PRO's.......

[Vader]

The CWB's hedging program is linked to actual sales and it has a component that is "smoothed". The CWB does not speculate on the dollar.

Individuals are afforded the opportunity to exercise their own judgement based on their desire and capacity for risk tolerance through the various pricing options.

[Incognito]

The BOD are right about one thing then: The CWB will not make it in a dual market - not with that attitude.

I ask again...When does the viability and sustainablility of the farmers come into question?

The BOD knows the uptake on the FPC, BPC and EPO contracts and would know that 95% of farmers would not hedge the CAD/USD because they don't understand it nor the implications. That is why they have entrusted the CWB to RISK MANAGE their wheat and barley. They don't expect it from pulses or oilseeds. Farmers do expect that the CWB is looking after their best interests.

I've gone from get rid of the CWB in the 90's; to we need the CWB to defend farmers and because of the demographics of the farm in the first part of this century to where I am today and that is:

If the CWB doesn't care about the health of the farmer - what the hell was I thinking?

The currency issue has been a thorn in my heel for a long long time. Being omnipotent and not ensuring the well being of the shareholders (the farmers) makes the BOD look really selfish and arrogant right now.

Chaffmeister is right. Speculating on wheat sales is ok. Hedging the dollar is not. In an earlier post, it was mentioned that staff would end up leaving in a dual market, compromising the CWB. I do believe the CWB has an excellent staff and maybe the right answer in a dual market is for the BOD to leave - With no interference, I'm sure they would figure it out.

[chaffmeister]

If the CWB’s forex hedging program is linked to actual sales, it sure as hell aint “a very sophisticated modeling and hedging protocol” as I was told (by the guy in charge of it). In fact it was suggested that it’s much more than plain vanilla hedging forex on sales – which totally contradicts what you’re saying, Vader. Also – I don’t have a clue what you mean by a component that is “smoothed”.

Oh well, I guess like most other things about the CWB, we’ll just never know.

I’m struck by the irony of the CWB offering farmers “the opportunity to exercise their own judgement based on their desire and capacity for risk tolerance through the various pricing options” yet also maintaining that this must be through the CWB pooling system (or at least it must not impact the sanctity of the pool). CWB pricing options are designed more to enshrine the pool (which they do) than to give farmers any highly effective risk management tools (which they don't).

The pool is sacred; individual farmers’ needs are not.

It’s a one-way street with the CWB. You can play with these pricing options as long as you don’t financially injure those in the pool. And yet those playing in the pool wreak financial havoc outside of the pool. I’m amazed that those that support the CWB do so enthusiastically even at a real cost to those around them that don’t – including those that grow non-CWB grains. And the foundation of the pool is equity; you’re kidding, right?

If you still believe the CWB is your “best defence against the multi-nationals”, is the only thing keeping you competitive in the global market, provides real market power, will provide leadership in canola and biodiesel and all that other tripe I’ve read here and heard elsewhere, just say so and I’ll be happy to tell you more tales of inequity, marketing ineptitude, redundancy, costly arrogance, waste, poor logistics management, lost opportunities (of just about every description), collateral damage, sex, lies and videotape. There is absolutely NO DOUBT in my mind that the CWB is costing you big time – and I don’t mean just in lower prices. Let them brag about getting premiums – there is no way in the world that some puny $10-20 premium can come anywhere close to what the CWB system is costing you right now.

I'll admit that the CWB may be able to give farmers some countervailing power against the "nasty multinationals" and the railroads (even though I'm not convinced you need it), but be aware that this big brother comes with a huge price tag.

[Vader]

It is late and I am going to make this short.

I do not favor pooling and I am open to any suggestion as to how to improve the CWB and make more money for farmers. In fact if the CWB comes with a HUGE price tag that outweighs any value proposition then I might even be convinced to wind it down.

Incognito, I think that the viability of the farmer must come first and foremost. I do not like that the CWB has not enshrined profitability in its vision and mission. Maximizing farmers return is a poor second to profitability.

What would the two of you suggest? Put it in simple point form (if that is possible since there is no such thing as a simple answer to a complex problem). List the objectives 1-5 max, three would be better.

[Incognito]

Not ignoring this today but will give it the time it deserves tonight.

[silverback]

How about you stick to how you think the CWB should survive Vader and then let farmers decide what the future should be? I am pretty sure we don't need you guys coming out now and saying how great you can be with just a little more support and a little more money. I wonder what you would be saying today if the liberals were still in power and Reg Alcock was still the man in charge? Let me guess, accept it or grow something else. (Not that we have ever heard that on this site before)

Don't ask for anyone's suggestions so that you can spin them into a glowing little speech for Mr. Ritter to propose on the radio.

Just stick to what the current policy of the board until there is something in writing to prove that things are changing. It's not that I don't trust you, it's just that I am tired of spin.

