CWB new malt marketing plan

[per]

Changes to barley marketing inevitable
Kevin Hursh, Special to The StarPhoenix
Published: Wednesday, December 12, 2007
One way or another, there will be increased barley marketing freedom in the new crop year. Rather than an action by the federal government, the most likely scenario will see the Canadian Wheat Board making substantial changes on its own in an attempt to satisfy producers as well as the domestic malting industry.

The Conservative government tried to create an open market for barley with simply a regulatory change to the Canadian Wheat Board Act. The CWB took the issue to court and the court ruled federal legislation is required to make changes.

The feds are appealing that ruling and the appeal will be heard Feb. 26 in Winnipeg.
Most observers believe the success of the appeal is unlikely. Even if the government is successful, the CWB would have the option of taking the case to a higher court.

The federal appeal probably has a lot to do with the Conservatives trying to appease their open market supporters while figuring out their next move. Federal agriculture and Canadian Wheat Board minister Gerry Ritz said he wouldn't proceed with legislative changes to the CWB Act until after the appeal is heard.

Introducing new legislation and getting it passed is typically a slow process. If the process doesn't start until after the appeal is heard, getting legislative changes in place before the Aug. 1 start of the crop year would seem unlikely.

Besides, the minority government may not be able to get the legislation passed. In fact, by next spring, the country could easily be in the throes of another federal election.

Regardless of what happens with the legal wrangling and with potential legislation, it won't be status quo in the new crop year. The CWB is working on changes that will probably be announced before Christmas.

It appears the system will move to something more closely resembling cash sales. Malting companies are expected to have the opportunity to contract directly with producers at specific prices.

A few weeks ago, the Malting Industry Association of Canada took the unusual step of publicly calling for legislation to end the CWB's monopoly on barley sales and brought more urgency to the CWB's action.

Just how the system will function and just what the CWB's involvement will be are not clear at this point. Also unclear is whether the changes will go far enough to satisfy those who have been calling for an open barley market.

Prices are amazingly strong for almost all the grains, oilseeds and specialty crops. Producers can lock in a portion of their 2008 canola production at prices over $10 per bushel.

Analysts suggest that malting barley should be worth about $5 a bushel in the new crop year. Malting companies want to lock in a supply and many producers would like to lock in attractive prices. The changes need to address those needs.

The CWB will no doubt continue to offer a price pooling system for producers who want that option. Previously, CWB supporters have always said that a voluntary pool wouldn't be sustainable, so it will be interesting to see the specifics of the CWB actions.


It would be marvelous if the changes could strike a balance that would satisfy the majority of open market advocates as well as CWB supporters. The court appeal could end and the government could forget about legislation.

Based on the rancorous history, this happily every after story is a bit far fetched. But it is the Christmas season, so we can hope.

It's interesting to note that CWB officials have high praise for Gerry Ritz. His predecessor Chuck Strahl would rarely talk with the CWB. Ritz is an avid open market supporter, but he has meaningful dialogue with the board.

This conciliatory approach is a welcome change that should be more fruitful for the entire industry.

Kevin Hursh is a consulting agrologist and farmer based in Saskatoon. He can be reached at kevin@hursh.ca.

[per]

As to the article I submitted above.
Seems like the CWB has consulted with media prior to consulting with barley producers on how we should be marketing our malt barley. Why not? if you get the media on side and spin it as a win win for the CWB then producers must believe it will work for them! Funny how Mr. Hursh goes on to suggest that it will INCREASE BARLEY MARKETING FREEDOM, and the CWB is making substantial changes on its own in an attempt to satisfy producers as well as the domestic malting industry.
Perhaps Kevin can explain to me what increased freedom means? perhaps instead of both wrists handcuffed behind the CWB pillar now only my ankles are shackled?
Attempt to satisfy? come on, what did we vote for last year? we asked for marketing choice, not partial freedom, not to be patted on the head and told good farmer, here's a bone, still no meat on it but, heck at least we gave you something!! MIAC has refused this idea so they are not satisfied!
The article goes on to show that in a totally open system producers can lock in over $10 for next fall's canola. Yet with partial freedom? What transparency will we see? What market signals are there going to be if the CWB is still the middle man?
The CWB will counter by saying they had producer input in the new plan. True they did have a series of malt forums, with invited only attendees. When I questioned this, beside being smacked around by the iron fist of the CWB, was told that it was permit holders only. No effort was made to reach any of the producers that grow barley with out a permit book. Over a million acres alone in AB !!
So by also stating that Minister Ritz will look favourably on this is simply crap. We asked for choice. We clearly voted for choice, our government committed in the speech from the throne to enact marketing choice for barley.
There is no compromise, no half way. The CWB has failed us and our malting industry on this and must step aside.
Erik

[charliep]

Would note I am hearing the same as above. Farmers will have a cash pricing system of some sort this spring/summer for new crop with the discussion as to whether CWB controlled pricing similar to the current wheat daily pricing contract (i.e. not a direct relationship to the price maltsters pay) or an actual price agreed between the maltster/farmer (with perhaps a CWB deduction similar to the tookage organic farmers who price outside the pool pay).

