CWB and friends need to come clean

[chaffmeister]

Agstar - Who are you talking to? Someone here looking for votes?

[agstar77]

Not you Chaff.

[andersoj]

How quickly we forget what happens when Canadians sell lumber and beef to the USA. Why do we think grain will be any better if we don't have collective clout?

Alberta report misuses data to reach false conclusions: CWB

August 8, 2008

Winnipeg – An Alberta government report has used false assumptions and selective data to undermine the value of the CWB, its president and CEO Ian White said today.

“This study is badly flawed,” White said. “The authors have made sweeping assumptions to create comparisons so simplistic that they are meaningless.”

The report, commissioned by the Alberta government and prepared by Informa Economics, was released last week. It calculates on page 34 that the CWB earned significant premiums (prices above market values) of up to $33 per tonne in 10 of 11 markets studied, but then uses a number of incorrect assumptions to discount them.

The report wrongly assumes that all wheat is the same and that overall market share is what determines the CWB’s ability to exercise market power, White said. It ignores the crucial fact that the wheat market is not homogeneous, but made up of many segments that purchase specific kinds of wheat. In certain segments, the CWB will hold a very large market share for a particular kind of wheat and thus earn substantial premiums.

Because of its flawed premise, the report selectively focuses on only 11 of the 60 to 70 actual wheat markets the CWB sells into each year – rejecting important, high-value markets like Canada, the U.S. and Europe. Based on false assumptions about what grades or qualities of wheat these markets were buying from Canada, the report then wrongly adjusts and discounts the higher prices achieved by the CWB in 10 of the markets.

“This adjustment does not reflect how grain marketing works in the real world,” White said. “Wheat is different, markets are different and our strategy as a single seller takes advantage of exactly that fact.”

The report also blatantly misuses grain handling and transportation data published by the respected Quorum Corporation, which produces the quarterly Grain Monitor report under contract to the federal government. Quorum emphasizes in its reports that efficiency comparisons cannot be made between wheat and canola based on its calculations of export basis and producer netback for each crop. Yet that is precisely what Informa has done.

Examples of other flaws include:

Lack of acknowledgement that the CWB’s dominant position in the durum market supports the overall price structure.
Comparisons to U.S. elevator prices, which are based on a different set of market factors than Canadian wheat returns. American wheat has an intrinsic price advantage due to factors such as the dramatically lower proportion exported from the U.S. (40 per cent compared to 80 per cent in Canada). This means less U.S. grain is sold into diverse markets outside North America where prices tend to be lower and transportation logistics more expensive.
Handling system costs are counted twice in the comparison between U.S. and Canadian returns for wheat and durum. Farmgate values that already account for system costs are used, then a canola-versus-wheat comparison is added that also accounts for those same costs.
Failure to account for the CWB’s ability to assure customers of long-term and consistent-quality supply, which is a valuable competitive market advantage, attributable to the single-desk structure.
Failure to acknowledge the dramatic differences in U.S. and Canadian rail capacity. The study also fails to account for the important role played by the CWB in keeping regulated rail freight rates in Western Canada lower than American rates.
Based on all of the above, the CWB completely refutes a key finding of the report that an open market would generate significantly more revenue for Prairie farmers than the single-desk system.

“It is ironic that this false conclusion is being circulated in a year when the CWB marketing approach has delivered extraordinary returns to farmers,” White said. “We’ve conservatively pegged that benefit at $560 million for 2007-08.”

White said the CWB will conduct further, more in-depth analysis of the report’s methodology and conclusions and intends to share those results when completed.

Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. One of Canada’s biggest exporters, the Winnipeg-based organization sells grain to over 70 countries and returns all sales revenue, less marketing costs, to farmers.

[parsley]

You miss the point.

Kids always squabble about the money thrown down on the ground for them to pick up. How much? Who got the most? Who's hiding coins? Who's sharing? Who got US coins?

The important issue is about choice. About being able to sell the grain farmers grow to whom they choose.

Don't forget it.

Parsley

[chaffmeister]

andersoj:

What part of the simple math that Fransisco posted don't you get?

Your "marketing clout" is getting you and your neighbours - the entire western economy - OVER ONE BILLION less than what average prices would have given you.

Selling grain to the US isn't the issue. Call it the "individual right to prosper".

If you want to go on giving grain away, go right ahead. But don't tell your neighbours that they have to as well just so you feel better about it.

[stubblejumper]

selling grain into the US is the only issue. I have not seen one post talking about marketing grain to any country but the US. most of the marketing being talked about is a phone call to a US elevator or a broker.

[Fransisco]

When comparing wheat board asking prices to the final pool returns those asking prices are not just to the US they are asking prices to the world.

The CWB sells to more than just the US.

BTW-stubblejumper are you happy with the boards performance here? Does below average pool prices year after year do it for you?

[chaffmeister]

stubblejumper

If you haven’t seen any posts about marketing grain to any country but the US, you haven’t read my posts – or the post Fransisco put up earlier in this thread. We talk about what’s going on in the US because it’s close and a fair comparison. Some of us have talked about how the CWB really doesn’t get premiums on barley into Japan too, but that’s a tougher one to really place at your farmgate.

But you missed something important.

