Announcement CWB Antidumping Tariffs

[ianben]

Just a note that UK steel is laying off workers and closing plant due to over production and US tariffs.

No farmers seem to want to reduce output given the obvious market signal of a tariff.

The US wants to use home grown wheat even if it is inferior to Canadian and is willing to use tariffs to achieve this.

You assume you will still sell into US but only if us does not continually raise tariff. Steel is 30% I believe. Wheat was 3% now 10% Tomorrow if wheat continues to cross border ?????

What will 10/13% extra volume do to your other markets?
Will CWB be forced to dump even more further reducing your price and mine?

There is no way CWB or free market can market unlimited quantities of grain

[jgstuart]

Charlie....Lets see if I've got this right. If the Canadian government were to suddenly start paying Canadian farmers $4/bu to raise barley,(I know...I'm dreaming) and we turned around and sold if for $2/bu into the U.S.....There is nothing they could do about it because barley doesn't make up a large enough portion of the U.S. feed complex which is dominated by corn?

[charliep]

jgstuart

The answer to your question (as illustrated by wheat today) is yes - the US government would nail us with countervail.

On the antidumping side, lets say no gov't support (no $4/bu). Cost of production is $3/bu (on the average). Western Canada sells for $2/bu market price. Under their process, they could charge with $1/bu antidumping (selling below cost of production).

You will have no disagreement from me as to the fairness of this.

[jgstuart]

Charlie...Hmmmm. Seems to me that this "cost of production" component is downright ridiculous as it pertains to grain production. As we all know cost of production can vary widely not only from farm to farm, but from year to year. Obviously there are going to be times when you are selling below the "cost of production". I somehow doubt that U.S. corn which is flooding into the prairies would stand up to their own "cost of production" criteria.

[TOM4CWB]

Wedino;

>>Remember Soft red winter, Hard Winters, and Soft white wheats have no duty applied to any of these exports to the US from Canada. <<

Are the above wheats grown mostly in Eastern Canada?


THE answer is yes... and the North Dakota Wheat Commission has made it clear it is the CWB that they are upset with for dumping... in third markets especially.

[ianben]

Does "fair" fly out the window when you are only world super power?

Tom your calculations assume you will pay tariff and supply wheat.

Tariffs and trade restictions health rules/etc are about suppling home market with home produced goods. US want to keep your wheat out just like you want to keep their corn out of Alberta.

BSE was used by French to stop export of UK beef. You try to use fusarium to keep grain out of Alberta.

So lets assume tariff works. CWB now has 10% more grain to sell to the rest of its customers, who of course know this, and you are trying to tell me you will only be 1% worse off!!

The CWB must be the best marketer in the world.

I see pain for us all as CWB is force to sell/market/dump this grain.

[brian99]

We're missing a whole lot here guys. If the US wants to go after the CWB, what about their sugar policy? What about the peanut quota system? I'll say it again, this isn't about marketing philosophy. It's about internal american politics and turf protection. The president of the American Millers Association was quoted as saying the tarriffs were "silly". Oh, by the way, do american buyers of canadian wheat have to post a bond (this is an interim tarriff), and pay later if it stays?
The other thing that came out yerterday was that dumping numbers were calculated without crop insurance proceeds, ie., a canadian farmer with 8bu/acre yield due to drought has a huge expense per bushel, and no insurance income to reduce those expenses. I guess we were all dumping! Should we expect a countervail every time there's a drought?

[TOM4CWB]

Ianben;

The experience on CDN softwood lumber into the US with a 30% duty has been that big efficient lumber mills have simply increased sales to the US, increased enough to offset the 30% duty... and this has wiped out many smaller US producers... the exact opposite of what the smaller US lumber companies expected...

This has all been a big distraction... and the CWB is making a big deal about losing 1% of our gross revenue... because the CWB lost 15-20% of our gross revenue by failing to risk manage our sales this year...

THe US duty will only cost us about $2.50/t this year... while bad marketing by the CWB will cost us a minimum of $40/t... and could be as high as $60/t.

THe Transportation "efficiencies" and tendering profits the CWB claims to have gained for us are miniscule compared with the sales timing blunders the CWB marketing system creates.

Farmers need to be responsible to make the timing descisions on CWB sales... NOT CWB staff or directors that have no interest in the profitability of my farm. We need to be responsible for our own decisions on marketing!

We CDN farmers need to keep the US supply chain working and supplied with high quality CDN grain... that is needed by US processors... at a fair transparent price... a price that does not undercut EU, FSU, US sales... in third party markets... a fair price that is transparent to everyone.

[brian99]

Tom;
That defies the most basic laws of economics, higher price does not mean higher demand. I'd like to know why sales are higher.
What the CWB does for the purposes of this discussion has no relevance. The US can't put on tarriffs and have their own quota systems in place. They can't call us dumping and have huge subsidies of their own. Oh, Charlie, corn usage in S.Alta is commonplace now. Basically all feedlots can use corn and are using it whenever price dictates.

