It's all about listening and responding

[gustgd]

Another NFU talking point is that they want to see more farmer control on the Board. They are floating Goodale`s plan to limit govt control by having the BOD appoint their own experts to sit at the table.

Point is that they forget what has happened in the past and how many good qualified directors have quit over all the BS politics and the lefty insatiable desire to meddle in day to day affairs.

What would stop them from appointing Stewart Wells as their Agricultural policy advisers

He obviously has the credentials they are looking for.
Tongue planted firmly in cheek

As long as tax payers are on the hook for this shit show the Govt will have say to protect the purse.
Let us free and you can appoint any one you want.
OR better yet
Show me how you plan to earn my business, by making me more money and reducing not adding to my marketing stress.
Let me vote on how much business I may add to your business and then it may work.

All most done ranting, but as long as the monopoly is as dysfunctional as it is you will NOT attract the directors WE need most.

I`m out.

[jdepape]

Dmlfarmer:

OK - here goes. Sorry for the length.

Re China malt – re-read my comment. The import tariff on malt doesn’t play into this at all. China expanded their malt capacity just to export it. Malt houses were built on the coast to facilitate the acceptance of foreign barley and the EXPORT of malt to other countries in South East Asia. My point was that we (Canada) should be exporting more malt to that region.

Your point on the shifts in demand growth is correct but, to put my comments in context, you have to go back to 2006-07, the year I was talking about – the year when the CWB met with Ritz and the malt companies said they wouldn’t invest in Canada. Back then, it was estimated that the world was short about 500,000 tonnes of malt capacity. These multinational companies were deciding at the time where in the world the new capacity would be built. Canada was a perfect location but in their approach to location selection, these companies chose an ABC approach – Anywhere But Canada. Because of the single desk – which is what they told the CWB at the time.

I didn’t ignore the fact that capacity has been added elsewhere. Much of it was added after 2007.

Sorry to trouble you with my use of the term “democratically” – I didn’t mean anything by it other than to describe an approach to an issue where everyone has equal input. Trust me - it’s applicable here.

I guess where I’d agree with you is democracy would be applied if their stated wishes were implemented. As it is, the CWB has left the majority of farmers impotent on that particular question.

I understand your comment about how farmers used the election of directors as a proxy for a vote on the “single desk” issue, but I don’t agree with that conclusion. In the last directors election I was a scrutineer – monitoring the handling of the ballots by MNP. Time and time again I saw ballots that selected a strong “single desk” candidate as the #1 choice and a strong “dual market” candidate as the #2 choice (or the other way around). If that election was a vote on the single desk issue, it didn’t show up on the ballots.

To your questions: Why does the CWB not work? What changes would have to be made to or in the CWB so Canadian farmers would benefit from collectively negotiating?

This is a big one. I’ll give you a little teaser here and write it up later as a full commentary later.
- The CWB does not have a monopoly, yet it acts like it does. (Yes, if a buyer wants Canadian wheat, it must go to the CWB, but that doesn’t give them a monopoly. But nobody NEEDS Canadian wheat, so the CWB competes. Usually on price.)
- The CWB does not have market clout, yet it acts like it does. (4% of global production and 14% of world trade does not fit with the definition of “market clout”.)
- On barley, the CWB is a bit player, handling only 20% of the crop – if that.
- On durum – quite frankly I’m dismayed.

To your question: how do you see the dual market working?

Another biggy. I won’t comment on AWB directly but think of this. So often we automatically assume that the entity (this time it’s AWB, another time it’s Ontario Wheat Producers Marketing Board) couldn’t survive because it didn’t have its market power anymore.

I look at it the other way. If the AWB shrank, maybe it shrank to a size equal to the size of the “market” for the service it was offering. There’s nothing saying that it has to be everything to everyone.

In western Canada we’ve seen about 40% of farmers (or less) favour the single desk. For arguments sake, let’s assume these 40% represent 15% of the barley production and we go to a dual market, and this 40% continue to work with the CWB. It wouldn’t be surprising at all if the CWB handled 15% of the barley. In fact, it wouldn’t be a sign of failure, rather an indication of the demand for its services.

Actually, I think the market share of the CWB in a dual market would be even smaller. Take a look at my blog:
<a href=http://cwbmonitor.blogspot.com/2010/10/why-barley.html>Why Barley?</a>

(Hope that worked...)

As for a plan, again, I’ll leave that for another time. (And yes, I do have ideas of how it will work. But I’ve written far too much already here.)

On your question “How do I know an open market supporter also won't override farmer's interest simply because of ideology?”

I guess you don’t. But I just think that the evidence is so overwhelming that the single desk is not creating wealth, why would getting rid of it be overriding a farmer’s interest?

[parsley]

cityguy,
I am saying that the CWB, through legislation, once marketed every kernel of wheat and barley in Canada.

