Ethanol Strategy... do we have one?

[ianben]

Tom
You are beginning to sound like me. I rabbit on how we should know the value our commodities have as energy source.

I sometimes struggle to see how free exports of your wheat to US will improve wheat prices for us all. After all they are hardly short of wheat are they?

But energy that is different. Some people claim Iraq is all about oil supplies to US and not weapons of mass destruction. N Korea?

Your energy hungry neighbour will take your oil and gas and pay well for a product which flows at little cost trough pipelines and across borders with ease.Perhaps a fact of increasing importance with new rules and regulations about to be implemented.

Subsidise corn/wheat burning boilers install then along side existing heating systems giving users option to switch when wheat prices are competative with fossil fuel.

Go for a dual market food and energy instead of CWB and freedom.

If I get to visit Edmonton again I would love to find the West Edmonton mall famous for being not just the largest shopping centre in the world but the first to be heated by wheat.

Wheat supplied from local farmer Tom4CWB

With the drive and determination you have Tom I believe you could make it happen.

[TOM4CWB]

Ianben;

I have shipped to the US... simply because the marketing system there gives fair value...

However... if the CWB were doing it's job even close to as well as the competitive US system... we would not need to ship south... because our Canadian grain handling system from Alberta to west coast Vancouver or Prince Rupert... has a major competitive advantage in lower cost than shipping costs in the eastern PNW states.

There would be no doubt that burning #1CWRS wheat would be a crime (to me morally)... but high yeilding biomass crops would obviously be more efficient for producing heat and power... and could be developed to fill an energy market.

Obviously Germany is at least 10 years ahead of us... and you folks are about 5 years... we have much catching up to do!

The CWB must still be fixed... and since fixing it is my job... you know the rest!

[TOM4CWB]

Tom thanks for the answer but its not quite what I wanted to find out. I wanted to see some numbers so I could compare to what is being paid out in other add hock programs. And would the better crop ins. save the governments money.

[TOM4CWB]

Kernel;

Really a good question...

FIDP has been paying out between 95-150mil/year... possibly 200mil for 2002

Acreage payments between 300-400mil/year...

Crop insurance has been 150-375mil until 2002 02 itself is said to be about 750mil

How exactly the new NISA ties into all this is rather difficult to tell yet... except that we are expected to put about 15% of our gross margin into NISA... to get the other 85% coverage... Charlie might help more on this...

It looks like Crop Insurance premiums will be up somewhere near 60% for all the new bells and whistles...

So if typically we spend 300mil on Crop insurance... we farmers will now be required to put in close to $480mil... farmer's share... for full package coverage.

How this will translate into more coverage back to the farm gate is yet to be seen...

Pretty soon gov. risk management programs will be our biggest single expence for our farm!

[ianben]

TOM
Why is it morally better to depress world prices selling grade one wheat at below its value as a fuel?

Would this really happen if lower grades where burnt and taken out of the food chain?

Removing land into biomasss production is long term and totally dependant on energy market. This could put food supply at risk if low production years occur around the world.

Would this be morally more acceptable?

[TOM4CWB]

Ianben;

Good questions...

Being good stewards, of the resources we are privileged to control, demands hard questions be asked...

[TOM4CWB]

Ianben: Your statement: Why is it morally better to depress world prices selling grade one wheat at below its value. That is a prefectly good question to ask our CWB monopoly single desk seller of wheat and barley. They must have the moral answer because they depress the world market pricing mechanism to a lower value ever time they cherry pick their way around the world price. They are dumping grain on to the world market to gain market share and that is what the USA farmer is so upset about.

[TOM4CWB]

Tom: we might need to clarify some figuires but from what your fiquires say the government could give us a better coverage then we had last year at the same premium or less and save $400 million a year over a 10 year period. If they dropped all the other add hock programs.

I think it is time farmers were required to produce crop imput receipts before collecting on their insured coverage. This would remove a great deal of the fraud that accompanies crop insurance at this time. I'am not saying a farmer should make money on insurance but give him the capability to cover his input cost. But I guess that would be politically incorrect to some people. But in the end it would give us better coverage at a smaller premium. After all this is about making the system better not making it easier to farm for the fat of the land type welfare farmers.

There I go again being politically incorrect.

[TOM4CWB]

Kernel;

You are right about concern over farm imputs...

If Crop Insurance has doubt over "uninsured causes" they can easily document what the farmer has spent, and if it was not reasonable... reduce the payment... this is in the Crop Insurance Contract today...

But the payment will not be reduced any further than what should have been produced...

For instance... a herbicide application increased my yield from 9bu/ac to 14bu/ac, therefore the uninsured causes to be deducted from my payment, would be 5bu/ac.

Further, the extra yield lost goes against my index in the future, therefore my coverage is reduced, for future years.

In a disaster year, the will of politicians to enforce this uninsured causes is diminished, as we are already forced to take a "deductable" (coverage is only avaliable to 80%, so added pressure occurs to deal gently with those who were hurt... Many farmers have paid into Crop Insurance for decades... and I see the treatment given farmers is very close to what auto insurance pays out on auto accidents... in this year's examples.

IMHO the cattle folks were the biggest benificiaries of Crop Insurance this year... with all the writeoffs that were done... but I guess that is ok... we need these folks around too!

[ianben]

Kernal
Does the CWB have any control over the amount of wheat it must sell/market?
If as I understand it has to sell whatever Canadian farmers produce be that 25million tonnes or 8million.

How can any system manage to dispose of these variations of produyction if export is the only option.

Markets continually change FSU and UK are both exporting wheat today totally the opposite of past history.

Just being free to market might help but the answer must be to have a CUSTOMER for what we produce.

How can farmers get from the questions to the answer.

Your grade1 wheat might be the best in the world but if there are fewer customers prepared or able to buy it can you market it?

How much rat bait will I sell in Alberta?

[ianben]

Ian: No rats here in Alberta. You are required to market that rat feed in Winnipeg Manitoba at the CWB thats where the rats are.

Ian are you taking a poorer that average yearly price for your wheat there in jolly old England or are you allow to attempt to extract the highest price you can from the free open market.

I'am saying that the CWB and the AWB monopolies by with holding their production off of the world pricing mechanism tends to lower the price on the world market because it is not effectively in the bidding process. Thus it weights heavily on the world price because it is traded or cherry picked outside of the system.

[ianben]

Hi Kernal

It is a shame the Cwb has not moved with the times and provided a better service for farmers and customers. Change can be difficult though as confidence and perception play such a large part in success. Weakness is used to lower prices, SWP and canola, just the perception can cause large falls in the free market.

I am free to market but in effect can only obtain a small location premium over world price.

World price rules with or without CWB.
Supply drives world price.

More customers able to pay or more non food uses are a must because as individuals more production seems to be the answer. Run faster to standstill!!!