Westlock AB CWB Forum

[TOM4CWB]

Last night, I went to the CWB Director Candidate forum, sponsored by Wildrose...

In the only forum for the whole District 1 southern area...

About 30 folks showed up

There must be 1000 farms in this area...

It appeared to me that not one person had their mind changed by what was said in the forum by the candidates...

The Single desk was the main topic...

I tried to ask Art Macklin about why the PPO pricing options were not working... why minimum price contracts were not avaliable for 03 harvest like the Ontario Board has for their wheat farmers...

Art Macklin said he did not understand how these work, as CWB Directors are not allowed to sell anything but to the CWB pool to sell grain....

He said the directors have inside information on the markets, where they are going... so they cannot use anything but pooling... What a bad joke.

Mr. Macklin said the CWB was responsible for pushing the wheat market up in August... when the CWB withdrew from selling...

What do you think Charlie...

Does the CWB have inside info and know were the markets are going... if so why did the CWB sell grain for 2002 harvest last spring?


Mr. Macklin states that all domestic prices are formulated on a North American price... that the CWB has no control over what is charged because of NAFTA...

Sounds like the "single desk" is useless in the North American domestic market... the only place where the CWB can be effective...


After what Chairman Ritter and Director Flaman have said in the past two weeks bites them real good in the backside...

With the CWB spreading it a couple of feet thick... It does appear people are tired of the garbage we are expected to swallow... as truth... coming out of 423 Main... official government of Canada reps...


Talk about election conflicts of interest... and the farmers in the "designated area" know...

BUT what will farmers do?

Are they so fed up they will not even vote?

Indications are in southern District 1... by attendance at the Westlock forum... that interest in the CWB elections are at an all time low!

[melvill]

tom4cwb, actually Art is right. (And after spending time visiting with Art on airplanes, I learned that Art and I don't agree on quite a few things.) CWB farmer-directors aren't allowed to use any CWB pricing alternatives except pooling. That stipulation is part of the Code of Conduct that they all must sign and adhere to. As I understand it, that part of the Code was strongly suggested by at least one of the non-farmer directors. The reason is that they do not want there to even be the slightest sniff of directors benefiting from inside knowledge. Probably a good idea.

[chaffmeister]

I agree with Lee - it's not so much that they have the benefit of "inside" information, it's the perception. Sort of like someone on staff at the Commodity Exchange trading his own personal account at the same time.

[Braveheart]

Tom4CWB, in regards to Art Macklin's comments re PPO: First I believe it would be unethical for directors to be allowed to use these options. Inside information or the perception of access to it should preclude the directors from using it. Something as simple as hearing that the basis was about to weaken could be very advantageous.

But Art's comments that he doesn't understand how they work are inexcusable. How can farmers be represented by an individual that seems to have little interest in a concept that was created to benefit growers? This proves once again that directors are not there to direct, but are elected to foster their policy beliefs about the CWB.

On the subject of interest in CWB elections, it's amazing how even the face of imprisonment of a brave few farmers, most producers are easily calmed by the high but likely mythical PRO's.

Regards,

Braveheart

[TOM4CWB]

Lee and Chaffmeister;

Why are CWB Directors active farmers, and must be active farmers?

My understanding is farmer directors at the CWB are there to be accountable in the systems the create for farmers... because they are to experence first hand what they have created... or are maintaining...

CWB Directors not trading PPO proves to me that there is an integrety problem at the CWB.

WHY?

Cause if the system was accountable... and fairly transmitted pricing signals and opportunities to "designated area" producers... there can be no conflict.

Another issue is that if there is an opportunity in the operational system of pricing... for skimming to occur... then there is temptation for CWB staff and Directors to commit fraud.

A pricing system must be created that is open and transparent... with equal access to pricing opportunities for everyone... creating an accounatable system that cannot be corrupted.

The CWB Opponents presently are right to object about the single desk.... because if there is real conflict of interest inherent in the present system... the motive and opportunity for payoffs exists both ways...

The CWB monopoly sales dept. can give give a supplier a special deal... and then these people can be paid off for completeing the corrupt deal.

This temptation is too large and it is not fair to expose CWB staffers to this situation... and the monopoly makes this situation unfair to farmers captured by the monopoly... cause there is no way to even see that this situation has occured with pooling the base of the CWB.

People are human... and as I personally experenced... CWB sales and other CWB staffers want to please those they come in personal contact with...

Hard reality however... proves that personal accountability to farmers who are captured by a CWB policy... that is not the written law of Canada... that these CWB staff know is hanging on a unravelling thread of political retoric and the shifting winds of powerful and influential... leaves these CWB people in an unfair and unreasonable situation.

My point is that a pricing system must be created that is accoutable to everyone involed... that allows freedom...

Just ask OWPMB or AWB or Western Pork Exchange directors if the must remain only in the pools... without risk management tools...

HOW ABSURD can we be?

[parsley]

Having a policy and following it is another story from this CWB Board of Directors!!

Here's their policy guys......

" II Policy
B. "Members of the Board who are appointed by the Governor-in-Council
shall not represent the CWB in making financial or other contributions
to political organizations or any other candidates seeking election to
government at any level in Canada. "


Followed their code? Here's the CWB Director's real life happenings....

Mr. Ed Zinger was in contravention of this Board policy. He was appointed to the CWB by Minister Goodale,and he attended the Liberal fundraiser in Winnipeg, represented the CWB at the the Board's table, and $400.00 was paid out of farmers' pooling accounts for him. An obvious contravention. Has it been paiD back yet? Ask Art Macklin.

melvill and chaffmeister, what good is a policy if nobody follows it?

