as I suggested on other threads, but Parsley there is no need to open the CWB can of worms ( Laws and acts and some that are out dated ) to answer a simple question.

The CWB is a Government agency and lets forget the early stages of the board because it has been revised in some areas, but unfortunately not enough to accommodate the marketing needs for today’s farmers.

The Government is saying that the CWB is a gentlemen’s agreement with the farmers to help the producers market their wheat and barley, but we all know that the Government bureaucracy is the stumbling block for that to happen, so we need change.

So lets go back to the original question and answer that started this debate.
I will try to answer the same question in a different way and again it falls in the gray interpretation area.

Yes the CWB at the present or if revised will always be just another grain marketing competitor in the marketplace worldwide.

Steve

[ianben]

Steve
Thanks for trying to answer my question.

I have seen a disaster with change at MMB.

In a dual market we thought we had a competative buyer when if we looked we clearly did not.

The best example I can think of is the auction system to decribe the sevice our MMB provided.

Like the auction system MMB/CWB allows you to sell all you can produce and risk manages debt.

Like the auctioneer price is of little significance to them, and what happens to the product immaterial.

Now a buyer who pays cash is different he now has an interest in price even the guy who just buys and sells wants to sell for more than he paid.
There is a greater debt risk here though something some people forgot about postMMB.
Pooling not only averages premiums but shares debt. OUch!!!

Lastly what I call a marketer.

This guy will search out new markets for my products and provide a service to my existing customers.

In our hast to be free of MMB we thought we had a marketer when we didnt even have a buyer just an auctioneer.

It doesnt matter what the law says what actually happen in practice.

What best describes your CWB?

It appears to me your grevances with CWB are that they do not buy or market.

Competing with a seller who has no interest in price is bad news believe me

Take a good look at your CWB if you are to run a dual market try to leave a marketer or at least a buyer even recognising a competative seller would help.

[ianben]

Line missing
A marketer will cash buy or pool offer me a service based on my needs. This guy/etc

[parsley]

Charliep, your questions are really interesting ones!

1. "Does the CWB ever take ownership of wheat/barley for export or domestic human food use or does it always belong to the farmer who produced it?"

When the Praire farmer moves 'wheat/barley for export or domestic human food use' to another province or into another country, the farmer ALWAYS loses ownership because he must sell to the Board.


2. "One factor I always look for in ownership is risk. Who carries the price risk of CWB transactions"

This is an important one. Look at demurrage, charliep. The CWB has both ownership and possession. They don't get the boats loaded, but the farmer gets the demurrage bill! Just one example.

Parsley

[Steve]

In the CWB pooling system or any other pooling of products falls under the gray area of ownership.

The CWB would pay the marketing expenses out of the selling price if the board paid the producer cash for his grain.

The CWB pools the grain and asks for delivered when they make a sale and the initial price is lower to accommodate the price risk factor.

The grain buyer estimates and incorporates price risk and marketing cost into the cash price offered to the producer.

A cash sale the producer pays the marketing cost up front and in the pooling system it is deducted after all costs are known and it reflects on your final payment. Yes demurrage charges are a part of the marketing system.

It doesn’t really mater how you interpret the CWB act, but that is what happens in the real world.

[parsley]

Steve,
In the real world:

The farmers who want to market on their own will be granted licenses. They will bypass the Board and market their own grain directly. It is what is already happening now, only this time, ordinary farmer applicants will be allowed to get a license. An extension of privilege, so to speak.

The Board will continue as is with a little less grain to sell. The farmers who really want the Board to market for them will continue having the Board as their single desk.

No Parliamentary change. No referendums. No Act revisions.

Parsley

[Steve]

Parsley

I agree with you as a second choice, for the CWB to issue free export licenses but we need something better.

Steve

[parsley]

Steve,

I'd really like to sell wheat like I sell flax. It's my first choice, too, and we sure are on the same page here.

But the only way to do that is to either get the CWB Act erased or modified. Do you have any concerns with doing that? The political route, including plebiscites, could take years. Have to get the Liberals on side! Do you have lots of influence there? I don't get Christmans cards from Jean Chretien.

Cheers,
Parsley

[ianben]

Parsley
Here is a story from the real world useing names from this site to make the point. No offence intended!!!!

Tom and Parsley have the licences they require. They meet eatmorewheat and find they can supply his needs. They will grow exactly what he wants and deliver just in time etc. A fair price is agreed. Everything goes well. Eatmore wheat decides to invest in some new plant.

Now BigmultinationalNo1 notices he is loosing market share to Eatmorewheat.
He put a very low bid into CWB. Sales at CWB have been poor and price does not matter that much to them after all.
CWB accepts bid.
Before Eatmorewheat knows about this BigmultinationalNO1 has taken most of his customers with a special offer deal.

Eatmorewheat goes broke and Tom and Parsely are badly hurt.

Bigmultinational1 sees another opertunity to take market share from Bigmultinational2.

He slashes the price of bread.

Bigmultinational2 aproaches Tom and Parsley and offers an even lower price. They are in no position to argue and accept.

About now Vader finds out what price CWB sold his grain at.
He is apalled.
He sets up Vader and Co but who does he blame for this low price.

Using Vader logic it is not the CWB but Tom and
Parsley who are the cause of his problems.

So Bigmultinational1 and Bigmultination2
fight for market share offering less and less to Tom Parsley and Vader.

The hatred the Vaders have for the Toms and Parsleys means working together is totally out of the question.

This is a simplified version of what happened with MMB in UK.

Remember the real world will not stop while you change the CWB and you cant press the rewind button either.

You will have one chance to get it right!!!

[ianben]

Just a further point I am not sure I made clear.
In UK everybody who offers a pool price option also offers a real cash price 365 days a year.