Ethanol Strategy... do we have one?

[ianben]

Ian: The CWB sells wheat into 70 countries in the world and has 20% of the world export market. The AWB has a simlar marrket. Their system of marketing removes 40% of wheat from the world pricing mechanism. This type of monopoly marketing does not create a fair market value in the world price. The world price is lowered as a result of undercutting selling done by the monopoly grain handlers. The price will not rise even in short supply times because of this type of marketing being allowed to continue to exsist.

Ian you should be complaining loudly about these monopoly sellers of grain from these two countries as they lower the price that you receive.

The CWB claims they get Canadian farmers a premium but we never see the premium at the farmgate. The prices are all diluted by the above marketing of our poorer quality grain and the pooling system.

I would do immensely better on the open market with all grain handlers and end users buying my grain, whether it be feed or milling quality grain.

Bidding is what creates a fair market value. As it is the monoploys foster a customer subsidy on wheat throughout the world.

Theres no great surplus of wheat in the world just a huge interference in price discovery.

[ianben]

Kernal
There is and probablly always will be huge interference in price discovery CWB AWB monoploies verses US and EU subsidies and third world debt thrown in for good measure.

I agree the surplus is small, non existant if the poorer countries could stop exporting and feed themselves.

All present systems which operate drive prices lower and lower altering just one will have little effect in my opinion.

Removal of CWB, decoupleing of EU subsibies, may slow down the spiral but while farmers continue to produce and accept the price without providing a real service low prices will prevail.

While we continue with a short term individual attitude that someone will buy what we produce can we expect more?
Will the free market with a few large buyers ever see the thousands of farmers as a strong seller?

I still believe we could learn to act a strong marketer. One internet based organisation monitoring prices and giving all farmers the confidence to sell for the same price.

Markets work on confidence just look at the stock market.
How low will that go? No crop insurance or subsidies there.

[TOM4CWB]

Ianben;

Look at Canola and Flax markets... and Canadian farmers have worked together to hold premium prices... as with peas and lentils... this system will work... especially for human consumption crops.

How do we stop the CWB from price discounting... ?

[ianben]

Tom
Canola might be better but is it good enough!
From Western Producer on line report from MCGA meeting Cargills Canada in Brandon

But the major processors and restaurant chains will not adopt canola oil if supply is in doubt, Hawkins said. They want guaranteed supply or none at all.

There is core demand for about eight million acres of canola from the Prairies, and more can easily be sold into the bulk commodity market. But new buyers will be scared of incorporating canola until its acreage here is bigger and more dependable.

"We have to get a mature industry in Western Canada for canola production that virtually guarantees that farmers will at least plant a minimum of 12-13 million acres a year."

Hawkins hopes a new, long-term contract system will keep farmers growing canola consistently, not jumping in and out of the market based on guesses about where prices are going.

Keys words Guaranteed supply or none at all

We could try to guarantee supply if we had confidence to store a large crop not accept a low price then force customers to switch or use inferior product when we ask a too high and uninformed price. Did your crushers really want all that green seed you guys produced?

Pulses? Are they better
From agri-ville thanks Lee.

My experience this year talking to producers is that either, they forget to consider the substitution possibilities for many products or they don't know about the substitutes that are out there.

A perfect example is yellow mustard. A lot of yellow mustard is heat treated and used as a binder in processed meat products. A yellow mustard dealer told me that many meat processors have already switched to other binders and it will take a long time and much lower prices for them to switch back. Some of the processor market may have been lost for good. They view mustard as overpriced with an unreliable supply.

Illustrates again the old adage - the worst thing for high prices is high prices.

Not supporting CWB but we could do better in all sectors with a little help and education dont you agree?

I can find all this from a different continent. Dont you see the possibilities?

[TOM4CWB]

Ianben;

Market distortions and lack of transparency are the biggest resourse abusive factors on my farm.

I must adapt to the world around me... mitigate risk wherever possible, as much as is cost effective...

when the cost of risk mitigation becomes higher than the risk itself... then the risk mitigation itself becomes the culpret.

How do we apply this to Ethanol in Alberta?

