Benchmarking CWB Performance

[TOM4CWB]

Charlie;

Just reviewing CWB Benchmarking theory;

1. CWB Benchmarking theory... assumes that the CWB holds up US and other high quality Hard Red Wheat Markets. Price Discrimination policy the the CWB practices... points to the lowering of high quality world wheat prices... not to supporting them.

2. CWB Benchmarking theory... the average selling price for the CWB is simple, the pool price for the year in question. Now if we average PNW daily spot prices, and create a yearly average, my experience has been that the CWB is at the lowest end of the average... not as the "single desk" supporters would have us believe, above the PNW average US selling price.

3. THE CWB expects Benchmarking theory to discount US producer elevator offering prices... a very strange concept to me as a farmer.

When I go to sell any Canadian or US elevator, I work to negotiate a higher price than the one quoted price for a specific quality... I DO NOT GO IN EXPECTING TO Discount my product and receive A PRICE LOWER THAN THE QUOTED OFFERING PRICE.

THIS Distorted CWB theory, about recieving less than the quoted price... Is a very telling sign to how exactly the CWB does business and sells our wheat.

For Example:

Todays CWRS #1 13.5 offering price at Van./St Law. port was $297.95/t

Yet the producer direct US Truck Buyback price for this same wheat was $268.60/t... some $29/t below the quoted price.

Just because the CWB price discounts to nearly everyone when they sell, does not mean that everyone else in the world does the same as the CWB.


CWB Benchmarking... is built on a series of unreliable unreconsilable figures that create a distorted view of the world.

In the world of political wishful thinking, the CWB takes first price in avoiding reality and dealing with farmers in criminal a fasion,...

like answering our questions... just for example...CWB,

Where is T Halpenny's, replacment?

I have been told T Halpenny is still working at the CWB, is this right?

[Everest]

Tom and others,

I am aware that Sparks Cos. have done some work on CWB benchmarking for the Alberta Grain Commission. I think it is mainly a critique of the Gray/CWB process and methodology. Don't know when it will be available, but you may want to contact the AGC.

[TOM4CWB]

Everest;

I am aware the CWB Benchmarking committee is meeting next week, and that what is happening at the CWB does not match sales records;

For instance;Vancouver #1CW Feed barley has been quoted between $190 to $210/t for some time, yet the PRO is still stuck at $182/t... high quality barley is worth more than the CWB is willing to admit, like in Australia for example.

I am sure the AWB would have much rather have bought non-GMO high quality barley from Canada, rather than GMO Corn from the US... yet we missed this opportunity.

On top, the CWB has all the interest payments to add to this pool.

The CWB should be required to benchmark Select Barley... it is obvious we have a huge problem... in both the high quality wheat and barley prices...

SImply because the CWB sold 2002 crop before it was even out of the ground... at very low prices.

I understand the CWB decided we had a little more high quality wheat to sell in the past couple of weeks... interesting how the wheat market has reacted...(declined)

Too bad the CWB did not let farmers themselves sell this grain at $3/bu higher a couple of months ago!

How do we benchmark all these blunders?

[charliep]

Not too much to say other than to let discussion continue. As farm managers, how do you think the CWB performance should be measured?

With regards to measures, it is interesting to note that in most businesses, measures normally relate to business outcomes/output. In a farm business, the question would be "Our farm will have been successfull if" - this could be return on investment, paying down debt, introducing a new family member into the ownership/management of the business, etc (whatever is important to that farm family). Normally has a 5 to 10 year horizon. A key performance indicators will tell a farm family whether there are on track to achieving these goals - things that will tell the management team whether they are on track to where they want to be.

After 25 years in the business (including time working for them), I am not so sure what success looks like/feels like at the CWB and how it would be measured. An area that should define success is their vision/mission statement and outlined goals. It can be found at:

http://www.cwb.ca/en/about/vision_mission/

Can these goals be measured? Thoughts?

[TOM4CWB]

Charlie;

Good to have you back!

Can you find the Crop Insurance wheat and barley projected prices for SK. for the 03 Crop?

If you would post them, then this would give an indication of where the CWB is thinking our wheat prices are going to be at next fall, important info for our farm management decisions for 03.

Unfortunately the CWB promo and policy statements seem to indicate that the continued mere existance of the CWB monopoly... is a major marketing sucess...

the main CWB emphasis is on selling the "single desk" and "monoply" to "designated area farmers,...

rather than selling our wheat and barley at the highest possible prices.

THe lack of a minimum price 03 wheat and barley contract, something like the OWPMB offered wheat farmers last fall for 03 crop... is proof the CWB does not care to do the hard work to earn our trust.

Benchmarking the failures of the CWB PPO programs has been sucessful, I understand major changes are about to be announced... all our hard work Charlie, has not gone unnoticed!

WHat have you heard, I understand PPO's will not be based off the PRO in the future, is this correct?

[charliep]

Good to be back.

Quick comments.

1) Will have to check on final prices for SK./MB. and whether there were changes.

2) CWB may have provided some guidance to Ag. Canada but the wheat price forecasts are those of those of the AAFC market analysts and the provincial counterparts. The accuracy of the forecast is the responsibility, the work in putting together and subsequent respontibility of this group - the CWB has no involvement.