Monopoly

The monopoly was reduced by legislation. A 'designated area' was instead formed.

At that point in time, a Canadian monopoluy died.

Did the CWB fail? NO!

That's my point.

Easterns began marketing.

Surely you cannot argue that more than one marketer was born out of a Monopoly.If you do, go to bed and sleep on it.

The CWB are worse than bloody bedbugs ....impossible to get rid of, in your face, and your farm.

They will survive with fifty farmers. All staff won't. Pars

[jdepape]

To me an open market is where all participants are, for all intents and purposes, offering the same value proposition.

A dual market, on the other hand, is an open market where one participant offers a different value proposition than all the rest. With the CWB, the different value proposition would be up to the CWB, but I assume it would include pooling and/or some form of coop approach.

By definition, the single desk cannot exist in a dual market.

And that's ok.

[parsley]

From CGC:

Exports of barley malt were 656 thousand tonnes (724 thousand in 2007-2008). Country of destination not available due to confidentiality."

Conversion rates to grain equivalents, bushels to metric tonne: Barley malt – 1.339

[parsley]

depappy.

China has a single desk.

Does Canada?

[dmlfarmer]

jdepape: thanks for the response. But do you have any emperial data that supports your statement of China exports of malt and that the higher tariff on malt than barley has no effect? USDA world trade figurues do not support this claim as China malt and barley exports have dropped last 2 years and have trended down since 2000. Furthermore, domestic consumption of barley and malt in China have increased steadily since 2000 as would be expected with the estimated 5% annual increase in beer consumption.

Other than that I will wait with high expectations for your expanded responses to my questions. Given your teasers to my questions, I have high hopes.

I will just make a couple more comments. First, in a democracy, what the "majority" wants and what they get rarely matches. It is quite amazing as a country we currently have a government and leader in power who had the support at the polls of only 37.65% of the 59.1% of the electorate who voted. The same arguments you use against the single desk I hear everyday from people upset with Harper and the Conservatives and which I think I would still hear even if they had a majority as I doubt we will ever see more than 50% of Canadians agreeing on a government. But despite its flaws, democracy is much better than all the allternatives. We each have the opportunity to freely discuss and attempt to change what we don't like. The only threat to democracy is that people will not accept the decision of the people made legally at the ballot box.

Second, bj, I also disagree with voter eligibility rules and gust, I too question the decisions being made, and to everyone else I agree the board costs to much. But if farmers vote to end the monopoly, I have no problem with that. I do have a problem when 3rd parties, such as the foreign owned maltsters tell us we have to get rid of the monopoly or they wont build here. (Sort of like the pro sports team telling a city either you build us a new facility or we will leave.) These are business, and if there is a potential profit to be made, they will build; especially if as jdepape says the CWB is not getting a premium, and actually competing on price. Therefore why are these industries not lining up to build instead of fleeing. Or are there other locations where they can make even bigger profits where they have and are building? Or do they just want to be kissed too when screwing the farmer more.

But the most important point jdepape makes in his response was: "But nobody NEEDS Canadian wheat..." and I couldn't agree more. In truth, Cargill, LD, or even Viterra could care less if they get my grain, or any individual Canadians grain. Individually farmers have zero market power. While jdepape may be right and the CWB does not have pricing power, they do have market power with 14 percent of world trade. I am still trying to figure out if we can afford to lose this limited market power should the CWB go the way of the OWB and the AWB.

[derek75]

this is the way i see it, under the cwb there are 4 markets for our barley. 3 of them under the wheat boards control domestic malt, export malt and export feed. the domestic feed market is outside the wheat boards control but not its influence.

the domestic feed market is captive for feed grain producers but not to feed grain users who have the freedom to import feed grains.

so who benefits? certainly not the producers.

[jdepape]

dmlfarmer:

My source on the Chinese malt exports is a senior exec in the malting industry. His source is the General Administration of Customs of the People's Republic of China.

The import tariff on malt is of no consequence here because importing malt is not an option for these companies - they import barley and produce malt - not for domestic use, but for export to other countries in south east Asia.

I'm not here to defend the "foreign owned maltsters" but you are echoing an argument I hear a lot - that price is the most important factor in the decision to build (or expand). Sure, maltsters want to buy at a good price, but what many farmers don't consider is that maltsters are extremely quality conscious and the ability to service clients is extremely important to them. The problems they have with the single desk is not price - at least not the price they need to pay. They want the price they are paying to be transmitted to farmers so farmers know the value they are willing to provide. And they want a system where they can actually depend on delivery of barley.
Put it this way - quality and logistics are so important, they will pay more to get it. Or they will go where they can get it. The single desk gets in their way - not on price - on dependable supply.

You misinterpreted my comment "nobody NEEDS Canadian wheat". I meant offshore end-users, not Canadian grain handlers.

