Western Producer Editorial

[craig]

Tower
Please explain or show us these higher government payments for U.S. export grain. Next explain your loss leader logic. We are to sell our domestic feed barley cheap so that the feedlots will pay us higher prices for what.(Silage,hay, U.S. Corn) Grain Companies must just seeth having to deal with grain farmers who have some measure of control over their grain marketing. In western Canada with grains controlled by the CWB we have no control over our marketing. We have someone else make those decisions who has no economic stake in the transactions. Have you ever seen a CWB marketer get fired for poor performance.Finally just so I understand correctly Tower. Are you telling us that it is the role of the CWB to keep prices low for our domestic feed industry.

[craig]

Burbert
Let me get this straight. It is alright for the greedy CWB to extract premiums from the market place but not alright for farmers to try and make more money on their grain sales. On one hand you accuse farmers of giving our grain away( that's what happens in an open market when the greedy grain companies squeeze us) yet if we try to get better prices we are greedy. Greed implies excess. Not sure where those farmers are but there not in my area. I don't hit homeruns all the time and if money was my total motivation I would have chosen another occupation than farming. In my business I don't have the luxury of giving away my production.

[FarmRanger]

I wonder what subsidies the U.S. farmer is getting right now, as the loan deficiency payment program wouldn’t be paying a dime with world prices at these levels?

Tower, I can understand the principle of a “gains leader”, but I really doubt that it would apply in this case. Why would a company take large losses in a large market (U.S. domestic), only to get possible lower future prices in a much smaller market Canadian market? Are these multinationals not only evil, but stupid as well?

If another of the CWBs competitors on the world supply side were to want “to shut down the board”, why would that be? If I understand the argument correctly, the CWB gets a premium to the world price. If that’s the case, then the world price of wheat would tend to rise, rather than fall, so why would that be a problem for another seller.
If, on the other hand, the CWB is a discount seller, they would tend to drag down prices, and make it harder for other sellers to get more for their wheat when world buyers they know they can get cheap Canadian wheat.
I think the discount seller scenario is the most likely reason for any animosity by other sellers toward the CWB. The Algerian “tens of dollars a tonne” durum discount, and Brazil’s Moinho Pacifico purchase of Canadian wheat with an 80 cent per bushel discount from the world price tend to support this view as well.

I agree that we have no obligation to provide cheap feed for domestic livestock. Is it possible that domestic feed barley and wheat are being artificially held down by the CWBs monopoly buying power? The evidence is starting to pile up.

[craig]

Just a note of interest since we all think we are barley experts. When you post a thread state the percentage of total acres that you crop barley on and whether it is feed or malt. On our farm we over the last 5 years we plant between 20 to 35 % of our acres to barley. This is all 2 row feed.

[FarmRanger]

Last 5 years averaged about 20% 2 row malt barley. This year I substituted quite a bit of 2 row feed , but the total percentage is about the same. A lot of that 2 row malt was going into animals anyway depending on quality and/or CWB price differentials.

[chaffmeister]

tower says: <i>Grain markets dropped on announcement that the conservatives tried to make an end run around the law, and were stopped.</i>

Wrong. Barley prices shot up on the news that we were going to an open market and therefore western Canadian prices were finally directly connected to the export market – the market needed to move higher to reflect world values at the time. They then dropped when it was announced that we were going back to a CWB-controlled market. The market has since stabilized (and risen) as the smoke has cleared and it is apparent that the private exporters who made the export sales will be allowed to fulfill their sales as if they were non-CWB – which means the impact on the barley balance table remains and also that the private trade will be bidding for your barley to fill these sales. In other words, the market is acting like an open market because for the time being, it is at least partially an open market. At least until those sales get completed.


<i>A gains leader then is where American multinationals have a pricing setup which encourages Canadian suppliers to buy into their system in the sure confidence that once the board is gone, those same grain companies will have another captive market willing to sell at low enough prices to cover their gains leaders.</i>

I have never read anything even remotely as ridiculous as this in all my years of reading.


<i>Gains leaders might be what's paid in the American market, or what would be paid as an incentive to get Canadian farmers to give up the board so that losses could be recouped.</i>

What drivel.


<i>Grain prices are also higher there because there is higher government payments for grain in export markets allowing grain prices to be higher for domestic.</i>

Wrong. Wrong. Wrong. Do some reading, tower.


<i>Anyone have any ideas concerning where these companies have stood on the many American attempts to shut the board down?</i>

As stated before, grain companies tend to stay silent on the CWB issue to avoid commercial retribution. Also - another reason to stay quiet – good margins on CWB grains.