All crops are offering favorable new crop pricing alternatives. This is particularly the case for identity preserved crops like malt barley, specialty oil canola, etc. These crops are competing not only for acres but also to have their crop seeded first and with the due and attention that maximizes the probability of achieving grade/selection. To move the malt industry forward, it is critical that the maltsters be able to offer contracts that have a pricing component. More contacts in the malt industry suggest Alberta pricing (2 row) close to $5/bu with an act of god type clause and closer to $6/bu if the farmer is willing to guarantee quality.

[TOM4CWB]

Charlie,

If the Maltsters turn on barley growers.... again.... take the easy way out... what can I say.... GET those SKUNKs out of my HENHOUSE!

The malties reck the feed barley market. The CWB will protect the malties... prevent barley arbitrage into the international market place... and provide captive supply.

Is this better than what we have now?

Perhaps... but clearly the shackles still bind the slaves to the Master... sell your produce to X or go to Jail.

This is a very long way from market choice!

Now do you understand why I was so skeptical about the original Malties press release a few weeks ago?

No Pain... NO GAIN!

Obviously we have not had enough hurt enough yet!

[cropduster]

I agree Tom........CWB asking $22 for durum and giving farmers $9-10.When you phone the CWB now "ALL calls are recorded for quality assurance".There`s gotta be some "stress" there!!!

[charliep]

Am trying to stay out of the political/market choice debate on this one. My comment would be the current malt barley pricing and contracting system isn't working for anyone starting with maltsters and farmers. Something has to change provide proper signals to farmers ahead of seeding. This is particularly the case when canola and now wheat prices are rocking higher - acres will follow. Corn outlook is optimistic given the contining drive to ethanol. Feed barley will be different. Current signals and a cooperative mother nature will mean larger world production/less Canadian feed barley exports. Given the current state of the Canadian livestock industry, don't look for new crop feed barley prices to get bid up. Implications will be acres and barley getting seeded last/least amount of attention relative to other crops.

[TOM4CWB]

Charlie,

The short sight view is... livestock can't pay for our feed barley/wheat.

Unbelievable!

If barley/wheat growers are allowed to arbitrage the international market... THEN we grow the crop WITHOUT pricing 75% of it till next fall when it is in the bin!

SO instead the CWB prevents Arbitrage...barley and wheat acres drop again... how on earth does that help livestock folks?

When they need to import $6 corn... what will they do then?

Why the CWB is allowed to mess up our Ag economy by messing with feed barley and wheat is beyond all logic and understanding!

[parsley]

The "plan" simply means selling to the Board, and the Board getting a piece of the action, the same as before.

Nothing has changed except the process.

For many farmers, 2007 has been a year of heightened awareness...a year highlighted by individuals and groups and officials and institutions not only NOT meaning what they say, but never having had any intention of doing what they said they would do.

It's a hard lesson, especially for those farmers who offerred nothing but good intentions, positive advice, and a good heart.

Meantime, they got lied to, and stomped on, and laughed at.

2008 can be a fresh start, and what is being offerred is being told fibs, given the boots, and a fresh Board sneer.

Yup.

Parsley

[furrowtickler]

Is it true that american malt producers can lock in over $6/bus malt(6 row?) for fall 08 with an act of god clause? And to think we may get all of $5/bus, good old cwb premiums? Some hard questions need to be asked/answered at the crop production show.

[furrowtickler]

Tom4CWB
you lost my initial point, the maltsters although I'd have to admit have changed their colours and have me sceptical yet my point was that the Maltsters have seen the light and want to work with producers.
For as long as we all can remember the way the CWB has masked pricing signals and clouded price transparency that reflected back to our feeding industry could finally be at an end.
If you care to Tom review Market Signals in the Canadian Barley Sector on WBGA's web site.
The brokers I deal with in southern AB want transparency with moving the maltsters to pricing directly to the producer that will happpen.
In the new CWB plan, it will be a three way contract. Price set by the CWB, giving the Maltsters a range to offer to producers, yet maintaining a set spread between the price the CWB sets and what the maltster can offer the producer that will go into a new revamped "dividend fund" (or a new pool).
Question is why would one want to still deal with a middle man (CWB) that continues to mask pricing signals, and won't allow maltsters to deal with the 1,million acres alone in AB that grow barley with out a permit book.
I want to work with the maltsters one on one, no highbred pooling deal, no administration costs funneled back to the CWB, I want price , contracts and defined delivery times.
Erik