Steve,
I believe that today's farmer needs to look at what pays the bills, cash flow, and profit margin.
The reason a farm is in trouble today, is if cash flow, cannot pay all the bills.
Now if I pre price, and buy options back, I can cash flow everything including the cost of the options.
Now your statement about farmers selling too cheap, that is simply a matter of what the cost is for the farm, what cash flows are to be met, and wether an overall profit is being produced by doing a specific sale transaction.
The beauty of the pea market this year is that if a farmer needed $5.00/bu for his feed peas, the market offered it to him. The market also offered $4.00/bu, and if that was all he expected, and could live with that $4.00/bu was fair for him too.
The fellow that sold at $4.00/bu and the fellow who sold at $5.00 were both treated fairly, and neither can complain.
Was 4.00/bu too cheap?
I do not believe it was, but the fellow selling at $4.00/bu allowed the $5.00/bu price to come about.
Substitution is a sneeky animal that will kill a market, if that market is not willing to be fluid and supply the needed product when demand occurs.
If we do the supplying, then an investment and stability happens in our market.
If we outright refuse to supply, substitution will often not give a second chance, or if that chance occurs a cost far above the value of the first sustitution cost will be extracted from us as if to prove we are really serious about wanting this specific market back.
This is why the CWB "theory" about the single desk "extracting" a "premium" is so short sighted.
It is clear that the CWB, according to Adrian Measner and Greg Arison, MUST BE COMPETITIVE.
I believe that the human consumption $6.25/bu Pea and Oat$3.50/bu market are excellent examples of why a "choice" marketing system is the fairest when it especially comes to drought years.
Why should the farmer in Milk River not be able to sell his 5 bu/ac winter wheat crop to a US marketer at the fair market price value?
Instead the CWB system says the buy-back must extract back this drought "premium" and pay it to me, who harvested a good crop at 50bu/ac through the pooling accounts.
Is this fair?
I believe that today's farmer needs to look at what pays the bills, cash flow, and profit margin.
The reason a farm is in trouble today, is if cash flow, cannot pay all the bills.
Now if I pre price, and buy options back, I can cash flow everything including the cost of the options.
Now your statement about farmers selling too cheap, that is simply a matter of what the cost is for the farm, what cash flows are to be met, and wether an overall profit is being produced by doing a specific sale transaction.
The beauty of the pea market this year is that if a farmer needed $5.00/bu for his feed peas, the market offered it to him. The market also offered $4.00/bu, and if that was all he expected, and could live with that $4.00/bu was fair for him too.
The fellow that sold at $4.00/bu and the fellow who sold at $5.00 were both treated fairly, and neither can complain.
Was 4.00/bu too cheap?
I do not believe it was, but the fellow selling at $4.00/bu allowed the $5.00/bu price to come about.
Substitution is a sneeky animal that will kill a market, if that market is not willing to be fluid and supply the needed product when demand occurs.
If we do the supplying, then an investment and stability happens in our market.
If we outright refuse to supply, substitution will often not give a second chance, or if that chance occurs a cost far above the value of the first sustitution cost will be extracted from us as if to prove we are really serious about wanting this specific market back.
This is why the CWB "theory" about the single desk "extracting" a "premium" is so short sighted.
It is clear that the CWB, according to Adrian Measner and Greg Arison, MUST BE COMPETITIVE.
I believe that the human consumption $6.25/bu Pea and Oat$3.50/bu market are excellent examples of why a "choice" marketing system is the fairest when it especially comes to drought years.
Why should the farmer in Milk River not be able to sell his 5 bu/ac winter wheat crop to a US marketer at the fair market price value?
Instead the CWB system says the buy-back must extract back this drought "premium" and pay it to me, who harvested a good crop at 50bu/ac through the pooling accounts.
Is this fair?
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