When we talk about the CWB pools being a BILLION dollars below average pricing, do you think we’re only talking about sales to the US?

Think about this - it’s important.

<b>ONE BILLION DOLLARS.</b>

Year after year. (OK, I only did the math on three years but there was a definite pattern/consistency.)

How would the western Canadian economy be different if you guys made ONE BILLION DOLLARS more each year? (Arguably you would make even more than that without the CWB but that’s another discussion.)

How would your farm be different if you had been making $1.00 to $1.50 per bushel more? Every year?

How can you argue over whether we’re talking about the US or the rest of the world when there is this BILLION DOLLAR elephant sitting in the room screaming for you to notice him?

[TOM4CWB]

stubble...

The US Hard Red Dark Northern is exported as shown before... by far the majority in the past year... was sold to the International market... contrary to popular CWB fairy tales and myths that are simply not true.

We had a this discussion a couple of weeks back... in case you forgot.

http://www.uswheat.org/supplyDemand/doc/1F12C86023E8E550852574C5006C96FD?OpenDocument#

In 07-08 The US exported 8.3mmt out of 12.2mmt... of DNS HRS.

State your deceptions as many time as you like... they are still just as incorrect the 10th time as they were the 1st time!

Interesting that Agstar77 treats the simple truth... as "rhetoric on this site... being lowered to a new level"


Chairman Ritter had as many chances as the sun rising every morning... over the past 10 years... to put the CWB on the rails and prepare the corporation for reality.

In my opinion it was these lost opportunities that now mean the CWB can not be salvaged.

Dealing with an honest business... like many of the grain co's my farm has the privilege and opportunity to partner with... is 100X better than the deceit and corruption the CWB has initiated ...especially over the past few years.

I have no desire whatsoever to try to bail out a bunch of lefties that have brought the CWB past the point of no return.

WHO exactly is pleased or satisfied with CWB risk management or marketing performance?

The shell game is over... and we found out which shell the bean was hid under...


you guessed it...

it is clear...

there never was a bean!

[Fransisco]

Nice statistic and a good analogy there Tom, I hadn't seen that one before.

[stubblejumper]

My point is none of you so called marketers really wants to market grain. All you want is to be able to price grain into the highest world market and let the rest of western Canadian farmers have the rest.

[chaffmeister]

Why do you and other CWB supporters think that free marketers want freedom for themselves but not for anyone else? Where did that ever come from? I’ve even heard free marketers called “Farmers for Just Us”.

The irony in this is that single deskers want to subject everyone to their view of the world. I’ve even had these guys say to me “I don’t care if the CWB is getting premiums or not; I don’t care if the CWB makes you and me more money or not; it needs to stay so that we all get the same.”

Now that’s selfish!!!

Marketing freedom will benefit everyone, even those that fear it.

The single desk, through pooling, benefits some and hurts others. (Actually, it hurts everyone by selling below average, but you don't seem to want to see it.)

If you want a system where everyone benefits equally, pick one where everyone has the same opportunities – a free market.

Free marketers want a system in which they can respond to meaningful market signals – when they’re deciding what to grow; when they’re deciding what to store and what to move; and when they’re deciding what, when and how to price. (That’s marketing by the way – it’s not just phoning around for the best price as some have suggested.)

Free marketers want a system that is competitive and efficient. Competition drives down costs.

Free marketers want a system that is sustainable. Imagine what an extra $1.00 to $1.50 per bushel each year would have done for you and your family. (Re-read the post about the BILLIONS blown by selling below average.)

Free marketers want a system where nobody pays for someone else’s mistakes. The CWB makes mistakes; you pay for them.

Free marketers want a system that rewards hard work.

Free marketers want a system where everyone has the same opportunities to prosper.

If you don’t like the idea of a free market because you think the CWB single desk serves you better, just remember the $1.4 BILLION that the CWB missed for you last year; and the $1.1 BILLION the year before that. Then, if you actually end up with market freedom, and you feel lost without the CWB, simply arrange to sell 10% of your crop on the 15th of each month from Sept to June. You won’t have the worry and stress about “marketing” and you’ll actually do better than you did with the CWB.

Here's the main difference between single deskers and free marketers:

Single deskers don’t care that the system they're fighting to hang on to is hurting free marketers.

Free marketers would be very happy to see every single desker reap the rewards of a free market.


So, who really are the Farmers for Just Us?

[craig]

stubblejumper
You critize individuals for trying to do the same thing you exole the CWB for doing. Do you think those of us who try to sell for the best price we can get are thinking in the back of our mind that we are stealing money from our neighbors. Farming is a business and we make decisions based on trying to make that business successful. I do not want to make decisions of what is good or bad for my neighbors. They spend their dollars, they should have the right to decide what is best for them.

[charliep]

Apologize for interrupting but a question based on
observation.

A farmer who would want to sell durum today for
$11/bu durum is greedy and taking away a market
for every other farmer.

A farmer who deliver durum for $6 bu and has a
promise (not guarantee) of a further $3/bu is a
responsible member of society and should be held
in highest esteem.

A farmer who uses an FPC/EPO to manage risk
because of their risk management strategy/need
for cash flow or what their business reason
demands is ______________?

[charliep]

The fpc/epo for durum is $7/bu by the way.