CWB Video Conference on New Malt Barley Programs

[charliep]

http://www.cwb.ca/public/en/newsroom/releases/2008/010808.jsp

[Raven]

Will the Malt Barley Program be in contravention of NAFTA?

[Raven]

Charlie, on another thread you said: "Good, bad or indifferent, the CWB barley programs are likely to look a lot like what is being offered the organic industry". As you suggested, I went to the CWB web-site and found:
"Organic Fixed Spread Contract (OFSC)
The OFSC allows farmers to obtain an export licence or SELL INTERPROVINCIALLY BY MAKING A low, stable, up-front PAYMENT TO THE CWB."
But CWB Regulation 14.1 states: " 14.1 The Corporation may grant a licence for the transportation from one province to another, or for the sale or delivery anywhere in Canada, of wheat or wheat products, but NO FEE SHALL BE CHARGED FOR THE LICENCE." Can you explain what appears to be a glaring contradiction? Maybe Vader or AgStar can explain

[charliep]

Your real name is not Parsley? Yes. This is an issue for either program.

My only purpose is to to highlight the CWB allows cash pricing today through several programs. Whatever program the CWB offers has to have a direct relationship between the price paid a farmer and the price a maltster pays for the malt barley that is being delivered.

[charliep]

No surprises. Farmers still not able to contract price directly with maltsters/recognize the full sales price.

Thoughts on the program?

[Hopperbin]

Didn't read anything into the program but if a farmer cannot contract at the real price a maltster has to pay at a specific time then that sucks. Time to bring some unripe compost to CWB days.

[mcfarms]

Pretty much what we saw a month or so back.
However
From the news release. CWB Director Oberg speaking....


If these contracts were available through selecting companies today, the upfront cash price for malting barley producers would be over $5 per bushel, backed off to west central Saskatchewan, with flexibility to negotiate additional terms directly with the companies.

“We’ve developed an innovative program that delivers the options farmers are looking for in barley marketing,” said Allen Oberg, CWB farmer-elected director from Forestburg, Alberta. “Farmers have indicated that they want a strong, viable CWB as well as more choice. Under this program, they will have both.

FROM Canadian Press today.
Commodity Exchange prices closed mostly higher
7 hours ago

WINNIPEG - Closing prices:

Canola: Jan. '08 $8.20 higher $529.80; March '08 $8.90 higher $541.50; May '08 $8.80 higher $553.00; July '08 $9.40 higher $560.90; Nov. '08 $9.50 higher $542.70; Jan. '09 $9.00 higher $549.30; March '09 $9.40 higher $553.10; May '09 $8.10 higher $554.90; July '09 $8.00 higher $557.00; Nov. '09 $1.20 lower $508.80; Jan. '10 $1.20 lower $513.50.

Feed Wheat: March '08 unchanged $195.50; May '08 unchanged $199.50; July '08 unchanged $199.50; Oct. '08 unchanged $192.50; Dec. '08 unchanged $192.50; March '09 unchanged $192.50; May '09 unchanged $192.50; July '09 unchanged $192.50; Oct. '09 unchanged $192.50; Dec. '09 unchanged $192.50; Mar. '10 unchanged $192.50.

Barley (Western): March '08 $2.40 lower $204.90; May '08 $3.10 lower $214.00; July '08 $0.10 higher $220.80; Oct. '08 $1.10 lower $200.70; Dec. '08 $1.00 higher $203.40; May '09 $1.00 higher $203.40; July '09 $1.00 higher $203.40; Oct. '09 $1.00 higher $203.40; Dec. '09 $1.00 higher $203.40; Mar. '10 $1.00 higher $203.40.

Wednesday's estimated volume of trade: 213,360 tonnes of canola; 20 tonnes of feed wheat; 7,820 tonnes of barley (Western Barley) Total: 221,200.

Wheat, St. Lawrence: 1 cw 1.00 pct 475.50; 1 durum 809.19. Malting barley (domestic), Thunder Bay: Special Select 6-row 358.00.

