Let's Pretend

[cottonpicken]

Let's pretend that 5 years from now the wheat board is eliminated.
And things dont go as planned.
A few major companies control the grain trade.
Its back to the early 1900's.
The farmer LOSSES POWER,and we cant get it back.
What will all you haters think/do?
What will the rest of us do?

[AdamSmith]

CP, would you say the European farm economy is as it was back in 1900?

What about the American farm economy? same as 1900?

What about the South American or the Asian? is it 1900 there? They all function under a free market system with respect to buying and selling grain?

Give me one example of where you draw your opinion from.

And explain to me, like I mean really explain with lots of relevant examples as to where the current system has given "farmers control" over anything?

CP, I'm really trying to understand you, really. But I don't get were your coming from.

You seem to have devoted much energy in understanding and trading commodities yet you obviously don't believe in the system in which you are participating in and putting so much money at risk in.

How can you trade wheat or gold or oil if you believe there are a only a few companies controling the price?

Are you not afraid of them taking you to the cleaners? wiping you out? Your in a game you have no "control over" why do it when you can't win?

You can't be nearly as big and as liquid as Exxon or Cargill or are you?

Why are you trading commodities when there is no way for you to beat the big boys?

And one more question, do you farm? If not what do you do?

You have to admit it's a bit confusing for alot of us because you come across as a pure capitalist one minute and then a raving NFU type socialist the next. What gives?

[lesm]

Most wheat exporting countries of the world are all enjoying a substancial rise in wheat prices except for here in Canada. I'm not an expert in grain marketing but I don't think that I could have done any worse of a job in selling my wheat than those clowns in Winnipeg( Based on current pros). I don't think there is anything to lose by total dismantling this current CWB.

[liberty]

Is it 1900 for canola, oats, flax, or any other crop not under CWB control? No? Then it's pretty unlikely that it will be 1900 all over again if we wind up with a dual market for wheat and barley.

The outlook right now for canola and oats is surprisingly good. So good, in fact, that "coffee shop" talk indicates farmers will be growing anything but wheat, given the CWB's latest PRO's.

Thanks to the CWB single desk, for wheat and barley growers it's the year 1900 all day, every day.

[SASKFARMER3]

I have to agree too, that if its 1900 why is canola feed barley oats all climbing on world and Canadian market but wheat is staying low and only will take 80% yet all over the place you read how their is a shortage of wheat yet our wonderful CWB give us scrap prices.
As far as dropping wheat it is starting to look pretty clear that if we cant achieve a premium in a year the world is out of wheat then we never will so probably seeding the farm to 4 crops oats barley canola and peas and dropping durum hrs and trying for malt barley.

[Lifer]

In the scenario above I don't believe CP has let anyone know what his opinion on the scenario actually is.

Today there is more information and options then early 1900. What power is being given up?

[cottonpicken]

Well Adam i am a full time farmer and part time trader.
Lets get a few things strait:
1-i do believe it is a producers right to do what ever he wants with his product
2-i do believe monopolies are inherently powerful and good to be apart of and hard to oppose.Do you think microsoft or opec are weaker because of there position?
3-our fore fathers gave us the cwb for a very good reason.Why did they support it so strongly?
4-if the board is up to no good then shouldn't our energies be put towards fixing it.Constant critisim and questioning is good.
5-comparing canola,flax and oats to wheat is a little unfair.They dont call it king for nothing.
6-marketing is not easy.It is a well knowen fact that 99% of traders dont make money in the market

I do think some changes need to be made but lets not burn any bridges.

[AdamSmith]

Thanks CP

I must dispute is your point #3 which you said “our fore fathers gave us the cwb for a very good reason. Why did they support it so strongly?”

Our fore fathers gave we just as divided back in the twenties and thirties as we are today. The feds set up the CWB in 1935 as a voluntary marketing agency. It operated from 1935 until Sept. 1943 within the open market system. But in 1943, during WWII, the federal government closed the wheat market in Winnipeg because the price of wheat was rising. Canada had commited to supply Britian with wheat as one of it’s contributions towards Victory but very little wheat was being offered to the CWB that year because the open market was paying substantially more. The CWB was paying 90 cents per bushel, the open market had risen to $1.23 per bushel by September. This was costing the government too much money so on Sept 27 1943 the Feds closed the Winnipeg wheat market down and took over all wheat stocks. The feds said things would revert back to a voluntary cwb after the war, but they never did because the Canadian Government signed the British Wheat Agreement to supply Britian with cheap wheat which pegged the price of wheat at $1.55 for the duration of the agreement (1946-1950) by 1947 wheat on the open market was trading at $2.75.

