Canada's Position at the WTO

[TOM4CWB]

Charlie,

Have you got a breif AB Gov. position for negotiation for the April 30 WTO meetings?

There is some concern that SM5 CFA and the CWB have sidetracked the opportunity to negotiate significant WTO reductions in subsidies for the grains, oilseeds, cattle, and hog industries.

Where are we at?

[charliep]

I would highlight Minister Horners recent press release after the meeting of provincial Ag. Ministers.

The end of April deadline for agreement on rules in WTO negotiations represents a crucial point in determining the future growth and prosperity of the agri-food industry, Horner said.

"Our industry's sustainability is dependent on improved market access, the elimination of export subsidies and substantial reductions in production and trade distorting domestic subsidies of other countries," he said.

I would also highlight the AGC press release.

http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/agc10410

[MBFarmer1]

I always have to reply to these WTo discussions as they tend to fire me up. As a young farmer (32) I find this to be one of the most misleading ag discussions out there. Government officials spout garbage talking points about how we need increased access and lower tariffs to survive. True enough I suppose but what is always very carefully left out of those talking points is when any decisions made at the WTO in regard to these issues, good or bad, will come into affect on the farm. For example, I recently had a discussion wiht one of Canada past lead negotiators. When asked directly for a time line his thoughts were changes made in this round of WTO negotiations would affect Canadian farmers around 2020 or later. Not sure age of the guys that post here but, I for oen don't really want to wait 15-20 years for a chance of increased profitability. Sorry for the angry post but I get very tired of hearing government officials and their various sycophants tout the WTO as the Golden Chalice for Canadian farmers. It simply is not true for your generation or mine. Maybe the next?

[Vader]

Horner said.

"Our industry's sustainability is dependent on improved market access, the elimination of export subsidies and substantial reductions in production and trade distorting domestic subsidies of other countries," he said.

I disagree. The world has consumed more wheat than it has produced for seven of the last eight years. Is trade the reason why prices are low in spite of this shortfall? I think not. The problem is 135 million metric tonnes of inventory around the world. No trade liberalization will improve grain prices as long as this surplus inventory exists. We need to target this inventory and put a "stick of dynamite" under it.

What I really wonder is where in the world is this 135 million tonnes. In Canada we only have a carry over of about 6 million tonnes. On the surface that is insignificant. However when you consider that Canada is responsible for about 20% of world trade in wheat and when you also consider that world trade is only 100 million tonnes per year it becomes apparent that a significant amount of this surplus must reside in the consuming nations as opposed to exporting nations. (Contrary to what I am always hearing).

Perhaps if Canada's 6 million tonnes were to disappear from the market the buyers of the world might consider a 6% reduction in available inventory for purchase to be significant. In fact depending on how much of the 135 million tonnes is in exporting versus importing countries 6 million tonnes might be an even larger percentage of tradeable supplies.

My mission at the next CWB board meeting will be to examine the question of "where in the world are the available wheat supplies and how large are they".

As Canada moves to meet its biofuel committment perhaps we can eliminate our share of the exportable surplus.

Rod

[silverback]

Another question would be, "If there are stockpiles of Wheat around the world, where are they and who is paying the storage for that grain?" Does it turn over or has it been sitting for 5 - 10 years? Can the whales or cod eat wheat if we dump it in the ocean.? lol

[Incognito]

Your mission should be to decide how the CWB will operate in a dual market environment.

Canada's trade of wheat ex durum has fallen to 14% to 16% - not 20%. Time to get the briefing notes updated.

http://www.igc.org.uk/gmr/gmrsummary.htm

Global stocks at end 2006/07 are forecast to fall by 17m. tons to 119.m., including 45m. (52m.) in the five major exporters.
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Knowing the above, what direction has the CWB taken?

Those are responsible questions you should be asking - not where is the frikkin 135 million tonnes of wheat in the world.

Google it - for goodness sakes.

[TOM4CWB]

Vader;

How Ironic that the CWB has been holding stocks of Wheat and Durum OFF the market... which has what effect?

Increase STOCKS.

The effect is to create opportunity for others around the globe; who would not otherwise look at growing the wheat and durum if it was not withheld... to fill that market gap.

Market distorting... a subsidy to domestic consumers; WTO issues for sure.

THe CWB is not required to pay interest on the stocks they force us to hold, risk or carry inflationary costs that accrue.

ASTOUNDING.

There is nothing in the CWB ACT that even authorises CWB directors to maximise returns be withholding our stocks... unless distorting International trade is a function of "Marketing grain in an orderly manner"!

Talk about being NON COMMERCIAL.

[Vader]

Incognito, where do you get the figure of global stocks falling? I looked at the website you gave and I see this.


SUPPLY AND DEMAND IN 2005/06

WHEAT: Estimated 2005 world production is increased 2m. tons to 617m. with small revisions for several countries. Total consumption is also up 2m. tons at 620m., with increases in Iran, Turkey and Pakistan. Forecast world trade is 1m. tons higher at 109m. tons, reflecting continued strong purchases by Iraq and recent buying by Iran. Export shipments by Argentina, Russia and Ukraine are slowing considerably compared with the first half of the season. Turkey has recently sold large amounts of wheat flour, notably to Iraq. The forecast of global end-of-season stocks remains at 136m. tons, including 52m. in the major exporters.

[Vader]

I note that world trade varies between 102 MT and 109 MT. Stocks held be the major exporters back in 2003 was 40 MT. Today we are at 52 MT. I think that the major exporter stocks to trade ratio might be more important than total stocks to use, at least until China has a wreck.

Mr ASTOUNDED, you say that the CWB is holding stocks off the world market. Have you noticed that the CWB is on track to make record sales of durum wheat this year? Probably the largest percentage of the world trade in durum ever. Have also noticed what has happened to the traditional premium that durum wheat has enjoyed over spring wheat?