The folks over at API know all about this situation... Alberta has no ethanol strategy... while many other jurisdictions do... with accompanying tax concessions and fuel blend preferences...

API is at a serious disadvantage... guess what... they are in receivership... shouldn't be a big surprise to anyone, should it?

[TOM4CWB]

Ianben;

On the Canola production stability issue... there is no problem for Cargil.. for specialty oil production... if they set up a fair contracting program... and don't leave all the risk in the farmer's lap.

CanAmera got all the acres they needed, for their HEAR contract... proof.. no arguments needed... we farmers will supply the needed production capacity... if we are paid reasonable compensation for the useage of our assets!

Can't it be this simple, Ianben?

[ianben]

Tom
One would hope so but do we understand the conditions?

Guaranteed supply or none at all!

I will start a new thead

[TOM4CWB]

Ianben;

Cargill is masterful at promotion... a little threat is involved in what you have identified...

Much more will be gained with a little honey... than with a stick... don't you think?

[ianben]

Looks like UK not got much of an Ethanol stratergy either if this is to be government policy

RENEWABLE energy has received a boost in the government's Energy White Paper, announced on Monday (24 February).

But fuel from crops is given little mention in the 142 page document that outlines the UK's proposed energy policies for the next 20 or so years.

The White Paper Our energy future – creating a low carbon economy sets targets of reducing carbon dioxide levels by 60% by 2050.

Energy from renewable sources, such as wind, solar and biomass from farmed crops, "will become a more significant source of electricity" states the document.

An extra £60 million of capital grants is set to encourage investment in renewables, which the government hopes will supply at least 40% of the nation's energy requirements.

Currently the UK lags behind other EU countries with just 1.3% from renewables, compared to Denmark's 16.7%.

Infrastructure will also be improved to give renewable energy plants better access to nationwide and local electricity grids.

Meanwhile the government has decided to reduce nuclear power's share of the energy market, currently around 25%.

Combined heat and power units, such as small-scale community projects fired by biomass, are also expected to be big winners in future energy policy.

"CHP’s overall fuel efficiency is around 70-90% of the input fuel - much better than most power stations which are only up to around 40-50% efficient," said the White Paper.

Future encouragement, to double current CHP output by 2010, will include planning and price incentives, as well as looking at using such projects to heat government buildings.

But the White Paper has already been criticised for making little specific reference to fuel from crops, while wind, solar and other technologies have firm backing.

Biofuels receive little more than a mere mention in a 12-page chapter on low carbon transport.

"It is simply insufficient to offer aspirations and warm words," said Country Land and Business Association head of rural economy Oliver Harwood.

"Wind power alone cannot be the answer for renewable electricity.

"Energy crops remove carbon from the atmosphere, provide habitat for wildlife, increase rural employment opportunities, and add to fuel security."

The National Farmers' Union said that measures to help CHP units would be useful, but these were not exclusive to biomass plants.

"If the government really wants to meet its obligations then it must work with the agricultural industry," said NFU alternative crops committee chairman Rad Thomas.

"It is the only sector that can supply the raw materials needed."

Estimates suggest 25% of UK land could produce all the nation's transport fuels using the latest technologies, without compromising food security.

The government received criticism from other industry sectors for resigning the UK to being a net energy importer.

With coal, gas and oil reserves all likely to be exhausted by 2010, the UK could be dependent on imported energy for 75% of its total energy needs by 2020, according to the White Paper.

[TOM4CWB]

Ianben;

With $38/barrel US oil costs today... ethanol will have a chance... but what happens when oil falls to $15/barrel?

If Ethanol cannot maintain the higher price the whole biofuel industry will be in big problems...

Solution:

If we can afford to operate today at $38/barrel... then it is obvious that when oil prices drop in half, we can still afford to pay the higher price for the biofuels... this is not an option for the biofuel industry... it is a must.

If we can get Ethanol a good base price that is stable... we will have a biofuel industry over night... and oil prices will drop like a rock...

But, we will still be way further ahead replacing petrol with biofuel... as oil prices will have major competition and oil reserves will last much longer!