Vanclief's fantasyland

[TOM4CWB]

Ian,

Sounds good what you are saying!

I do hope we can have Canola back over $7/bu on a more long term basis, although if Brazil keeps expanding bean acres, I hear they have the potential for 100 million more acres, we may not see it happen!

It would be good for the earth if they would stop burning the jungle and save the rainforest, should industrialized countries be partly responsible to pay so they don't wreck the environment and upset the grain production industry around the world?

[ianben]

Hi Tom
That Is what I've been trying to say for the last six months, perhaps I explained it better this time.
I would like prices higher too perhaps $6to $8 would be more acceptable. The important point is to draw a bottom line somewhere and all stick to it!!
We must avoid those crazy lows.

I have difficulty finding an acceptable solution to Brazil etc.
I truely believe higher prices will help their peoples standard of living, but may not save the rain forest. Paying people not to do something is not good for their dignity or self-respect.
How can we refuse them what we demand ourselves?

We could do with a Joseph for this one!!!

Regards Ian

[chas]

Ianben: I believe you and I are on the right track but we can't seem to convince Tom4cwb and Melvil that the mental and physical high that you get from speculating need not be in our industry. We speculate enought by keeping inventory that is unpriced. But then they say price it. But pricing into the future works against us by keeping the same low price into the future. The only way to move price is to with hold product from the market like car makers do. But that is all speculating I quess, confusing isn't it.
Just to try and clairify my statement of large speculators. I'am talking about the large corporations such as Cargil, Louis Drefus, Tyson foods, ADM and McCains foods. It is in their best interest to keep prices of grains and oilseeds at the lowest price they dare manipulate to and still maintain a supply. They accomplish this manipulation by lobbying and buying political votes with governments. The market distortions are created by subsidises to certain commodoties which creates over production and maintains the low prices for companies who are intergrated into the food supply industry to great depth. There is also a great suspicion that these companies have a great influence on out coming USDA crop reports. The right report gets the right price. Lets not kid ourselves food is a big and lucative industry and moneymakers have no morals.
Tom the price of our product has nothing to do with the hungry and the poor of the world. If we gave it to them they would still be hungry and poor. Don't put a world political problem on the backs of farmers.
Governments must be removed from the pricing mechanizm and speculation must be removed by, if you sell you deliver, if you buy you take delivery. Amen. Pass the wine Chas.

[TOM4CWB]

Chas,

To refuse to accept that supply and demand of a grain product over the long term equals the value of this product is not facing reality!

If Brazil can grow soybeans profitably at $3.50/bu, by breaking up the rainforest, means our Canola is worth less than $5.50!

Now the "market" knows this, and unless a value added side can be added to the sale of a grain product, no one will pay more!

I am not saying that we are directly responsible for the hungry or starving people in the world today, as we do not have a cartel on grain like OPEC.

However, once we do set up a cartel, then we cross the line and take this responsibility upon ourselves!

I do not have the knowlege of what the weather will be in the next 5 years, therefore I cannot tell people how much to grow, because I cannot know what the supply will be over this time period.

Further, restricting supply and withholding a product to make this product "high priced" from a historical point of view is only cutting our own throats!!!

Mark my words, OPEC will pay big time for what they have done in the last year, because oil prices will come down!!!

It is just so profitable to find and produce the stuff that eventually the demand will fall and the supply will increase making a glut of oil at some time in the future a certain fact!!!!!

Now, when we do this with our grain, and anyone on the planet can produce grain, what makes you think if the supply is limited by us, causing the price to rise, that others will not produce making a glut and getting established?

Once they are established, they innovate, and learn to grow it for less than we can, and you guessed it?

We can't grow it profitably and are out of the business anyway!!!!!!

So now that we can't efficiently grow grain anymore Chas, because we got these other folks growing the stuff by our own greed, just so they could feed their own hungry people, why would we consider this as a solution???

[ianben]

Hi Tom
Try looking at it the other way round.

Our canola is trading at $6-$7 Brazilian soya is now worth $4.50 are they going to say we only want $3.50.

They will take the $4.50 improve their standard of living and CONSUME MORE!!!

Who says they are making a profit at $3.50 anyway, we still sell at the best price we are offered, never had a buyer worried about my profit.

You and I know we cannot grow enough to keep the whole world well fed. Iv'e mentioned before if every Chinese person was able to eat chicken once a week the present grain stocks would be gone in a year.

Just who does benefit from low commodity prices ??
Not farmers no matter where you live in the world.

Regards Ian

[TOM4CWB]

Ian.

Profit is a strong incentive to produce!

100 million acres of reserve land is a huge resource such that Brazilian farmers can bury the rest of us in beans and corn!

I certainly hope this does not happen, but ignoring reality never constructively solves any problem!

[TOM4CWB]

Chas and Ian,

Have a look for yourself on the Brazil situation!

http://www.agweek.com/docs/0725/0725ellison.htm

[ianben]

Hi Tom
Thanks, I looked up the site. A bit scarry I agree, but why are they doing this. Look at the second paragragh.

More than 15 years have passed since his father, a penniless pre-World War II immigrant from Japan who first planted soybeans in 1948, last increased those holdings. But with world soybean prices at a 30-year low, he and his brother need the cash flow and improved economies of scale.