Craig: I’m not a farmer so I can’t give my acreage. But I’ve traded lots of barley over the years. Cash. Futures. Domestic. Export.

Lots.

[winwin]

Craig;your criticism of the W.P.editorial is right on.They looked at the WCE only,ignoring the farm gate.
My challenge to you though---WRITE the EDITOR.
I don,t know how many great insights there are here from the rational side of the debate which go underutilized because the points are not being made in the print press.

If its true,shout it from the rooftops.The editor needs to hear it and so does all their readership.

[TOM4CWB]

Chaff,

Good points on the barley market between early June and July 30.

To get the barley, the trade had to pry it out of barley growers... which meant bidding UP the price to get commitments.

When the Liberal Judge did her little trick... the trade knew it was back to a normal CWB Bla Bla Bla market... which meant logistics and efficiencies were no longer avaliable to needed get a commitment...

through premium prices...

Because any extra premium given up or gained by the trade after August 1 goes to the CWB pool account instead of to the people who actually should have earned the additional revenue streams.

The CWB "single desk" virtually assures every "designated area" board grain grower of the lowest average price and below average basis.

Pooling at it's jaw shattering best.

[craig]

WinWin
I considered a letter to the editor to the western Producer but not sure they would be willing to print something that criticized their logic. I am under no illusion as to where they stand. I already have seen the situation where my previous letters have been past on to the CWB so that they had their rebuttal in place and were both published the same week in the paper. I'm also interested in the fact that I'm not getting much response to how important barley is to people's farm operation. ( percentage of total acres). It only reinforces my belief that the majority of people impacting the barley question have little involvement in the industry.

[tower]

Gains leaders are used regularily in business, in the case of a continuing effort to accumulate more control of the marketplace companies will often pay more for stock of a competitor with the intent of removing the competition. It isn't always about the dollar value of the trade at the present time. Grain companies for example are not just buyers, and not just sellers. They make their money on the service they provide to society whilke the grain is in their hands.

It doesn't matter particularily then to them where the price is because their markup covers them. At his point the problem is that some portion of the market is not in their control. Not that many years ago, I think during Reagons presidency the US of A declared that food is a weapon of war... It seems evident to me that a decreasing number of companies are trying to gain control of the power involved in that.

About a quarter of my crop this year will be in barley, all feed.

[tower]

Whether the cwb is restricting the value of feed grain in Canada has been discussed on here quite a bit. Looking at the board Act successive liberal and conservative governments have placed quite an onus on the board to assist the value added industry. Livestock might be considered a value adding industry.

I found no specific mention of livestock but if governments have appointed directors and farmers have elected feeders to the board, I expect that would have an impact on interpretation of such a regulation.

[tower]

With respect to the notion that a supporter of the board should necessarily be selling all production through the board, I for one don't.

I agree with the concept of conservation of resources. If it ain't broke don't fix it and if it ain't trash don't junk it. The board needs fixing but it is better than some of the junk out there so I figure it's fixable.

[chaffmeister]

So the CWB needs fixin'.

<b>How would you fix it, Tower?</b>

[TOM4CWB]

Tower,

If the CWB WERE to extract a premium and maximise our returns as grain farmeres in the "Designated Area" it would indeed mess up the value added sector.

This is why marketing must be competitive and allow growers/farmers to find their own equilibrium on value... cattle/hog growers need the opportunity to bid for my growing acres... as do special crops consumers, human consumption produce, oilseed processors... no one sector should be allowed special status or it distorts all sectors.

Pools simply prevent arbitage of the markets... WHEN CASH MARKETS are not allowed to co-exist along with the pooling system. Dry Bean marketing works in this dual system... in Alberta the pooling system is the marketing option of choice... yet growers of dry beans could choose another option if those managing the pool ripped them off.

This is market discipline... and we don't have it as the CWB exists today.

Will the CWB honestly operate a competitive cash pricing system along side the pools thsy now operate?

Only if they change the system to a cash bid... grower based sales system. GROWERS must make the decision of when to release stocks and make sales... not the CWB sales dept. When we finally get this problem ironed out... it would be possible to rebuild the CWB.

If the CWB is allowed to operate as it does today for an extended period... it will destroy itself with a slow and bitter struggle as it burns out grain growers till in the end through WTO type interventions it is finally dismantled.

[parsley]

.....but unfortunately, if the CWB warble is allowed to suck along, as it is accustomed to, those farm children, with agricultural skills oozing out of their genes, are bound to kick up their heels, and move on to greener pastures.

Parsley