What's so important about initial price increases

[craig]

As Stewart Wells whines about the feds foot dragging on initial price increases, I started to think that initials are really only symbolic. The modern marvels of EPO's mean farmers who need more money early can get it. If we had an open market producers would have the opportunity to get all their money up front when they sold. You can even get a cash advance if you need it.CWB grains have never been considered a source of early season cash flow. Pertraying farmers as hard done by because initials are low really only seems to be political posturing and not the reality of today.

[mcfarms]

Why not an 70% zero dollar EPO. Call your FBR and lean on them. And then your director.

[kamichel]

And I can foretell the future. In the near future the CWB will ask to have the contingency fund increased to 200,000 dollars. Do the feds really have to guarantee epos?

[mcfarms]

the feds don't guarantee epo's

[just_wondering]

If the feds did not guarantee the initial price, in the future would the pool farmers have to contribute to the contigency fund or would the people using the pricing options continue to get hosed to build a CWB war chest?

[TOM4CWB]

Craig,

The NFU is trying to divert attention from the real problem... CWB POOL PRICING.

The CWB can go away from pooling as we know it today... and leave it alone.

If the CWB offered fair PPO contracts... there would be no pressure at all to increase initials.

The NFU and CWB want the pools to be a leg up on PPO contracts... which is simply not fair. EQUALITY has been a selling point the CWB counted on to maintain support for the 'single desk'. Well Well... the 'new' CWB policy in all its glory is in view.... milk the folks who don't like pooling... where ever and when ever possible! DUmb and DUMBER!

[charliep]

An initial payment increase in early November (based on information from the September PRO analysis) has a good fit with the market place (we'll see how much higher this market goes but suspect will stuggle from here on in) and when the increase has been announced traditionally.

[charliep]

mcfarms

Nobody has picked up on your 70 % idea (CWB developing programs that increase the percentage of the PRO and manage the risk themselves).

Does the CWB manage risk across the crop year for farmers or does it simply price 5 to 10 % of the expected production? What would the cost of getting into this type of program be?

Would the CWB be prepared to close the pool early (say after the "A" series contracts) if they realize they have set initial payments too high? Are they prepared to think about things like shorter pooling periods? Managing risk over 6 to 9 months will be a lot cheaper than 18 months and provide better market signals.

[charliep]

that should be 5 to 10 % of production every month (assuming the CWB prices over an 18 month period).

[parsley]

GOVERNMENT APPROVES INCREASE TO WHEAT AND BARLEY INITIAL PAYMENTS


OTTAWA, Ontario, October 2, 2007 – The Honourable Gerry Ritz, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board, today issued the following statement regarding the Government’s approval of a Canadian Wheat Board (CWB) request to increase initial payments for wheat and barley.



“Farmers work hard to grow the grain they sell and they should get paid for that work as quickly as possible.



“Canada’s New Government is committed to getting high commodity prices into farmers’ pockets quickly and that’s why we worked hard to expedite the CWB’s request for an initial price increase.



“This government is committed to delivering action for farm families and is also committed to accountability. CWB initial prices put taxpayer dollars on the line and it’s important to go through the due diligence process.



“This process usually takes between eight and 12 weeks. Canada’s New Government did its due diligence and delivered the initial payment increase in less than seven weeks.



“Hard working Canadian farmers produce some of the highest quality food in the world and they deserve every opportunity to choose and benefit from the marketing options to make the most of the high prices they’re currently enjoying.”





For more information, media may contact:


Media Relations

Agriculture and Agri-Food Canada

Ottawa, Ontario

613-759-7972

1-866-345-7972



Todd MacKay

Minister Ritz’ Office

613-759-1059

[charliep]

CWB link.

http://www.cwb.ca/public/en/newsroom/releases/2007/100207.jsp