Sounds to me like they have the same problems over there too. Crazy low prices!!!
Doesn,t look like they would be expanding if prices were higher, they haven't in last 15 years and I presume land has always been there.

Who sets these prices?

You say the "markets" you cannot interfere with supply and demand.

I wonder why not?

NONE of us producers are making money at todays prices so why do we keep selling??

I thought Canadians could produce canola at £140 atonne del Liverpool and make a profit. That is what my buyer infers when I try for a better price.
You tell me you really need $8/bushel that would be over £200 in Liverpool.

A price I would be equally happy with.
What would those Brazillian guys be doing at these prices?

Did you notice those comsuption figures up 20million tonnes/yr.

Production was up 27 million I know, but in percentage terms 7 million is small.

Just a few tonnes each in the lean year bin.

Can we not try to change a system which is wrecking farmers lives and rural comunities through out the world.
Are we going to bury our heads in the sand and be ploughed in.

We are all in the same boat lets at least try paddling.

WE ALL NEED HIGHER PRICES!!!

Regards Ian

[TOM4CWB]

Ian,

I am the last one to object to a "fair" price for anyone's grain!!!

The problem is that this is a totally relative term, and if prices are held up artificially, someone will start producing much more, and then we have a glut and oversupply that makes us in worse shape than we started at!!!!

So supply control is important once a higher price is attained.

Now how do we get the wisdom of Joseph, when we don't know what the weather is going to be like 3 weeks from today let alone 3 years!!!

Guessing when higher prices will come is near imposible!

Projecting the efficiencies of production is almost as hard to project 3 years into the future!

What I am saying is that as transparent and open a selling system as possible, is in the best interests of everyone.

Now if I was greedy I would say from a selfish point of view that I don't want Brits or Ausies hedging on Winnepeg Canola!

But this is short sighted as when Canola sellers use the exchange then buyers can see its prices are reliable, and are more likely to step up and use it as well.

This promotes efficient transparency, and pure speculators will end up over the long term getting wiped out, if they are distorting the market place!

I know this sounds like a broken record, but until we can assure future production levels, controling supply and demand will place us in the position of stepping in front of a freight train that will not stop!

[chas]

Tom4cwb: I'am not refusing to accept the value of our product by supply and demand. Iam' not happy with the mechanism in are marketing system that allows for easy manipulation of supply fiquires. For example a spectulator can buy or sell large amounts of grain on paper for a mere 10% of its value and turn around in the future and reverse the trade for a mere fee. When there is no delivery of the product and no storage to worry about large speculators can manipulate the market to their advantage. Large companies who are intergrated into food industry are controlling the low price.
Government subsidises are for the benefit of large companies not farmers because they work to keep a large supply of the perferred product at a low price. This allows large corportations to add value to make a large profit.
Supply and demand is the only fair way to discover price but lets make the mechanism of supply and demand procedures fair and honest. Chas

[TOM4CWB]

Chas,

The speculators may appear to have a low cost ride, however, when they are wrong, they have to pay up big time!!!

THis is the time when if we are patient, we can farm them for 50 cents a bu!!!

No one knows what the weather is going to do, and the weather determines supply, which in turn is half the input into the price.

Now low prices increase demand, which is to our benefit when the supply is reduced.

Then substitution comes into the picture when the prices of our products are out of kilter with other products.

This is why we have to be careful we don't shoot ourselves in the foot. Many times once a customer swithches to another product, they are slow to switch back, and then our product developes into a surplus more quickely than it would normally.

I believe in 1996 this is what happened with wheat.

The CWB withdrew from the market in the spring and early summer, particularly on new crop wheat.

The CWB was banking on higher prices and seriously had to slash prices to get back into the market later that fall.

Once we make our customers mad by refusing to sell, hold them ransom, they are very slow to come back to us after they find an alternate supply.

This is why restricting supply by means of a cartel can end up being counterproductive in the long term.

But what do I know, I am just a dumb farmer!

It is good to talk and discuss these issues and work them through, it helps us to become "master marketers"!!!

[melvill]

Very quick input. This is a great debate. I've always maintained that debates are a great way to learn something new. Keep up the good work.

I'm going to watch for the most effective presenter and recruit him/her to help me persuade more of my clients to work on becoming "astute" marketers this coming winter. ;-)

Tom4cwb I like your phrase "master marketer". May I borrow it?

Lee

[TOM4CWB]

Lee,

The term "master marketer" is a really interesting one, particularily when any one of us can be humbled so quickly!!!

Marketing is a state of mind, and the principal of doing unto others as you would have done unto yourself is the principal to start being humbled!!

I am in particular thinking of the customers I sell to, when I say this.

This is why I enjoy growing Canola, I can get really close to the end user and consumer when selling my Canola.

The interference of brokers can be weeded out particularily when dealing with Co-operative owned value added processors!!!

It is an unforgivable sin that has occured, that in the Wheat Industry we have to the greatest extent cut out the domestic value added Co-operative millers. How could this happen in Canada, with our Co-operative spirit and all?

[ianben]

Hi Everyone
Starting again under Fantasyland 2