Fixed price contracts with the CWB

[Fransisco]

It always amazes me how someone, like chaffmeister this time, can say one thing and others like cotton and burbert can completely reinterpret the meaning of what was said into something completely different.

Maybe chaff needs to type more slowly so you guys will get it.

Prices in fall are lower because farmers are selling more. It's not a "corporate conspiracy" its fundamental supply and demand factors at work.

Either pre price at a more favourable price or store it till the harvest glut is over. Those are your two options if the harvest spot price is not to your liking.

One could ask the same ignorant, " do you really farm" question to anyone who doesn't understand this.

[charliep]

Will note the thread started with a management
decision about what you do with a pre-priced
contract and a crop disaster (grade or yield). The
suggestion was that if the contract is higher than
the current market, to find a neighbor or someone
else to fill. Can work with an FPC (contact your
CWB farm business representative if you don't
know anyone) or a canola contract.

Does this suggestion have merit?

[johnsmith]

Yes, don't let them go easily.

[Hopperbin]

The worst part will be when the CWB buys the grain back at a lower price and does not compensate the farmer. Then money goes into the new Pool account then later the CWB will brag about how high the pool price is when it is the poor farmers that gave up their high price contracts that supported the pool. Some farmers that are down get stepped on and go broke while others on top are better off. That is our CWB system.

[chaffmeister]

Cottonpicken:

I’m not surprised when Burbert shows his stupidity about how the grain business works. That’s basically all he does on Agriville. But for you to defend him, well, I’m astounded. You are among the people on this site that I expected to “get” what I was telling Burbert. (That was a compliment, by the way.)

My understanding of your quaint little saying is that you’re asking if I have a somewhat related education (or experience) and I think I know what I’m talking about - but really don’t.

I’d see your point if I was telling you and others here how to operate or manage a farm. But I’m not, nor would I ever be so presumptuous. I make a point of only posting here on things that I know. So when I tell Burbert that he doesn’t understand what he’s talking about, it’s because I know he really doesn’t (or at least he chooses to come across like he really doesn’t).

Why do you ask if I farm? If I farm will I have immediate “cred”? Or will your next question be “how big”? And if I tell you I don’t farm, then what? I’m not worthy? Do you really think that I should be a farmer before I can understand the grain business and therefore comment on it? Should you be a grain trader before you understand and comment on farming? Now how stupid is that!?

You often comment about global financial markets. Do you have the "cow" on that? Or even the hat?

Do you really believe that anyone you’re dealing with is a crook if they want to make a profit from the deal? If I make money dealing with you, does that make me a crook? And if you make money dealing with me, then I should think you’re a crook? Sorry ---- I just can’t go there.

I didn’t say grain cos and railroads are your friends, but they are certainly worthy partners. Do they want to succeed and prosper? Absolutely. Does this mean that they don’t care whether you succeed and prosper? Absolutely not.

Anyone with the narrow view of “either you’re workin’ with me or you’re workin’ agin’ me” is, well, narrow minded and has fallen prey to the same demons resident at the CWB. To be unable to see that prosperity comes from working with others where everyone gains, is commercial blindness.

TOM4CWB gets it. He writes about it here on Agriville all the time. Perhaps the way he writes makes it sound too “Pollyanna” to some, but there is no doubt it’s an extremely sound business maxim, regardless of the industry or sector. Simply put, you do business with those you know and trust. If you don’t trust anyone, well, then you really are on your own.


When asked about the secrets to his success, a very successful man I know said:

“The key has been to make sure my suppliers are more successful supplying me than they are supplying anyone else, my customers are more successful buying from me than they are buying from anyone else, and my employees are more successful working for me than they would be working for anyone else.”

It’s called an “abundance mentality”. CWB supporters just doesn’t get it.

Do you, Cottonpicken?

[agstar77]

Railways and Grain companies are entities. They do not care whether an individual farmer goes bankrupt because of them . This is not an inditement just a fact. They care about their bottom line. Individuals in these companies worry about their families and their jobs. They only want to be your partners if there is profit in it for them. So always count your fingers when you shake hands in a deal. This does not mean they are dishonest or cruel, just don't expect them to have your best interests at heart chaff.

[charliep]

Will note the discussion started about fpc and a crop disaster.