The probabem isn't with the policy. It's with the ethics of this particular Board of Directors, isn't it?

Parsley

[TOM4CWB]

Lee and Chaffmeister:

It is obvious that a conflict occurs if Directors can only use the pooling accounts... cause the PPO options have proven not to be the average of pool sales... but a value much below pool averages...


This means Directors are skimming money off PPO farmers and putting it in their own pockets through selling to the pooling account.

This situation must change... or the CWB is toast(IMHO).

[chaffmeister]

Braveheart:
Agreed. (1) Perception is paramount. (2) All CWB directors should know how PPO’s work, inside/out.

TOM4CWB:
Does it say somewhere that the CWB board members must “experience first hand what they have created…or are maintaining”, as you suggest? Does a CWB board member even have to grow wheat at all?

CWB members not using PPO by policy does not prove any integrity problem at the CWB. I don’t think there is much opportunity for board members to take advantage of the PPO in any regard – “skimming” or otherwise. (There might be ways, I just can’t think of any off the top of my head). Believe it or not, these kind of rules are just good governance.

You say “CWB opponents presently are right to object about the single desk.... because if there is real conflict of interest inherent in the present system... the motive and opportunity for payoffs exists both ways... “ but yet you seem to dislike policies that are aimed at preventing conflicts of interest.

You are absolutely right about the potential corruption in the sales area – but in my view that same comment doesn’t translate to the directors.


Parsley:
“What good is a policy if nobody follows it?”
Agreed. (But this is a slightly different topic than TOM4CWB brought up, isn’t it?) What the CWB needs is someone to watch over the foxes watching the hen house. Want the job?

[parsley]

"CWB farmer-directors aren't allowed to use any CWB pricing alternatives except pooling. That stipulation is part of the Code of Conduct that they all must sign and adhere to"

This is another Policy that is signed sealed and delivered to the farmer, and is being accepted without reservation, I can see.

Ummmm. Where do you check the facts?

Parsley

[charliep]

Hopefully Art could articulate the base principals behind the contracts (improve cashflow, allow opportunity for higher prices than pool, etc) as opposed to the mechanics.

Would this indicate a director of a $5 bln business that doesn't have a basic clue of the most basic elements of risk management/contracting? How can someone set policy/performance measures for operations without knowledge in this area?

I have to admit frustration with both PRO and CWB contracts. The PRO was light all summer relative to realistic market expectations give the best information available at that time(keeping in mind we only get monthly signals). Today, there is a distinct possibility the PRO is too high (again given the information the market is providing) - no CWB market signals for another 2 weeks. Combine that with CWB contracts that simply do not work.

I spent the morning at a canola industry meeting and what a breath of fresh compared to what we talk about here. Lots of challenges but an industry that works together. The challenge we face in 2003 (assuming decent weather) is to grow 6 MMT. That means at least a 10 to 20 % increase in acres. Watch out CWB - those acres are coming out of wheat.

[charliep]

I apologize for using the royal word "WE" above. That is a term that spreads responsibility and is a weasel word. The "WE" I refer to is the Alberta Industry of which I am proud to be a part. I will work towards that goal.

[charliep]

Now that you have me excited, I read your full question? Was the CWB totally responsible for driving the markets higher is August? Anyone who believes should talk to me about am investment in Florida swamp land.

An small western Canadian crop that went from bad to worst may be a better explanation.

Perhaps the reason was that the CWB was an active buyer of wheat futures. That would drive the market higher. That would make the CWB a speculator. Maybe this is the director confidential director information Art is talking about. If so, what is there risk position? Is this an appropriate activity for a single dest seller?

[Braveheart]

Charliep, I believe it was a CWB Chief Commissioner named McNamara that believed that the wheat board had so much market clout that he made the decision to withdraw the CWB from the marketplace to force prices to rise (mid 1950's?). The benefit was that a lot of curling rinks were built in small rural towns for grain storage. The downfall was that wheat prices didn't rise as hoped and a lot of farm families had a tough winter.

If the CWB thought they were responsible for raising the price of wheat, will they also take responsibility for when they create a situation that lowers the price?

When Art Macklin says the CWB withdrew and the price rose, he is also talking about a spot price situation, the very anithesis of the CWB system. Even if the CWB's withdrawal did cause a small price ripple, the next day the market would look for fresh news or changing fundamentals which would affect the price.

My actual question is though, if canola prices stay as strong this winter as I think they will, how many acres will we see in Canada next year, and how much will that affect wheat acres if PRO's stay elevated?

Braveheart

[charliep]

I wish I had answers to your question.

Point of discussion at the canola meeting - seed supplies (real fears of seeing farmers use common seed). It will be the same situation with all crops.

How dry (will farmers seed canola into dust)? When will crop get seeded? Crop that will be spring harvested? Wet or dry spring? No fall work done/fertilizer put down. Help!!

How tight will cash flow be? Put a crop in with low inputs/hope like hell - this would say more wheat.

What will be the next set of challenges/opportunities for creative get thrown at us?

I can only work to understand what is going on/how to position people with a strategy that provides opportunity with acceptable levels of risk.

[charliep]

After my wild tirade, the market needs to attract 10 to 20 % more canola acres (11 to 12 mln acres) to get to 6 MMT. One industry source indicated 14 mln canola (not today). Possible but I won't make that call now. Would have to see the planets line up with higher prices and an ideal spring.

Recommendation - Get your canola seed lined up early. Not today but be prepared to forward price this winter - a tough decision after the lessons of this last year but a necessary one.

With apologies for being off topic but an interesting comment this year is how well canola performed as a silage/annual forage. Farmers able to write off crop for crop insurance and get to cuts of acceptable quality forage.