[chaffmeister]

Here goes – my list of how to improve the CWB (Silverback: I'd love to see Ritter suggest these ideas.)

1. Get rid of the mandatory pool. Provide no cost, no hassle export licenses to whoever asks for one.

2. Now with an optional pool, set up your Initial Payment as a basis only. Farmers who opt for the pool would simply be agreeing to the basis with all their sales priced at any time prior to delivery. This would reduce the risk in the pool dramatically and improve farmer pricing and payments (more up front on delivery). And keep pool prices competitive as markets change. This is substantially different than the current basis contract offered by the CWB; not enough room here and now to discuss all the differences.

3. Hedge the pool activities appropriately – flat price (futures) and forex (interbank).

4. Design CWB contracts so that they are fair – not one sided. (To compete in an open market you’ll need to.)

5. Reduce costs; stick to your knitting.

6. Get out of transportation.

7. Generously reward competence / harshly penalize incompetence.

8. Develop working relationships with other players even if they seem to be competitors. (Play nice.) Others will treat the organization and everyone in it with respect if you bring something of value to the table and deal earnestly and honestly. If you don’t bring something to the table, you have no business being there in the first place.

9. Work diligently to develop markets regardless of the fact that other Canadian exporters might also benefit; ultimately the farmer will benefit. Support enthusiastically other exporters that develop markets on their own.

10. Show leadership; build industry teams to work for the betterment of all in the industry.

11. Recognize that a single desk is incapable of providing optimal service/benefit for each and every farmer out there. They each have different needs – one size does not fit all.

12. Use the force for good, not evil, Lord Vader.

[Vader]

Thanks chaffmeister. That gives me something to go on and I agree with you on a number of points. On point #12, you have me confused with that other Vader.

[parsley]

Vader,

What chaffmeister has proposed can only come about if the CWB culture is changed.

1. A tone of genuine respect must be set. Respect for all farmers and respect for agri-business players. Quit name-calling.

2. The CWB Board of Directors must read their own Code of Ethics and then actually put it into practice. (ie. Do NOT change the political donation gudeline right before an election.)

3. The CWB must STOP getting in the way of grain leaving the country at a higher price than the CWB can get.(chaffmeister's #9 says support, I say at the very least,get out of the way)

4.Stop pitting farmers against each other. Show leadership. Take the high road.

5. Be patient. Very few trust the CWB anymore. You will have to earn trust, and that is a long haul.

6. Be transparent.

7. PM Harper is very serious about the CWB.

The CWB would do well to seriously take note of #7.

Parsley

[Incognito]

With thanks to Parsley and Chaffmeister, I will be able to keep my thoughts narrowed.

First, a test of the political continuum facing western Canada today: Minority government, strong rural support across Canada. West’s turn for an Ag Minister - Diane Findley doesn’t just beat Bob Speller, she eradicates him and he is destined to Bob the Builder Wall of Shame and he can’t fix it – no he can’t. Rural Ontario support for Conservatives is strong.

Advantage: East for Agriculture Minister. The western Conservative support is stronger this election and they want an Ag Minister they can call their own. Harper settles on a Minister of the CWB from the west. West is *issed. 10 days go by and Conservatives announce a Farm Package better than anticipated – west is happy again.

Any Minister of the CWB appointed from the west is not going to be easy on the confines of 423 Main. The CWB knows it. Want proof? Ritter et al have been burning the phone lines with money from the wheat pooling accounts to the Ottawa bureaucrats demanding (that’s not my description) a meeting with the Agriculture Minister and the Minister of the CWB to ensure the single desk is enshrined in perpetuity or for ever and ever, Amen.

Two things will happen. 1) Marketing of wheat and barley will not be the same in 12 months. 2) The WTO will be relentless on STE’s and you have lost an ally because the AWB is pretty shaky right now.

In my opinion, the CWB can take this opportunity to be proactive or take the same approach as it always has and be prepared for a wakeup call some day (and soon).

Some of this is not new. Most of us have been in this business long enough that everything comes full circle after some time. This would be my proactive approach.

1)Get out of the road of organic farmers. It is an evolving industry that has great potential. Don’t screw it up. Set aside 250,000 tonnes of organic wheat and barley and watch them go. You more than anyone know that as individuals, you are doing most of the work and getting a piece of paper to make it legal. There is enough OCIA documentation today that is watermarked and sealed that tampering is not an issue. Let it go. (and no Parsley – I’m not blowing smoke up your butt)

2)It is my opinion that barley can be removed entirely with an Order in Council. A good trade lawyer would probably tell you that durum could be removed in the same manner. Wheat cannot – it is enshrined in the Act. During the next 12-18 months, I highly doubt the Act will be opened given the complexity of the house unless Duceppe is intelligent enough (and he is) to trade support for supply management for votes for a full dual market – wheat and barley. Be proactive. For the next 2 years, try a dual market for barley. This is not ground breaking news. The Western Grain Marketing Panel recommended the same thing; however, being proactive today would show good faith to the new Government and may buy you time at the WTO in April.