How much wheat should Canada plant this year? How much durum?

20 ethanol plants in Canada the size of the Husky plant in Lloydminster would use over 6 million tonnes per year and by my calculation would only get us 1/2 way to the 2010 federal target of 10% biofuels. How would that impact on the stocks to use ratios by 2012 especially if you could forecast what other exporters such as Australia and Argentina are projecting for ethanol production?

If Canada were to pull 5 million tonnes of wheat per year out of the export market and Australia and Argentina between them did another 5, the five major exporters would be cleaned out in five years.

Obviously there would be upward pressure on prices and therefore an incentive to increase production. One means to increse wheat production is by acreage shifts. Corn could be in short supply because of the demand for ethanol in the US which is expected to rise significantly due to their own energy programs. So wheat should not steal acres from corn. Soybeans and canola will have demands on those acres because of the corresponding increase in biodiesel production. It might not be easy to steal acres from canola or soybeans.

What about Brazil? They are the worlds leading producer of ethanol and they will be maximizing their sugar cane acres.

Perhaps it will be difficult for the world to meet the demands and world stocks will fall to near zero.

Would be nice if we didn't have to resort to feeding our wheat to the whales.

[Vader]

Incognito, your mission can be to figure out when and if the CWB will operate in a dual market environment, if you feel that is a productive use of your time.

My mission is to maximize revenues for farmers. Presently I do not believe that a dual market does that. Building ethanol plants might though!!!

[Incognito]

April 06, 2006

Harper, speaking in the Commons, reiterated a number of Conservative campaign promises concerning agriculture.

He said the government wants to replace the Canadian Agricultural Income Stabilization Program with a "simpler, much more responsive" system and is urging provinces to negotiate a new plan.

He promised to support existing supply-management programs, and said western grain farmers will be given "dual marketing options" when it comes to the Canadian Wheat Board.

___________________________________

I don't sit on the BOD and get paid for fidiciary responsibility to farmers - if I did currency hedging and administrative costs would be on the top of my list; so it is not my "mission" to figure it out. Frankly, I could care less other than you have an audience of pick a number (50 60 75%) that support the CWB and what of your responsibilty to them?
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Global stocks at end 2006/07 are forecast to fall by 17m. tons to 119.m., including 45m. (52m.) in the five major exporters.
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i copied and pasted the above. Scroll down.

[wd9]

How quickly the Vader pulled the wool over everyone's eyes once again from the real issue, market access and Canada's WTO position, which is the topic of this discussion. Market access is a bit of a misnomer because we have access, just not fair or financially viable access.

All along the CWB has been 'representing farmers' by convincing the federal government to not negotiate - that no agreement is best, that we can't make any headway on access so just walk away.

With tariffs alone on wheat at $25 to 30 per tonne, canola - $77 per tonne, barley $27 per tonne, MBFarmer, you and I will not see progress in our lives.

I just wonder and am unable to understand why the CWB is ensuring with it's political clout there is no progress on WTO and that market access (tariffs too high to make the sale)alone will continue costing farmers billions in lost sales.

Let alone tariff escalation (the more a product is value added, the more it is tariffed) and defining which sensitive products (those products outside the WTO negotiations with their own special rules) costs to farmers and any ag processors in Canada.

Maybe we should do as the CWB suggests, become supply managed grains and find other work for 4/5 of the farmers and the arable land in the country. Not!!!

I would encourage our government to negotiate for open market access, that export and domestic subsidies be reduced in the coming years, that Canada can compete fairly with other countries with regards to tariff parity (tariffed higher on a competing product in the same country like soy 5% and canola 25%, barley against corn...) tariffs and subsidies.

MBFarmer, given the choice, would you like to see no progress or at least progress for the future?

[MBFarmer1]

Hey, I am all for progress in the WTO. For the next generation or possibly the one after that maybe it is the answer. Where i get a little upset with this process is how ti is represented to farmers and the general public. I attended a number of large farm meetings over hte winter and they all had the prerequsite WTO update. In nearly every one of these updates people with their own agendas to push, people who wanted to justify their positions in life or people who need to get re-elected went on and on about how the WTO would save Canadian agriculture and that this was the path to the Holy Land. Trade liberilization has been held out to farmers as the saving grace since my Dad started farming. Elimination of US subsidies will not happen .... ever!! Fact. The US has set up a large part of their economy to depend on a cheap raw product to value add into a more expensive product to sell to the world. They will not give this up. In addition food production is considered part of US defense policy. In the event of war or serious attack on US soil adequate food production is utmost important. Since 9/11 do you think the US has not renewed its concern for security? So I guess the point i am making is that work at the WTO should be done as small irritants can be removed and trade can be improved, however for people to indicate that this will change agriculture is untrue.

[Vader]

I am not opposed to eliminating tariffs and subsidies. I just think that it is never going to happen. Giving up supply management or the CWB would be an exercise in futility similar to the giving up of the Crow Benefit was in the previous round of trade negotiations. What has that gotten us?

The real problem is oversupply. Always has been, except when the American Government considered it their duty to set a floor price and purchase and hold stocks.

[Vader]

I do see currency hedging and administrative costs as being important. I am undecided as to what more the CWB should do in the area of currency hedging other than to hedge sales once they are made to prevent against erosion of sales values.

On the administrative cost side I believe that the CWB has done much to reduce admin costs through corporate restructuring. The cost of running the CWB is quite small compared to what corporate profits would be for delivering the same services.

Incognito, I still don't see where you are getting the reduction in wheat inventory by 19 million tonnes. I could google it or you could save us all the trouble.