http://cwb.ca/public/en/newsroom/speeches/pdf/garason_030107.pdf
Arason:
It has been suggested that, as of late January, an Ontario farmer selling hard red spring wheat with 13.5 per cent protein would receive $5.50 per bushel, whereas a grower on the Prairies selling No. 1 CWRS would receive about $4.40 per bushel as a final pool return—approximately $1.10 less. The implication is that this suggests poor performance by the CWB. That implication is incorrect because of several errors in the comparison.
To begin with, a spot price (the Ontario price) is being compared to a pool value (the CWB Pool Return Outlook). This is a misleading comparison. A pool value is by definition an average of prices achieved over an entire crop year. In a rising market such as we have experienced so far this crop year, a spot price is always higher than a pooled price. Is the CWB selling wheat at those “high” Ontario values and returning those dollars to farmers? Yes. In fact, CWB values are even higher.
The source of the spot price of $5.50 per bushel is not indicated but it is undoubtedly a price at or near an Ontario mill. An appropriate comparison would be, therefore, the current price of let’s say Saskatchewan wheat landed at an Ontario mill. On February 5, the CWB offered eastern mills No.1 CWRS with 13.5 per cent protein for $230.47 per tonne at Thunder Bay. Add to this freight charges of $25 from Thunder Bay to the mill, and the landed price equals $255.47 per tonne or $6.95 per bushel.
The comparison, then, is between $5.50 per bushel of hard red spring wheat to the Ontario farmer and $6.95 per bushel of hard red spring wheat to the Saskatchewan farmer. The truth, therefore, is the exact opposite of what has been contended: CWB prices are actually higher.
This $6.95 per bushel would be added to the pooled payments western farmers receive for wheat sold throughout the 2006-07 crop year. However, if the farmer decided to price his wheat through one of the CWB’s Producer Payment Options, he or she could have locked in prices right around the $240 per tonne mark – backed off to a Saskatchewan location, this would have translated into returns of approximately $5.20 per bushel. To make the comparison even more valid, the price available to the Ontario farmer would also have to be backed off for freight, cleaning and elevation charges. Therefore, the posted price of $5.50 per bushel might, in fact, translate into a farmgate price very similar to what spot prices available through the CWB are, and this, in spite of the huge freight disadvantage that Prairie farmers face, relative to their Ontario counterparts when servicing eastern markets.
Making inaccurate statements about sales values and our relationship with specific customers is damaging to our business and, as a consequence, damaging to western Canadian farmers. This is about business – it is not a political debate. And I believe very strongly – as the CWB’s entire board of directors believes very strongly – that any criticism of the CWB should be based on fact, not on vague innuendo circulated by Canada’s competitors. The marketing of Prairie wheat, durum and barley is a business – and a very competitive one – and at the CWB, we believe that farmers’ financial interests should come first.
It is my hope that, in the future, efforts will be made to verify information of this nature with the CWB prior to its use and dissemination. Whatever political controversy surrounds the CWB’s single desk mandate, it should not prevent the flow of accurate information between the CWB and the federal government.
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And the final payment wasn't even close to $4.40.
Today the difference is about $2,50 in Ontario and $3.00 in the U.S.
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Arason:
It has been suggested that, as of late January, an Ontario farmer selling hard red spring wheat with 13.5 per cent protein would receive $5.50 per bushel, whereas a grower on the Prairies selling No. 1 CWRS would receive about $4.40 per bushel as a final pool return—approximately $1.10 less. The implication is that this suggests poor performance by the CWB. That implication is incorrect because of several errors in the comparison.
To begin with, a spot price (the Ontario price) is being compared to a pool value (the CWB Pool Return Outlook). This is a misleading comparison. A pool value is by definition an average of prices achieved over an entire crop year. In a rising market such as we have experienced so far this crop year, a spot price is always higher than a pooled price. Is the CWB selling wheat at those “high” Ontario values and returning those dollars to farmers? Yes. In fact, CWB values are even higher.
The source of the spot price of $5.50 per bushel is not indicated but it is undoubtedly a price at or near an Ontario mill. An appropriate comparison would be, therefore, the current price of let’s say Saskatchewan wheat landed at an Ontario mill. On February 5, the CWB offered eastern mills No.1 CWRS with 13.5 per cent protein for $230.47 per tonne at Thunder Bay. Add to this freight charges of $25 from Thunder Bay to the mill, and the landed price equals $255.47 per tonne or $6.95 per bushel.
The comparison, then, is between $5.50 per bushel of hard red spring wheat to the Ontario farmer and $6.95 per bushel of hard red spring wheat to the Saskatchewan farmer. The truth, therefore, is the exact opposite of what has been contended: CWB prices are actually higher.
This $6.95 per bushel would be added to the pooled payments western farmers receive for wheat sold throughout the 2006-07 crop year. However, if the farmer decided to price his wheat through one of the CWB’s Producer Payment Options, he or she could have locked in prices right around the $240 per tonne mark – backed off to a Saskatchewan location, this would have translated into returns of approximately $5.20 per bushel. To make the comparison even more valid, the price available to the Ontario farmer would also have to be backed off for freight, cleaning and elevation charges. Therefore, the posted price of $5.50 per bushel might, in fact, translate into a farmgate price very similar to what spot prices available through the CWB are, and this, in spite of the huge freight disadvantage that Prairie farmers face, relative to their Ontario counterparts when servicing eastern markets.
Making inaccurate statements about sales values and our relationship with specific customers is damaging to our business and, as a consequence, damaging to western Canadian farmers. This is about business – it is not a political debate. And I believe very strongly – as the CWB’s entire board of directors believes very strongly – that any criticism of the CWB should be based on fact, not on vague innuendo circulated by Canada’s competitors. The marketing of Prairie wheat, durum and barley is a business – and a very competitive one – and at the CWB, we believe that farmers’ financial interests should come first.
It is my hope that, in the future, efforts will be made to verify information of this nature with the CWB prior to its use and dissemination. Whatever political controversy surrounds the CWB’s single desk mandate, it should not prevent the flow of accurate information between the CWB and the federal government.
____________________________________
And the final payment wasn't even close to $4.40.
Today the difference is about $2,50 in Ontario and $3.00 in the U.S.
__________________________________
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