I'd love to know how you see the CWB's "market power" translated to you in terms of a per-acre return. Show me your empirical evidence.

Also, how does the CWB exert this "market power" on its customers?

BTW - Canada's market share is 14% - but that includes exports from Eastern Canada, so the CWB doesn't control that much. A small point, but worth noting.

[FarmRanger]

<i>It is quite amazing as a country we currently have a government and leader in power who had the support at the polls of only 37.65% of the 59.1% of the electorate who voted.</i>
Chretien had a 172 to 129 <b>majority</b> with 40.2% of the popular vote. That’s the way it is.
Fortunately we have a constitution protecting citizens from the tyranny of the majority.
<b>Unfortunately</b> the constitution doesn’t include the protection against confiscation of property from select geographical areas within Canada. Having someone else being able to vote away my property rights is a far greater injustice than minority governments ruling with 37% of the popular vote.

<i>when 3rd parties, such as the foreign owned maltsters tell us we have to get rid of the monopoly or they wont build here.</i>
We don’t have the CWB <s>ruining</s> controlling canola and there are new crushing facilities being built in Canada; to the benefit of farmers, I might add.

Thanks to jdepape for taking the time to drop in on Agriville!

[craig]

DML
two comments
You don't want third parties to dictate the future of
the CWB but the current voter eligibility rules
mandate that third parties have the right to vote in
CWB elections. In can be argued that CWB elections
are not necessarily reflective of the views of
farmers.
Second comment
You claim that while the Board does not have
pricing power it does have market power. If market
power is not pricing power then just what is it?

[charliep]

Interesting these discussions are always about single survival and never include actural price references or individual farmer benefit/risk management ability . They also never address issues that are raised in other threads. Example issues around feed wheat and pricing. Issues around attracting durum deliveries to meet sales. Issues around transfering money from feed barley exports to the contingency. A political discussion rather than a business one.

[parsley]

Actually, charliep, farmers can cut and paste the technical information from the threads you provide information to, and take it to their meetings.

To the CWB.

This thread is the political thread, I agree,(saying get off your lazy asses certainly is, LOL) but actually 5 guys making an appointment with the CWB and making a presentation IS a political act. Not just reading, but doing.

Change is born by all actions, isn't it. All important. Information plus political. And when working parallel, effective.

It's when you'll see paid rats aggressively pop up their heads.
Pars

[Fransisco]

Let me weigh in on the "dual market".

I guess it all comes down to your definitions. For the boardies it seems to mean the single desk which in reality is just a monopoly buyer of western canadian wheat and barley.

To me what a dual market is all about is this.

The CWB is government. It is the government that buys your wheat and barley from you. Yes, the boardies claim that they sell it on your behalf, that they don't actually buy it(even though ownership belongs to the CWB). None the less, however you spin it, it's still government.

You get rid of the CWB and all you have is the private trade.

A dual market is one in which the government (CWB) competes with the private trade for your grain. Not unlike FCC which competes with private banks and credit unions for your mortgage.

The purists(extremists?) on either side of the public vs private debate argue that it has to be either one or the other. It doesn't. As is the case with my FCC example, you can actually have both.

A dual market, or a voluntary CWB is the compromise position between the two extremes.

As DePape and many others have pointed out the single desk offers no advantage to prairie farmers. In fact the opposite is true, it consistently puts us at a disadvantage to other farmers in the world. The reason why is obvious, it doesn't have to compete with anyone for your grain. A dual market would solve this problem by finally giving the CWB the proper incentive to actually do its job.

[stubblejumper]

Rolf Penner for CWB Director in District 10 gGive your neighbours a CHOICE!h
gBecause itfs YOUR grain!h
Skip to contentHomeWhy vote for Rolf?AboutContactDonate & Volunteer © Manitoba Hog Production 1960-2006The Contingency Fund ¨DePape endorses Penner
Posted on November 6, 2008
by rpenner| Leave a comment
Over the years I have spent a lot of time assessing the CWB marketing performance and I have come up with more questions than answers. The CWB is a puzzle; it states it gets the best prices for farmers but time and time again, actual evidence says otherwise. It states it uses market power to extract not only the best price, but premiums. Again, evidence tells a different story.
Rolf Penner gets it. He understands that the CWB could be a powerful ally to Western Canadian farmers and it should be available to those that want it. But those that donft want to use it, should be equally free to use whatever marketing mechanism they choose. Rolf believes that farmers know better than anyone whatfs best for their individual farms.

Seeing how Rolf approaches most things in his life and business I am certain that he would work tirelessly on improving the CWB by insisting on the CWB becoming voluntary and ensuring the CWBfs own marketing tools and techniques are competitive.

Rolf Penner would be a definite asset as a member of the board of directors of the CWB.

John DePape

Author of the Sparks Barley Report