3) Will be carefull since I am part of the process for AB. but I am pushing to relate the crop insurance values to futures (eg. - converted Dec. 2003 MGE futures plus basis for CWRS/CWES). Suspect the process will come out low but the variable pricing option will allow increases (if justified by the market - not have the greater than 10 % problem increase problem the group had this last year).

4) Have heard similar indications of upcoming changes to the Producer pricing options but have not had anybody provide the details. Will be announced February sometime - stay tuned.

[charliep]

Error alert - brain still on holidays.

Point 2 should be corrected to the following - "2) CWB may have provided some guidance to Ag. Canada but the wheat price forecasts are those of those of the AAFC market analysts and the provincial counterparts. The accuracy of the forecast is the responsibility, the work in putting together and subsequent ACCOUNTABILITY (changed from respontibility) of this group - the CWB has no involvement.

[Everest]

Benchmarking??

The only real benchmark, one that actually accurately measures performance, would be to compare CWB offered prices to other buyers' unencumbered and bonafide offers and paid prices at the same time and location. It could be spot prices or prices over a period of time.

Anything else is purely academic. And meanlingless. What relevance is there to measuring the CWB monopoly price against a non-existent, non-attainable, theoretical open market? It may be good for the sake of arguement(s), but it is a useless piece of information as far as farm decision making is concerned. Or risk managing. Or profit maximizing.

Economists and professors get another days pay. But all farmers get is yet another chapter in a tiring debate.

[Everest]

Benchmarking: Lets give the Bill 207 the Alberta Wheat and Barley Test Market a try.It frees up all producers and processors and grain companies to market choice or sell to the CWB. A large majority of producers(over 80%) in Alberta are in favour of this choice and the CWB would have a very good market to bench mark off of.

It looks like the only true way to reality and removes all political and bureaucratic bs.

[Kasro]

charliep,

The CWB vision, mission, goals statement includes very few measurable items. None could be benchmarked against any commercial values or prices. As with the University of Saskatchewan's Richard Gray model, only academic comparisons could be achieved, complete with errors due to imperfect and misleading assumptions. With apologies to academics, I am skeptical of them all except the ones who tell me what I like.

So I have to agree with the last postings. Give us a commercially competitive alternative, and you'll have a benchmark.

[ianben]

Can any marketing system be compared with the benefit of hindsight?

I see CWB blamed for selling early what it did not have

Had it rained and you produced 20million tonnes would you be arguing they should have sold more?

Why do you imagine looking at US prices gives you any idea of the average price CWB can acheive world-wide.

I have told you my free price bears no relation to Chicago.

Black sea is my benchmark today and that is way below US

Then there is the political element Egypt and the US for example do they actually pay cash or even repay loan? EU restitution payments. Cash to ensure a sale? Will you have to offer a discount or better spec?
Out there in this oversupplied market the sale is the premium.

If you want to export wheat outside the US you will not get a price higher than US published prices.
The more you sell the lower this figure will be and the less likly you will recieve any cash for it.

Just how big do you think the market is for high quality wheat or more importantly how many people are willing to pay a premium to garentee it?

[TOM4CWB]

Ianben;

All really good questions you ask...

Now, let me ask this,

A monopoly, that makes the decision for 100,000 farmers... is it not more likely to have a bigger negative impact on the market... on any single day, than 100,000 different decisions being made on a different day, a decision being made specific to individual conditions on each farm.

It is clear the CWB will have a much more negative effect on the market than you or I individually.

The large monopoly has big problems in todays market place!

[chaffmeister]

In 2001-02:

The CWB achieved net price for #1 CWRS 14 was, basis instore Vancouver (after all CWB expenses):
$219.84 per tonne
Source: CWB website

Converted to US dollars = US$139.97 per tonne (using the average daily spot forex rate through the crop year)

PNW cash prices for #1 DNS 14, basis track Portland (over the crop year):
High US$4.55 per bushel (US$167.19 per tonne)
Low US$3.90 per bushel (US$143.12 per tonne)
Source: USDA

Summary: In 2001-02, based on west coast pricing, the CWB’s stated selling price for #1 CWRS 14 (all sales in aggregate, all destinations, even domestic and US) was lower than the lowest west coast public price for #1 DNS 14.

The comparison is even worse if you look at #1 CWRS 13.5, which is considered closer to #1 DNS 14 in quality.

Data from previous years show similar results (Cdn average achieved prices are well below average US price).

Questions:
1. Where are the premiums the CWB is getting?
2. Can individual farmers do better?
3. What am I missing?

[charliep]

A question in my mind is how much wealth is being spread out through the pooling system as a result of the assigning of spreads/transportation adjustments such as the freight adjustment factor. Total payments do not necessarily reflect actual value of wheat classes but rather how the CWB chooses to allocate funds from the pooling system. My experience would suggest 99.99 % of farm managers do not have a clue as to how funds are allocated out the pricing pools and the impact it has on price signals for individual grades/proteins/classes of wheat.

[dnach]

Good day Charlie, easy on the term 'wealth' you make it sound like we actualy make money growing cwb grains.
Total payments absolutely should reflect the value of a wheat class in every situation. As a farm manager please fill me in on how funds are allocated out of the pricing pools.