When a farmer signs a fixed price contract with the CWB, whose interests should single desk look after?

Won't put words in your mouth but I suspect the commitment is to single desk/pool integrity. If this is the case, what is the difference between the CWB and a grain company?

[Fransisco]

Funny how agstars comment that, "They do not care whether an individual farmer goes bankrupt because of them". fits so well with charlie's question as to whose interests the CWB is looking after.

With the private companies I have the option to take my business elsewhere if I am not happy with the terms. That is not the case with the CWB. It's not about who wants to be my 'friend', it's about who is going to keep their word to me and therefore like chaff said who I can trust.

And I have a lot more trust in people and business's who allow me to walk away and explore other options when I am not happy with the terms presented to me than I do in the ones who will put me in jail for doing so.

Trust is something that is -earned- through free exchange, it is not something that is -taken-.

[FarmRanger]

I’ve never heard of a farmer going to jail for trying to bypass the railroad when marketing his grain.

I think I’m missing more than a few “fingers” from the agency that bought my ‘07 durum crop though.

[charliep]

Perhaps I should be careful in commenting about
looking after farmers interests in terms of the fpc
given the CWB lost (or perhaps redistributed) $40
from the contingency fund in 2006/07. From
indications, the producer pricing options have lost
even more in 2007/08. Hopefully these dollars
were redistributed to farmers and not spent on an
ill conceived expense risk management program.

More interesting will be 2008/09 and how (if at
all) the CWB puts back money back into the PPO
contingency fund. I note the daily price contract
was is no more. I also note (perhaps others see
things differently) that fpc (and by proxy the
flexpro) are about $20/tonne wider than a year
ago.

[charliep]

that should be $40 million.

[chaffmeister]

Agstar:

The type of company that you want to deal with is the one that is responsibly managing its own bottom line. The smart ones know that to protect their business over the long haul, they have to play fair. And that pays dividends down the road.

Read the following taken from the Aug 28th Manitoba Cooperator:

<b>In early 2007, when Terra Grain contracted with area farmers for wheat deliveries for both 2007 and 2008, $4 a bushel was enough to attract two-year contracts.

Wheat prices since rose sharply. A lot of companies would have rubbed their hands in glee, pleased with securing feedstock so cheaply.

Terra Grain went back to its farmer-suppliers and offered a $1-per-bushel top-up for the second year as long as producers would sign up for a third year. The 2008 price became $5 a bushel and the price for next year has been set at $5.50 a bushel plus up to 25 cents a bushel more depending upon what happens with input costs.

The company didn’t take the short-term gain of securing wheat at a low price. It realized that the business is long term and farmer-suppliers are vital. </b>

To say that Terra Grain management cares more about farmers’ bottom lines than its own would be wrong. But they clearly want to foster good working relationships with their suppliers and paying more for their supplies yet to come would certainly work. Often, when taking care of your own enterprise, those you work with - suppliers or customers – also see the benefits.

Think about it. Do you have a supplier that you prefer over others because of the something he did - and the sense of being treated fairly?

Don’t think for a minute that these relationships have always gotta be antagonistic and non-trusting.

[johnsmith]

Remember guys that CWB has NO DUTY OF CARE to its captive audience. I as a farmer take that as they do not have to take our board grains if they do not find a market. So who's care does the farmer run CWB care for? hmm
Would somebody like to explain?

[charliep]

Chaffmeister

I think you have indicated over time (and I agree) that the CWB is a good customer of grain companies that provides a solid contribution to their bottom line. CWB grain handle has guaranteed elevation (might also say profitable), paid storage (with a caveat the problem is lack of control over inventory and movement) and almost no cost risk management. On the latter point (and trying to tie to the topic in the title of the thread), risk management for any company these days is expensive given the volatility and I am not so sure that I wouldn't be glad to hand this responsibility to the CWB in exchange for quaranteed margins (read profit). The problem grain companies have is the overall control the CWB has over logistics and from there, the companies ability to operate efficiently/lower costs.

[parsley]

johnsmith,

The Board has a LEGISLATED duty to buy wheat and barley that is offerred to them.


However, they can legislatively sell it for what THEY deem is "reasonable".


Two bits a bushel could be deemed reasonable.


Yup

And legally, there's not a bloody thing you can do about it.

Parsley