Select 6-row $355.50; Special select 2-row $370.00; Select 2-row $367.50.





OK so heres the math as of today 367.50 posted TB asking price minus deduction to sask of 63.63 (From the DEC Pro)=303.87 or


6.62 a bushel.

I realise that the cash plus will reflect new crop values but I also know that current world new crop bids should support this 6 dollar level if not higher. How much higher I cannot say but when my numbers come from where they came from I trust my source.

The comment made was over 5 dollars a bushel not over 6 and even if this is the asking price there should be a minimum 6 dollar bid for this cash plus right now. With money left in the "dividend account"

Now the actual prices have not been set for us to see yet but if this is the cash a bid in the 5 dollar plus according to Oberg where the world is 6 and a half plus. this program will not send any sort of true market signals to the Canadian malt producers.

[SASKFARMER3]

Its sending me a signal and a lot of malt growers in our area. Drop the crop and quit loosing money. lots of other crops that will pay more and are easier to grow. I want to deal direct with malt. Not some CWB guy in Winnipeg telling me whats what.

[SASKFARMER3]

Clearly the CWB wants to run the show no matter what the cost. Perhaps the cost will be the demise of our domestic malting industry. Why would some one want to sign a three way contract where by the CWB does nothing to facilitate the deal yet charges a administration fee for the CashPlus program? And all along running a traditional malt pool. Talk about an administration headache ! or is that windfall for some one?

Flaten comments below :
"We want to sell barley, and they wish to buy barley, so I think there's still a reasonable chance that we might be able to reach an agreement to get that business going," said Gord Flaten, vice-president of marketing.
Barley sales accounted for about 11 percent of the CWB's C$3.5 billion ($3.47 billion) in revenue for the year ended July 31, 2006. Most of its revenue comes from wheat sales.
Flaten refused comment on whether the CWB had sold any new-crop malt barley, which will be harvested starting in August, and would not say whether buyers would be able to book supplies ahead of harvest outside of the disputed program.
"Our hope is that we can do business on this basis," he said.
Ok the CWB wants to sell our barley, the trade and maltsters are being held hostage by the CWB as to forward sales. It is a train wreack about to happen. With the CWB refusing to allow forward contracting by our maltsters and grain handlers, potential revenue back to the farmer is being lost.
Farmers are looking now at other options rather than malt. And why not? The CWB must understand that they can operate in a open cash market place. Treating farmers, maltsters, grain trade as enemies works wonders in building a solid reputation as a quality supplier of malt barley to our domestic and international customers.
Erik

[charliep]

I note that not all selectors may offer these programs. Without visible pricing, what is to prevent the CWB from cutting deals with cooperating grain/maltsters at farmers expense and penalizing those that don't. I also don't see any reference to a contingency fund while at the same time talking about the dividend fund. Will be interesting to see the accounting around these processes/how separated from the normal pools.

The bare minimum needed is an exact and visible price between a farmer and a selecting company (be it maltster or grain company). If the CWB wants to be at the table offering services or advice for a fee, again that may work.

The progam as it exists today makes farmers worst off by potentially increasing their contract/quality risk and limited if any benefits on the pricing side. Maltsters/others will still have supply risk.

[charliep]

Also wish the CWB wouldn't stretch their nubmers to make fit their purpose. Compare the CWB annual statistics report (2006/07 will be out in a month) to their press release. Will note that the CWB has been lucky to achieve the bottom end of their malt barley pool size (2 MMT). Canada doesn't consume 350,000 tonnes of domestic malt barley - last few years have been under 150,000 tonnes.

http://www.cwb.ca/public/en/library/publications/popups/pdf/stats_english2005-06.pdf

http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/sis5324

[parsley]

"Clearly the CWB wants to run the show no matter what the cost."

Yup.

You know the Beatles singing "I wanna hold your haaaaaaaaaaaaaaaaaaaand....?

Well the CWB keeps singing:

"I wanna squeeze your ballllllllls."

dah dee dee do dee daaaaaahhhhh.

Parsley