Marketing for profit is tough

[winston]

Cost of growing and marketing wheat for 2001-2002.

Seed $12.00/ac
fertilizer $40.00/ac
Chemical $37.00/ac
Insur& overhead $20.00/ac
Machinery-fuel $18.00/ac
Managment-labor $10.00/ac
Returnto Invest $40.00/ac
Total growing cost $177.00/ac

I know I've missed something or missed calulated an expense but my figure is probable low.

Marketing assuming a 40 bus crop

Freight $32.00/mt $35.00/ac
Handling $12.00/mt $13.00/ac
CWB adm $ 8.00/mt $ 8.80/ac

The marketing fees are deducted by our risk managment agency without any knowledge being forwarded to me of the price they obtained for my product it is always a huge mistery what they received for my grain. But I did receive on average $4.65/bus. which left me a profit of $9.00/ac on a 40 bus. crop. Lucky I grew alittle more than 40 bus.

Now everyone is aways trying to advise farmers on doing something about risk managment in their business. Well kiss risk managment goodbye when the CWB markets all of our milling wheat and select barley. The intial price may be the all you will get and best you can expect is an average price that you get to share with your incompetent neighbor. This neighbor, everybody has one, is farming the government programs and is being financially supported by the effort of others in a pooling market.

Will the CWB or the Alberta Government free farmers who want marketing choice.

I'am not crazy or against democracy, for I believe that demmocracy should not remove the ability of a person to sell a legal product to who ever he wants for what ever price.

I could have sold my wheat into the free market this last year for over a $1.00 bus. more than I received from the CWB. I have lost over $25000 do to letting a government controlled agency do my risk managment for me.

I have a sale right now for $9.00/bus. for #1 milling wheat because our premium marketer the CWB will not supply my buyer with this product. The only think holding up the sale is guess who, the CWB. If I sell to the board it will be closer to a $6.00 return for me, I'am betting.

When the CWB will not supply my buyer with the product he requires what does that do for value added processing in Western Canada. And we know not why our rural areas are becoming less and less populated over that last 60 years, need I go on any longer.

I rest my case. The Kernel

[Vader]

Kernel,

I note that you have pencilled in a return to management and investment of $50.00 per acre which I assume is your management and your investment. Add to this the remaining margin of $9.00 and multiply by a farm size of 2000 acres and this works out to $118,000 per year. If you are only getting $4.65 per bushel you must have grown all feed wheat as that is the price available on the open market, then you are doing quite well in a year when tens of thousands of farmers have virtually no crop at all.

[TOM4CWB]

Vader;

Just think for one second what you have just written.

1. Kernel specifically stated 2001-02, and the price quoted was for milling grade CWRS as close as I can figure it.

2. If Kernel had used the CWB and sold feed wheat/CWRS #4 as you claim he could have sold, at your CWB port price of $4.14/bu... minus shipping and handling you get about $3.00/bu. at the farm gate... where is your incredible monopoly premium here?

3. Logic and real economic sense have totally been overshadowed by memories of yesteryear and emotional baggage that do not realistically represent what the average commercial farmer... who must make a living from growing grain... by CWB theories that no longer have practical application to the world we must survive in today. A CWB that has a miniscual world market share... is not dependable... pre-sells grain it does not have... and brings grain growers down to the lowest sad common denominator...

4. The "democratic" side of the CWB is a disgusting side show of politics and dirty tricks when we review what just happened in your 02 elections... and farmers know it. The 43% election turn out proves it. I was an official election observer in Brandon... and unless things radically change, I don't know if I will ever vote in another CWB communistic sick excuse for an election ever again. Iraq would be proud of what you have done VADER!

[Lifer]

We all have different variables in our operations with a goal of arriving at a net profit. I don't understand how one risk management strategy can fit all. Isn't this the original question. How do we manage risk on our own farms when growing wheat?
If some one is happy with selling wheat for a price on any given day and at the same time there is some one willing to buy. Why not?

[Lifer]

Vader my boy who are reading things into my operation. But it does deserve some clarification. Yes Tom is right and as I mentioned it was for the crop year 2001-2002. In plain language that is 200l crop.

Managment was $10/ac that would include my wages for labour.
Return to investment is $40.00/ac which could include, land rental, land payment or as return to investment if you have clear title as possibly the landlord might enjoy.

Life: you are correct my statement was about having some ability for risk management when growning wheat and malt barley. The small intial payments and the small amount deliverable at any one time don't go far in paying bills in the fall. Young unestablished farmers have a very tough time keeping the banker happy at times.

Vader: Don't tell me about the advance payment either because most farmers don't like hauling wheat all winter for an unknown price, if any value left at all in the by quesstimate CWB Pro. average price.

Boy I better quit with at last jumble of words.

[bmj182]

No where in his post did Vader
mention anything about the CWB.
Why did you guys jump on him like
that? Kernal, I believe return on
investment would be your CLEAR
profits. Your land expenses would
be added to your cost per acre. Just
a tip!

[TOM4CWB]

BMJ182;

It is a shame the CWB does not stop handling wheat and barley that it has proven consistantly year after year to produce the lowest price... namely feed wheat and barley. And since the last few years have proven CWB prices on select barley sadly lacking... it needs to be released immediately as well.

The problem I see with Vaders comments was that he leads us to believe he thinks are doing just fine (are profitable) and should be satisfied with CWB performance with milling wheat.... Since Vader was directly commenting on CWB marketing... and since Vader is a CWB lover and Booster, comments that Kernel should have sold his milling wheat to the feed market were, unethical to say the least.

