I can't wait untill Barley Freedom Day

[just_wondering]

June 28, 2007 Thursday 9:20 AM EST
NATIONWIDE INTERNATIONAL NEWS

AUSTRALIA'S ABB WINS DEAL TO SUPPLY BARLEY TO SAUDI ARABIA MELBOURNE June 28

Grains marketer ABB Grain Ltd (ASX:ABB) has won a $A1 billion ($US844.45 million) contract over five years to supply barley to Saudi Arabia.
ABB said it had entered into a memorandum of understanding with Saudi Arabia's United Feed Company to supply feed barley.
An ABB spokesman said ABB would supply at least one million tonnes of barley a year, but United Feed had indicated that it would take as much as ABB could provide.
"In the past, we have provided one million to two million tonnes a year, depending on how the seasons have gone," the spokesman said.
ABB already has links with United Feed Company, having supplied more than eight million tonnes of barley to the company since 1998.
The barley to be delivered to United under the latest deal will be bagged and branded with the ABB logo and supplied to Saudi Arabia's Bedouin community.
"This agreement provides a solid, long-term support base for Australian barley growers and their grain, which is highly regarded by customers in the Middle East," ABB chairman Perry Gunner said.
"It is a significant coup for Australian barley growers and our company."
ABB said Saudi Arabia was the world's biggest buyer of feed barley, importing about 7.5 million tonnes a year. United Feed accounted for most of the grain tonnage.
The barley earmarked for Saudi Arabia will be drawn mainly from South Australian and Victorian growers, and from Western Australia if necessary.
ABB and United had agreed to explore other business ventures.
The ABB spokesman said United Feed, as one of Saudi Arabia's largest food producers, was also interested in other agricultural commodities handled by ABB, such as pulses and wheat in bags and containers.
(AAP)

[just_wondering]

Here's another example of the aussies kicking our ass.
Imagine packaging Grain the way the customer wants it, rather than the "one size fits all" Canadian approach. Even when we did ship barley to the Aussies, we sent them our poorest quality stuff. I can't wait until August 1, 2007 when we can say to the World that Canada is now open for business.
We'll ship it to you however you like -- bags, containers, vessel, whatever. You tell us, you're the customer.

I realy like the idea of putting a Canadian Flag on the Bags. If you did not know the Bedouins are the Saudi Army's feet on the ground.

[padron]

Smart move on the part of the Aussies to tie up one of the largest buyers with cold hard cash for the next 5 years. If anyone thinks the timing of this and the pending dual market on August 1 for Canadian barley is a coincidence you are dreaming. Sounds like there is still room for more volume to this customer and there are other international buyers including the USA. The best is yet to come for barley growers.

[wilagro]

You guys are sucking slough water. By your postings, one would believe that the CWB did everything wrong and YOU guys are going to correct that situation after "Barley Freedom Day" arrives.

What a laugh...

[padron]

In respect to marketing grain, by all measures, the CWB did do everything wrong. Their returns were consistently at the bottom end of the trading range for barley year in and year out. They made very little attempt to market feed barley for export after losing the Saudi business and have alienated the domestic malting business through a regime of a "take it or leave it" mentality. If it weren't for the million or so tonnes of barley the CWB currently has sold to domestic maltsters - well below world values when everyone except them seemed to know the market had to move higher - there would be no support for retention of the CWB from them either. I can't think of one right move the CWB has made selling barley for western Canadian farmers. Not one.

[parsley]

Well said Padron

[malleefarmer]

According to chairman of ABB, stated on radio last thursday, its 2mill per year for five years and its a billion dollar deal. get your calculators out and divide tonnes into dollars.....sound so good now??
Also traders here in aust also sell grain into this market but openly admit they dont do tonnes cause bids by monopoly marketers alway undercut the price so they pass on the bussiness and the only suppliers willing to take lesser prices over a long term are monopoly marketers ie they just get rid of the grain at whatever price it takes to shift it.

If you guys are ever privy to barley tenders with about a dozen or so offers you will always see the ABB and CWB are the bottom 2 tender prices.

Anyway the year here in aust is going ok, getting a tad dry but good rain forecast this week

[just_wondering]

Mallee your comment on
only suppliers willing to take lesser prices over a long term are monopoly marketers ie they just get rid of the grain at whatever price it takes to shift it.
Is the best reason monopoly buyers don't work.
No cost of replacrement

[charliep]

Of interest, rumors indicate that about 1 mln tonnes of Canadian feed barley have been sold the Saudi for fall shipment. Fits Saudi Arabia's need for crop ahead of Aussie harvest and offsets the Ukraine's decision not to issue export licences. Would this business have been done in single desk - maybe but the CWB/trade would have had to be innovative using fixed price contracts/early payment options. Amazing to me to think about hauling barley across a set of mountains and ship on the ocean half way around the world but that is the case. Would be an interesting excercise to compare the energy used to produce and ship Canadian barley to the energy the camel it is fed to gets. More interesting is the number of malt plants and feedlots it will pass on the way.

Would also highlight the last two annual reports. With an A and B feed barley pool, it is easier to evaluate sales timing. CWB sales (or really farmers decision to contract) picked off the lows both years. Would confirm malleefarmer observation that feed barley deliveries have reflected farmers need to empty bins versus maximize revenue.

[padron]

Good observations and inputs Charlie.

The pooling system is all about "emptying bins" and nothing about "marketing". Right now there are no signals for farmers to capture incremental earnings through forward contracts - priced/basis/futures only/etc. The sheer luxury of having multiple buyers bidding for your production using a variety of contracting options with bids at world values doesn't exist today. Maybe the CWB would have captured this Saudi business but it would have been at discount values (I agree with Mallee's posts) and offer little to the farmer beyond movement. In an open market environment barley producers will be able to capitalize on the full value of contracting options and risk mitigation techniques individually rather than via the blunders of this bureaucratic "good idea gone terribly wrong" called the CWB.

I know, the CWB have introduced new contracting options - mostly due to the pressure of response to the threat of losing their monopoly. But history has shown us these "contracts" suck. Prices too low - volumes too small - options too limited. Their options are a far cry from the creativity and flexibility of contract options for oilseeds and special crops.

I'll be celebrating Barley Freedom Day with some like minded grain producers. A day I've been dreaming of for over 30 years. It's not the whole dream - we still have to free wheat - but it reminds of that old question - What do you call 400 lawyers at the bottom of the ocean? - A great start!

[TOM4CWB]

Padron,

It is sad to see the CWB go backwards in some cases on flexibility on PPO contracts.

There should be no reason growers can't forward contract 06 grain for 07 delivery... like we can with the pool system. For a number of years this was accepted.

The liquidation of these FPC are not fair business practice, and the CWB should be dragged before a securities commission for breach of trust.

Keeping futures profits, while at other times paying them out... like during a CWB election period... shows just how these folks have lost touch with the real world of respect and trust for farmer customers.

The CWB fails to honour their own contracts that say the producer is responsible to "compensate the CWB for its actual losses incurred"... when in fact the CWB instead structured the charges to extract maximum liquidation possible.

Somehow this does not reconcile with maximising the returns to the producer that seeks to do business with the CWB in good faith.

Little wonder... as long as the single minded mangers rule and hurt grain growers as much as possible whenever they can get away with it. This is not Integrety.

Restructuring the Titanic is difficult when single minded managers can't even decide what to do with the deck chairs!