Was it bound to happen?

[dubsy]

supper? sounds like a tasty operation.

[furrowtickler]

ya ,I know nice spelling. I c u post alot??

[wd9]

Come on Larry, don't be so angry. It's the
glorification of these movers and shakers on large
scale that kinda sickens me. Listening to the
presentations on how great business people
these are by using all sorts of risk management
techniques to in the end transfer risk to others.

Maybe they went too far, but they were just using
the tools from the toolbox often talked about.

Dumb ass farmers who don't hedge and presell
and expand greatly every year are certainly
second or third class farmers and are behind the
times.

Risk has been transferred, Monsanto will get their
4 million from the rest of us. These guys won't
walk away penniless from their LLC's.

Maybe you never thought about it how some of us
react to those presentations and how small we
can feel.

[hobbyfrmr]

Wd9,

You have not provided any quote to prove that
LWeber encourages these farm business models.
I would like to read one.

[wd9]

Hobby, it's not about providing a specific quote. I
never said only Larry. I said all of them.

I've been to many presentations whereby farms
like Stamps are used as the model of how we
should all be. They get nominated as perfect
business models and are used repeatedly.

It's a culture that has gotten out of control
whereby only the very largest are worth
mentioning, are the model, get all the attention of
input suppliers and equipment dealers etc.

They don't make communities they destroy them.
Where several families could farm keeping
schools and businesses open and volunteer for
fairs there is nothing but a huge operation.

No quote required. It's a culture they have all
bought into.

[LWeber]

Read it slowly WD9 - one word at a time if you have to...then point me anywhere that I have advocated any one issue that you described above...

What is your cause WD9? Gutless driveby shooting?

________________________________________

Standing Committe: 2007


Good afternoon, Mr. Chair and committee members. Thank you for the opportunity to be here today.


On April 23 I am going to begin my 26th year in the grain industry. Over half of those years were spent in Winnipeg. I was fortunate to have the Honourable Otto Lang as a direct superior for four of those years, while I was at Pioneer Grain, and I worked with the Honourable Charlie Mayer during the last time barley was contemplated for the open market.


Today I own a commodities and communications business, with farmers and industry as clients. My daily newsletter is distributed to over 6,000 farmers, and I speak 40 to 50 times a year to ag-related audiences.

While parts of my Winnipeg years were spent shaping agriculture policy, today I get to witness the effects of policy in the agriculture industry. Adam Smith, in his book, The Wealth of Nations, first published in 1776, described free trade as the obvious and simple system of natural liberty in which individuals are free to pursue their own interests while governments provide the legal framework in which commerce takes place. I would challenge anyone to find an industry that is more regulated than agriculture.


I will utilize my time today on risk management. In the rush to regulate agriculture, managing the day-to-day risk involved in farming has been a forgotten entity. In previous APF discussions, business risk management was categorized as a suite of income stabilization production insurance, disaster assistance, and a cash advance program. The underlying theme has been the same for the past 20 years. Top-down management isn't the best route toward discovery and innovation. It's time that the bottom-up approach is considered.


We, in this room, fall into the trap that we know what is best for farmers.

We don't.

Farmers know what is best for their operation. Farms today have become so diverse that blanket policies and framework are ineffective. If you question that statement, I challenge you to look at the CAIS results.

We have created a system whereby farmers are risk takers, and when the actual risk is realized, either through forces of weather or through vagaries of supply and demand, government is looked upon to supplement the shortfall. One of the most common statements I hear from the farm is that governments created this mess we operate within and they can bail us out.

The current system has a farmer who is more important to the industry of accountants and chemical and seed providers than he is to supplying a continuous base for value adding.

There is a lessening cultural base on which to build the principles of a healthy society. I would suggest that it is time to ask the question: how did we ever get here?

Agriculture has lost its way.

We are here today because we have not fostered innovation.

We have allowed farmers to become risk takers, with government as the risk manager. A farmer who is shelling out $135 to $200 an acre on inputs and hoping everything works out is the recipe for disaster. The educational component to managing farm risk has been a forgotten entity.


Uncertainty on prices, yields, government policy, and foreign markets means that risk management must play an important role in many farm business decisions. However, for the majority of farmers it doesn't. There are a number of risk management tools available, including crop insurance, futures and options, and forward contracting sales and purchases. Today you can even buy weather insurance to mitigate weather anomalies on farmland. Farmers must become better risk managers rather than risk takers.


Let's start with crop insurance. How can you manage input cost risks when you cannot buy insurance to offset what you have spent? Name me one other industry where it is not possible. Your house is insured for the appraised value or replacement cost. You can buy business interruption insurance. However, you cannot insure the full cost of grain production.