[rain]

Tom I agree with you the CWB has to go. And at the least Canadian producers should have a choice.

But Tom the CWB is not reason for every bad thing that happens to producers in Western Canada. While you have been singing against the CWB. I have been singing a tune that may be much more dire. That is the Potectionist atitude of the US over the last few years.

Tom turn your CWB button off. There is something else going on right now which is bigger then the board.

I hope you are right and the yanks just want to get rid of the CWB. If that is truely what the problem is it is minor.

The US is in bad shape right now economically. There is nothing to say that they will not go through the same thing that Japan is still going through.

[charliep]

Brian99

I realize the volume of corn that is coming in. To the end of February, western Canada has brought in over 1.5 MMT of US corn. That is up about 50 % from the same period 2001/02 and over 5 times previous imports (with the majority of this going to Manitoba).

[TOM4CWB]

Brian99;

Double shifting efficient lumber mills, and shutting down all but the most efficient mills in Canada has increased our lumber efficiencies greatly.

The effect, because there is now no incentive to ship less softwood lumber (no duty free sales any more to the US at all, no threshold to work towards and not go past) is that CDN shipments to the US have increased dramatically. there is now no reason to reduce shipments. Capital costs can be covered by increasing volume, if the margin of profit is low, this is a common well known economic principal.

Now on wheat, the same principal applies... especially with the transport cost advantage western Canada has to PNW/California/Midwest US markets... over off shore export markets which Canada normally serves.

THE market demand for Canadian wheat in the US has not decreased at all because of the US Duty... as market demand did not decrease for CDN Softwood lumber in the US when US duties of 30% were put on Canadian softwood lumber.

Plus the CWB pooling system makes the US duties totally invisible... less than a 1% decrease in value of the CWB CWRS pool is totally insignificant.. especially when there are sales timing issues that the CWB can improve on and increase returns to us to counteract the US DUTIES that have been applied.

Further the CWB has stopped all producer direct sales to the US... they have put their own CWB tax on Producer Direct sales... I cannot afford to do the buy-back.... because the CWB is extracting $30/t from me, plus I must pay the US duty on top.

THis is certainly a terrible way to increase markets and develope long term marketing strategies...

THe multinational CWB Miller/Agents are laughing all the way to the bank! "Designated Area" Farmers cannot now develope and maintain a marketing relationship with anyone except the CWB.

Organic producers should be going through the roof... they have been denied the initial price floor price the CDN gov. gives... and the buy-back process has been totally skuttled... unless the CWB is just quoting "special" buy-backs just for me.

[TOM4CWB]

Ianben;

I see the EU is pummeling the world wheat, oat and barley markets with export subsidies...

DTN reports 05/08 12:21;

"At its regular weekly meeting today, the European Union Grain Management raised its main wheat-export subsidy to 17 euros per ton, from 16 euros at the last meeting, says OsterDowJones.

With the euro jumping to four-year highs this week, it puts the subsidy around 53 1/4 cents per bushel, up from 48 cents at the last meeting two weeks ago and 44 cents a month ago.

In other action, the EU grain committee granted subsidies of 9.95 euros per ton on 99,000 tons of Scandinavian oats exports, says ODJ. Much of that oats ends up in the United States.

The committee also released about 3.39 million bushels of older German barley from government "intervention" storage to the export market, at roughly $2.17 per bushel."

THe CWB is silent on EU subsidies... even though they are more destructive to our CDN grain prices... they are export subsidies and lower the whole world grain price complex.

But it is the "sexy" thing for the CWB to do... beat up on the US and deny any wrongdoing... instead of fixing the problem.

Hiding our loyal CWB heads in our collective sandbox will not resolve anything!

[ianben]

Tom
I find it difficult to relate these export subsidies back to my price on farm
Intervention stocks seem to be sold on a whim.

Still lots of farmers giving up here in UK and a kind of limbo exists as we await new EU subsidy reforms.

Decoupling subsidy payments from production is the aim and we await the how and when. I dont think they realise I will be planting next years crop in 3 months. Could do with knowing where the goal posts will be!!!!

Could make a real difference to the way we farm if reality is anything like proposals but already signs of compromise and fudge.

£ has fallen against euro so that has moved ex-farm prices up recently but dont think we would pass US tariff test.
Most will be selling below our real cost of production.

[brian99]

All subsidies are destructive, pretending that export subsidies from the EU hurt us more than US subsidies is a joke. I lose very real marketing tools by not being able to hedge into the Chigago exchanges. US subsidies distort price moves and change breakevens. They change seeded acres. A farmer who gets a government cheque couldn't care less whether it was for export wheat or set aside acres or daisies on his front lawn.