Westlock AB CWB Forum

[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.

[ianben]

Charlie
Why do you think canola is a better market?
It seems that way over here too without the CWB.
Somehow cdanola seems more of a partnership a better understanding of each others problems.
Canola does seem to marketed better always seem to be searching for new uses both industrial and food.

Grain on the other hand seems more us and them. Disputes over grade and moisture and no-one looking at inovational uses for this basic raw material.

Is it similar in Canada?

Are there reasons why this should be so?

[TOM4CWB]

Chaffmeister;

I think a really good example of directors and responsible balance between perception and needed experience is WCE directors.

Can you imagine if the WCE Directors could not trade (the companies the represent would be excluded because of "inside info"), if market makers (locals) could not be involved in the markets at the WCE!!!

A system at the CWB must be set up that fire walls conflicts of interest... so real commecial farmers can be on the CWB Board.

We must be realistic... not be off on some theoretical wonderland... soon CWB Director farmers will have to put their farms in blind trusts...

In essence this is what you folks are suggesting now... which goes against the whole reason to have actual producers be CWB Directors to begin with.

I sure hope you folks really think through what kind of a CWB you create by restricting farmer Directors marketing options... obviously the management at the CWB that has happened in the past four years does not bode well for the long term existance of the CWB. itself...

But I guess if you guys really want the CWB to be destroyed... the present path the CWB Directors are going leads straight to this destination!

[charliep]

Ianben

Lots of questions I don't have answers for today. The issue I identify is freedom of choice - no one in the canola industry is forced to work with someone else. Everyone has to work hard everyday to justify the working relationship or one doesn't exist. The other issue is that everyone comes to the room as equals and works to improve the industry. Markets are addressed in terms of customer needs and potential - price (except for my part) is rarely mentioned. Agromonic issues and ways to improve profitability for farmers are also a priority. There is an acceptance that farmers have to make money or they won't grow the crop.

[Braveheart]

Tom4CWB, the difference I see between the CWB and the WCE is that while the WCE is the place where market participants meet to conduct their business, the CWB is actually a market participant (well, maybe not this year). I would suppose the directors of WCE Holdings Inc meet to discuss how to make WCE Holdings Inc more profitable for its' shareholders. No inside info here. I'm just guessing, but I would think CWB directors are exposed to reports on CWB hedge positions etc. This would be information which an unprincipled individual could profit from.

I think the destruction of the CWB won't come from lack of firewalls of integrity, or directors/pool accounts funding the Liberal party, etc, but will come when farmers grow tired of being made fools of by Ralph Goodale's little pass the buck to farmers trick called the farmer controlled CWB.

Hasta La Vista, Baby!

Braveheart

[Braveheart]

I wish I had more time to spend on here with you guys. Here is an email I sent to Goodale on the weekend. I've not yet seen a reply.

Hon. R.E.G.:

I've been staying out of the Canadian Wheat Board (CWB) debate over the last five years for a few reasons: 1) I've grown tired of trying to change an industry that doesn't want to change; 2) there is better use of everyone's time than to debate empirical data, coffee shop rhetoric and the same innuendo that even Jean Luc Pepin had tired of and 3) I've learned it is more beneficial for farmers (and me) that I spend my time trading their grain than trading western Canadian issues.

One of the key issues that no one has debated is the industry's ability or inability to finance the 3 to 6 billion dollars of export sales should the Canadian government discontinue their guarantees and I expect in time, that this issue will be a major hurdle in World Trade Organization negotiations.

However, this column below posted on the CWB website, absolutely pisses me off and there is no way you can tell me that this is not election interfering beyond a reasonable doubt. If you, the spin doctors in your office or the CWB can justify this, I await your usual lengthy reply. Mr. Martin will be in Saskatoon on November 15th, and I will ask his views on the CWB election interference and expect his answer to be much more pointed than the one I will receive from you. The last time I emailed you was two years ago, Ralph, warning of impending financial insolvency in the grain industry and that farmers were at risk. As expected, I did not receive a reply from your office and the consequence is that farmers are out over 3 million dollars in the Naber Seeds and Agritrans debacle. Inaction, it appears, has a price.

Yours truly,

Larry Weber
Weber Commodities Ltd.
#9-2155 Airport Drive
Saskatoon, Saskatchewan
S7L 6M5
Phone:1-306-657-3456
Fax:1-306-657-3450
Cell:1-306-241-8844
Email:gograin@sk.sympatico.ca
Email:larry@webercommodities.com
Website: http://www.webercommodities.com
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CWB Now
2002 CWB Now
Comparing apples to apples
There are many differences between producing and marketing wheat in Eastern and Western Canada that make drawing a parallel difficult. What is good for Ontario farmers is not necessarily good for farmers in Manitoba, Saskatchewan and Alberta.

Ontario farmers typically grow only about one million tonnes of wheat each year compared to approximately 11.5 million tonnes grown by western Canadian farmers. The annual wheat production in Quebec is even lower than in Ontario, so a comparison of quantity of grain production shows a vast difference.

While the flagship wheat of Western Canada is Canada Western Red Spring wheat (CWRS) - a hard red spring wheat variety, soft red and white winter wheat varieties dominate production in Eastern Canada. While flour milled from CWRS is mainly used for bread and buns, the soft varieties grown in Ontario are milled into flour used primarily to make cookies, cakes and biscuits.

Between 40 and 50 per cent of the Ontario wheat is sold to domestic millers and bakers located in Eastern Canada, compared to just 15 per cent of western Canadian wheat that is sold for domestic consumption. Most of the remainder of Ontario wheat is purchased by customers in the northeastern U.S., with a small amount purchased by the federal government for overseas food aid programs. Over 75 per cent of wheat grown in Western Canada is sold to customers located outside North America, so international market conditions govern returns to western Canadian farmers unlike eastern Canadian farmers.

In 1999, the Ontario Wheat Producers Marketing Board (OWPMB) members voted to implement a direct marketing program. This program originally gave farmers the option of marketing up to 150 000 tonnes of wheat outside the OWPMB, and this amount was increased to 200 000 tonnes in 2002. This direct marketing program created a dual market in Ontario, with farmers able to sell up to the maximum limit of wheat themselves and the OWPMB also selling to customers. The Canadian National Millers Association is opposed to the dual market, as they believe it impairs their ability to secure consistent supplies of wheat. Compare that with the CWB's ability to provide domestic mills with a reliable supply of high quality wheat.

At their annual meeting earlier this year, the OWPMB directors announced their intention to issue direct marketing licenses with no limit on tonnage for sales beginning in 2004. This will create an open wheat market in Ontario. At this time, the majority of the 10 farmer-elected directors sitting on the CWB's Board do not favour the open marketing system. They believe that the CWB is able to obtain the best returns for Prairie farmers using the power of the single desk system in North American and international markets.

Farmers should be aware of the differences that exist in wheat production across Canada. It is not as easy as comparing apples to apples.

To reach the CWB, please call our toll-free phone line at 1-800-275-4292. This column is written on a regular basis by CWB communications consultant Andrea Geary.