Canada's new APF must take into account the rising cost of farm inputs and allow farmers to insure their costs--all of them, not 60% to 75%.

Price is one of the many risks that today's farmers face when developing an effective risk management strategy. Agriculture and Agri-Food Canada have developed Managing Market Risk, a self-study publication that examines the key fundamentals of price risk management tools. Futures, options, bases, hedging principles, exchange rate risk, and contracts are the main focus areas. It was a good first step.


The educational component to risk management for farmers has been a half-hearted attempt by government over the past 15 years. Allowing farmers to manage risk should be the cornerstone of a new APF.

I was once asked by a government employee how much money I thought farmers left on the table because of poor marketing habits. My answer was, “It is incalculable.”


Education can and will mitigate some risk. The Canadian Wheat Board's pricing options are an example of a risk management tool that is being underutilized by farmers. Many farmers don't understand the tools. Providing tools without the underlying education to understand them is akin to giving all of us a scalpel and asking us to perform surgery.


In the early 1990s, a concentrated effort was made to teach farmers the benefits of futures and options through a program initiated through the western diversification fund. It was a success; however, the educational component to risk management should not be a one-year, one-hit wonder. Empowering farmers can result in a system that satisfies nearly everyone and promotes cooperation instead of polarization.

We have a polarized industry. We created it. Politicians nurture it to the benefit of their ideological values, and it doesn't matter which side of the House you sit on. I watch way too much CPAC to think otherwise.


There are two other areas I'd like to mention during my allotted time.


The emerging renewable fuels industry in Canada will change the face of farming and could radically change the face of industry as we move from being export-reliant to having 18% to 20% of the grain we normally export used here at home, domestically, for fuel. Farmer ownership within the biofuel industry is key to sustaining agriculture at the farm level in Canada.

Without policy to enhance farmer ownership, farmers will again be providing raw product and exporting our wealth. If you need a blueprint for success, I suggest you look south.

The United States has proposed a 2007 farm bill that will help more young people break into the farming business. In North America, it has been extremely difficult for young people to enter into farming.

The health of an industry can be measured by the average age of the participants in that industry. Today, if we were using only that measure, it would show that we have a very unhealthy industry.

Let youth be your guiding principle when developing a new APF. It is our future, and for many farmers wishing to retire during the next five to 10 years, it is their future as well.


If the new APF addresses risk management in the sense that it all starts with the farm and ends with the farm, government will have made a major leap to future success.

We have forgotten our agricultural roots and lost our way, but it is never too late to change direction, not only to the benefit of farmers but to the benefit of all Canadians.

Thank you for your attention, and I look forward to any questions.

[Rareearth]

Wd9 what should the model look like? And how
will it be financed. We don't have to like progress,
just figure out a way to survive or thrive. Not
everyone is a 50 goal scorer, I'm not going back
to the dial phone, or giving up the f150 either.

Problems are easy to point out, solutions can be
impossible sometimes.

[bluefargo]

I'm going to stay out of the pissing match.
My question is how many local farmers got stung? I presume the elevator went down with the rest of the empire.

[wmoebis]

Good question BLUE.
How are the farmers in USA and other countries protected?
What about when they sell to feedlots etc?

[wd9]

And it's a fantastic speech! However my comment
is not about the model, it's about how farms like
the stamps are praised for their greatness. Am I
the only one that sees the pattern in the
nominees?

This is not about Larry. It's about how the entire
industry sees bigger is better. Much better.
Farming viewed as how much stuff you can
leverage from a few dollars and borrow money till
u can't borrow another dollar. A kid who was in
university just 5 years earlier now has 4000 head
and farms 12000 acres is gonna carry some debt.
A lot of debt.

Does this make them outstanding or are they
transferring huge risk to the rest of us? And again,
this is my question, why does the entire group of
venue to venue special presenters, crop input
companies, machinery dealers etc, and that was
my mistake mentioning Larry specifically, always
talk about and such risky ventures as great
farming?

Blue your question is easily answered. They all
got screwed. They will be paying for it because of
stamps outstanding ability to borrow.

Why does the criteria of an outstanding farmer
always follow the exact same model?

[cottonpicken]

Shadenfreude:its the german word for taking pleasure
in others misery.

Some people have this mental illness.

[wilagro]

cottonpicken: I don't think 'shadenfreude' applies in this particular discussion.

Shadenfreude: Might apply when I laugh at your discomfort when the price of gold slips down to about 3/4 of its present value.