1. It is against the law to sell #1 or #2CWRS to the feed market under the CWB Act.

2. When we are so short of high quality milling wheat, It is offensive, that Vader would suggest by his comments, that better utilisation of this human consumption food would have been attained by selling it for livestock feed outside the CWB.

The CWB will take years to recover market share lost in the last few years... to suggest we should have even less supply avaliable to the customers who depend on us...

Vader has indicated in previous Topic messages... to boost the price further... have less supply... so we can lose even more of our customers...

This is where I have heard the CWB and Vader taking this point of view.

Have I got it right Vader?

[Vader]

Tom,

You had better read my post once more. You must have been responding to some voices in your head.

[wilagro]

Wow...That was nasty.

[TOM4CWB]

Vader;

I Quote you:

"I like what you say about "planning to have".

Normally we market about 20,000,000 tonnes of wheat out of Canada. This year it might be closer to 7,000,000. Mother Nature has effected "supply management" on Canada and has also limited the size of the crop in Australia and the US....

Isn't it amazing how the market has responded....

In the month after the CWB announced that it had withdrawn from the market wheat prices went up almost a dollar a bushel.

Perhaps if we "planned to have" something less than 20,000,000 tonnes of wheat each year we might be able to "sell at a high price" more often.

How do we do that? We don't have a supply managed system. All we have is the PRO. The PRO doesn't always reflect a profitable sale for many producers and yet they continue to produce large quantities of wheat." END OF QUOTE

Vader, the way to deal with CWB problems is not to reduce volume... yet you folks insinuate you can extract a premium by reducing our production... when really the reality is that... you folks can take it easy... you do not have to work near as hard... when you are selling 7mmt instead of 20mmt.

But just think of the destruction and pain our prairie communities must endure to have lost this 13mmt.

Just a little question Vader... how many acres of wheat did you grow in 2000, 01, and 02?

Just how much did you risk of your personal finances to grow wheat in these past 3 years?

You don't have to answer...

The CWB Magician is very clever at magic tricks, we wouldn't want to confuse this issue with the TRUE facts, would we Vader?

[TOM4CWB]

Open Market for wheat went up $1.00/bus. after the CWB removed itself from the market. Ummmm was the price spike because of the drought shorten supply, OR?

Or could it be because the CWB and the AWB control at least 40% of the worlds export wheat. This large percent of exportable wheat that everyone in the world knows that is there puts a weight on the open market price of wheat. The knowledge that the supply is there, and is being held by state monopoly grain confiscaters who have no financial risk involved in that supply management, would hold the open market price unjustly low due mainly to the guaranted supply factor that the boards have with their buyers.

If the CWB gets out of the market, buyer will bid up to guarantee supply. Farmers are not good at giving up there supply unless it is confiscated or the price agrees with their risk management.

The CWB obtains a preminium for 25% of our wheat because of its quality and because of some quality buyers. (Most grain handling companies would pay you a bigger premium for quality because you wouldn't have to share it with a no account neighbor that we all have.) The other 70% is sold on a we wouldn't be under sold aggreements to who ever to gain world market, under agreement to pay some day maybe. The resulting price to the farmer is a below average open market price.

You would't trust your bank account to your neighbor so why would you trust a bunch of bureaucrats with your wheat?

Vader you want me to run with a bunch of losers at the CWB level.

[flatbroke]

"losers"? My, what an intellectual argument! ;-)

[TOM4CWB]

Flatbroke;

Losers... that is what all of us are... because we will not take the direct stand of respecting each other.

I was at the AB. Wildrose annual meeting yesterday... and a farmer was telling me he was afraid to wear a CWB jacket, cause there are such bad feelings in his area over CWB handling over numerous marketing issues...

This would not happen if we respected each other... and allowed marketing freedom... then a specific choice would not be offensive...

People in general do not get offended when a neighbour wears a CaseIH jacket or hat, an Agco Jacket... a Westco Jacket... a John Deere Jacket or hat...

How long must we tear our communities apart over this issue?

What will it take to move forward towards mutual respect where we will allow ourselves the privelege of marketing choice..., The right to say that the price being offered by the CWB is too low for our grain... especially for the CWB pre-pricing grain that has not even been grown yet...

Yet myself and my neighbour do not have the choice not to sell at that price that was arbitarily decided by the CWB.

Even The CWB PPO pricing system puts all wheat and barley back into the Pooling accounts... and cannot be directly connected with the real price the CWB gets cash for any of our grain...

Flatbroke... why do prices for flax, peas, lentils, mustard, Oats, Canola, Domestic feed barley and feed wheat all outperform the job the CWB has done in marketing today, if you look at cash prices at your marketers are offering?

[flatbroke]

Tom- You missed your calling! Cretien would pay big money to have you as a spin doctor. Have another look at kernel's post. My comment stands. I must say, however, this is the longest I've had a post in this forum without one of you making comment on my name in relation to the CWB... or did you just tire of that one?
Happy new year!

[TOM4CWB]

Flatbroke;

Which market has tanked the worst in the last month?

Chairman Ritter told us yesterday in Red Deer that wheat has dropped $2.00/bu.

And we have a monopoly seller selling our wheat with only 6mmt of CWRS...

Of which he said that only 20-30% is #1 or #2 grade. THose numbers only work out to 1.5mmt of high quality wheat...

The CWB was forced to drop the quoted selling price of #1CWRS 13.5 to $270/t, when the don't even have any to begin with to speak of...

what does this tell any sane person about CWB monopoly single desk marketing power?

It tells me... there is no additional advantage... and CWB performance is worse than every other sector in the grain industry today for selling 02 crop now!