Barley was brought into the cwb in 1947 because very little wheat was going to be planted the next year because open market barley prices were above the CWB/British Wheat Agreement price. So the feds put barley under the board and lowered the price.

Why did some farmers still support the CWB monopoly even after they saw it kept prices down?

Same reasons as today. Hatred of the Grain Companies, hatred of the Winnipeg Grain Exchange, envy of other farmers selling for more. They couldn’t deal with the fluctuations of the open market. That part is no different.


Cottonpicken, I would like to recommend you find a copy of THE EXCHANGE – 100 Years of Trading Grain in Winnipeg by Allan Levine. This book was written in 1987 long before the dual market debate got into full swing. It’s an excellent read and when I read it back in 1987 at the age of 22, my eyes were opened up big time. I’ve been an advocate of the open market in wheat and barley ever since.


Here’s a little excerpt. “Responding to their complaints, as translated and amplified by the leaders of various agrarian movements, the federal government appointed no less than six Royal Commissions between 1899 and 1936 to investigate the grain trade. Each time, the Exchange was vindicated, but farmers still demanded that the open market system be replaced by a state-controlled wheat board. In 1943, partly as a result of wartime exigencies, their wishes were granted and the federal government assumed total control of wheat marketing”


Think about the bridges that were burned in 1943?

[cottonpicken]

I'll definatly read that thanks for the reference.
I can except your arguments of the cwb keeping prices down but you must relize the gravity of your accusations.
I know of other price manipulation schemes in other markets but i refrain from talking about them because of their gravity.
If your correct where is the wealth going in your opinion.

[AdamSmith]

CP, most of the wealth in my opinion is never allowed to be created. Or it is transfered in the form of cheaper feed stock for feed mills and the livestock industry. I will refer to the CWB price of mid quality wheat like cps and winter wheat which the cwb prices at deep discount to it's real value. The domestic off board price of feed grains arbitage off the cwb prices.

The wealth is also transfered to non farmers who provide the handleing and transportation of wheat. As chaffmeister has shown the costs to market a tonne of wheat are substantially higher than the cost to market a tonne of canola.

The wealth is also tranfered out of Canada because we sell mostly raw product not a processed product. This is the value added argument.

Then this reduced wealth is then redistributed throughout the designated area via the arbitrary spreads between grades and classes of wheat. It's still a very sore point here in southern manitoba that in 1985 or 86 there was no final payment on #1 wheat because the cwb transfered the profit on #1 and #2 to prop up #3 and feed which was in abaundance up north because of weather damage.

[cottonpicken]

I used the word wealth instead of money because they are two different things.
Who now owns the shares of farming companies.
Who now has there hands deep in farmers pockets.
Who created the environment of low prices so they could get shares cheaper and hands deeper.

[AdamSmith]

Ok, lets talk ownership. Is the fact Cargill and JRI and ADM own canola crushing plants in Sask. good or bad?

Some see outside investment as an intrusion or a pillaging of our wealth, I see it as a vote of confidence. As that outside investor has chosen to park his wealth in my community or province. He's saying he's willing to invest here instead of someplace else.

Why wouldn't you want someone else to spend and invest in our communities?

I recall watching a documentary on TV about the history of Chicago. Names and Dates escape me right now but anyway after the great fire in 18 somthing, half the city burned to the ground. Most of the city leaders at the time were sure that their city could never recover. But one fellow went to New York and convinced a bunch of the New York money guys to invest in rebuilding Chicago. At first many were opposed as they thought that New York would now control Chicago, but he convinced them that that wasn't the case, in fact instead of New York money staying in New York, New York money would now be coming to Chicago for the benifit of Chicago.

So I guess it's all in how you interperate others motives.

[wedino]

CP, "Who now owns the shares of farming companies."

I think it's fair to say, with regards to SWP anyway, that farmers weren't capable of operating the company. It's a fact that while farmers were in control the company was driven almost to bankruptcy.

[wedino]

Whenever anyone is making an argument for the wheat board they have to refer to the 1920's.How about the 21st century.Things have changed too much for an 90 year old argument to work anymore.Our forefathers also left us with the horse and buggy,which we put in a museum(just the buggy)and I think that is an appropriate place for the Socialist mindset.How could I own shares in the big grain/chemical companies without the marketplace(ie.TSX,DJIND.).I would probably invest in these companies if they were as profitable as suncor.

[cottonpicken]

Actually my line of thinking was if the price of grain is being manipulated down the entity which would greatly benefit are the banks.