3)Let a million tonnes of CWRS go free and clear to wherever and whoever wants to make the sales. The sky won’t fall. The sun will get up in the WEST (I know) and everyone will be encouraged that the status quo is not the only option. In order that there be access to everyone - maximum sales from any one entity is 50,000 MT. That should leave the trade with 500,000 and farmers with the option on the other 500,000 MT. If the million tonnes erodes the marketability and power of the CWB – then I believe it was never there. 1 million tonnes equates to less than 1% of the expected world trade in wheat in 2006.

4)Remember where you came from. It astounds me that we fill the CWB up with graduates from the U of S, farm kids - and they forget where they came from. It all starts at the farm. No farm – no CWB. Simple. Why can’t anyone get that?


The dollar hedging I’ve been through 10 times before on here. During the next 30-90 days, the BOD and staff of the CWB must decide the route they want to take. For 13 years, they have had the ear of the government while ridiculing the likes of MP Anderson, MP Menzies et al. If you think that that doesn’t come back to bite you in the ass, think about the Hon. Charlie Mayer.

Years in opposition and taking the derision at Standing Committees took its toll. I don’t love ADM Vader. Never have – never will. But taking pot shots at them when they are your customer is not good business. That’s what made me angry. The contempt.

The CWB must now decide what it wants to be when it grows up – I will tell you on thing; it’s too late for status quo. Change or be changed. Proactive versus reactive - Positive versus negative; It is not too late.

[cropduster]

INC......It`s a little hard not to get excited isn`t it????Great sermon,albeit a little long.Keep up the good work!!!

[AdamSmith]

Excellent post Incognito!

I’ve been reading that PM Harper will have a smaller cabinet and that CWB will be just melded into another portfolio, probably Agriculture, but it could easily go with Trade.

My thoughts on incremental change vs. a sudden and irrevocable ground shift under this minority government situation.

It is my strong and fervent opinion that not one opposition party will choose to “Die on the Hill of the CWB”. The Big City Lib’s are not going to risk a Harper majority just to save the single desk. Even if they were to entertain the thought their Toronto, Montreal and Vancouver voters will skin them alive if they went into an election before they were ready in order to save something 99% of them have never even heard of.

The Bloc know that with ten seats already in Quebec, the Cons will have a powerful ground force in every Quebec riding next time and could win 40 or more seats in Quebec in the next election, the Bloc know this and my guess is the Bloc will do almost anything to keep this parliament going.

The NDP may put up a fight just for show but if the Bloc and the Lib’s vote to live and fight another day there is nothing they can do to stop CWB legislation.

My advice to the Tory’s, on the issue of CWB, govern like you have a majority and Rock My World.

[AdamSmith]

By the way KC Wheat up 10 cents this am.

[charliep]

Just a note that the CWB provides a graph of converted futures prices this can be found at:

http://www.cwb.ca/en/contracts/ppo_workbook/pdf/2005-06fpcbpccharts.pdf

I also encourage everyone to follow the daily pricing contract.

http://www.cwb.ca/en/contracts/ppo_workbook/pdf/2005-06/2005-06dpc.pdf

The above should reflect changes in the US market and provide a signal to farmers as to actual market prices. If they don't or the signal is not clear, then there should be some questions asked. My assumption is this program will continue into 2006/07 so you have to be prepared to understand.

I also highlight the more mundane issue of wheat movement.

From the grain stats weekly for week 25 (January 22) for wheat excluding durum(http://www.grainscanada.gc.ca/pubs/grainstats/gsw_2-e.asp).

Visible stocks - 3.2 MMT versus 2.8 MMT in 2005.

Deliveries - 6.4 MMT verus 6.8 MMT in 2005.

Exports - 4.3 MMT versus 5.1 MMT in 2005.

From the statistics Canada stocks report, 14.2 MMT of wheat excluding durum on farm December 31 versus 12.7 MMT 1 year earlier.

There will be a lot of preasure to move grain the last half of the crop year. This will be aggravated by the amount of tough and damp crop still stored on farms. Sell it or smell it. The lower PRO's could be an indication of a very aggressive pricing program by the CWB in the last half of the crop year to simply make sales.

[Vader]

Adamsmith, two questions.

What makes you think that the CWB issue would be a confidence motion that would bring down the government?

Why do wish for the government to bring down the CWB rather than doing it about as a farmer movement? Do you not trust farmers to make the decision?

(sorry that was 3)