I read the KAP questionnaire and backgrounder and I will try to attempt to answer the first two questions. (I will look past the obvious, that this is another CWB prepared document)
Question 1. When You market your crops throughout the crop year will you be able to obtain premium prices from an open market?
Yes. As I understand what premium prices are to me. Last Jan. I sold 20000 bushels of feed barley FOB farmyard. I received $2.10/bu for the first 10000 bushels and then $2.20/bu for the next 10000. This price was at least $.35 to $.45 per bushel better than the elevator companies offers at the time. This was sold to a colony that saw my sample and wanted my barley. So yes premium prices will continue to be available.
But this question had to come out of the mind of a cwb staffer.
It’s not a question a real farmer would ask.
A real farmer would ask, “Am I still going to be able to sell my wheat and make money in an open market?” or Am I going to make more money or less money selling wheat in an open market than I do today with the cwb?
My answer to that is I know I will make more money. On winter wheat alone I will make at minimum a third as much more from the open market than the cwb system. On CWRS, I know the basis will be much more attractive in a competitive system, the ability to grow higher yielding varieties will make me more money. Earlier I posted the results from the North Dakota yield trials. Superb was one of the lowest yielders compared to say Glenn. I think there was about a 12 bushel to the acre difference. So If I think I will gain about $15/t on basis with a 12 bushel yield advantage by accessing superior varieties I’m probably increasing the profitability of wheat in my rotation by $80 and acre. That’s what a real farmer will consider. I think on winter wheat the number would be closer to $100/acre increase in profitability.
Question 2. Has price pooling been an important risk management tool for your farm? Without a single desk, is price pooling still viable? For me No price pooling is not something that has appealed to me, but that is in the context of how the cwb has price pooled. But maybe it might look more attractive if I thought the costs associated with pooling were substantially less and the pool could actually prove by way of a competitive price to be a viable option. So in my mind the viability of price pooling is in the ability of the CWB II to contain its costs and try to achieve a high average price. But that’s just my viewpoint others may be happy just so long as there is a professional third party that they can rely on to market their grain for them.
I will try to address some of the other questions later (or maybe not)
Question 1. When You market your crops throughout the crop year will you be able to obtain premium prices from an open market?
Yes. As I understand what premium prices are to me. Last Jan. I sold 20000 bushels of feed barley FOB farmyard. I received $2.10/bu for the first 10000 bushels and then $2.20/bu for the next 10000. This price was at least $.35 to $.45 per bushel better than the elevator companies offers at the time. This was sold to a colony that saw my sample and wanted my barley. So yes premium prices will continue to be available.
But this question had to come out of the mind of a cwb staffer.
It’s not a question a real farmer would ask.
A real farmer would ask, “Am I still going to be able to sell my wheat and make money in an open market?” or Am I going to make more money or less money selling wheat in an open market than I do today with the cwb?
My answer to that is I know I will make more money. On winter wheat alone I will make at minimum a third as much more from the open market than the cwb system. On CWRS, I know the basis will be much more attractive in a competitive system, the ability to grow higher yielding varieties will make me more money. Earlier I posted the results from the North Dakota yield trials. Superb was one of the lowest yielders compared to say Glenn. I think there was about a 12 bushel to the acre difference. So If I think I will gain about $15/t on basis with a 12 bushel yield advantage by accessing superior varieties I’m probably increasing the profitability of wheat in my rotation by $80 and acre. That’s what a real farmer will consider. I think on winter wheat the number would be closer to $100/acre increase in profitability.
Question 2. Has price pooling been an important risk management tool for your farm? Without a single desk, is price pooling still viable? For me No price pooling is not something that has appealed to me, but that is in the context of how the cwb has price pooled. But maybe it might look more attractive if I thought the costs associated with pooling were substantially less and the pool could actually prove by way of a competitive price to be a viable option. So in my mind the viability of price pooling is in the ability of the CWB II to contain its costs and try to achieve a high average price. But that’s just my viewpoint others may be happy just so long as there is a professional third party that they can rely on to market their grain for them.
I will try to address some of the other questions later (or maybe not)
Comment