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Canadian canola called out on its dirty little secret

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    Canadian canola called out on its dirty little secret

    The world is full of customers who think they are special.

    They are the people who send their meal back in a restaurant if it isn’t cooked to their liking, or the ones who brag about never paying full price for anything.

    If truth be told, even a few farmers have used their scale or long-term loyalty as leverage to extract a little better deal from their suppliers. In business, that’s considered astute.

    Whether they get away with it depends on their ability to go without or take their business elsewhere. Likewise, if the supplier doesn’t need their business, they get shown the door.
    The only thing science based about it is psychological — the dynamics of finding equilibrium in that see-saw of power between buyers and sellers.

    So it is a little surprising to see the leadership in Canada’s canola industry beating the “science-based” drum in the ongoing spat over the amount of dockage China will accept in the canola it buys from Canada.

    Canada’s biggest export customer for canola seed, the one that buys 40 per cent of what gets sold offshore, is saying it will only buy canola that has less than one per cent dockage as of Sept. 1. The current export maximum is 2.5 per cent.

    Chinese officials cite the risk of importing the blackleg disease in the dockage, something Canadian officials dispute. Trade observers suggest it has more to do with the fact that the Chinese have stockpiles of oilseeds right now.

    Either may or may not be so, but the fact is, it doesn’t much matter.

    By focusing on whether dockage can transfer the disease to another continent, the Canola Council of Canada and the grower groups writing letters are missing the point.
    It is also disingenuous to suggest meeting China’s demand can’t be done.

    The “dirty little secret” of Canada’s grain export system is that dockage is routinely added back into the cargo holds to bring levels back up to near the maximum 2.5 per cent allowed for commercially cleaned grain. That implies the system is capable of cleaning it to well below that standard. The Canadian Grain Commission measures dockage in increments of .1 per cent. The commission’s statistics for dockage in canola during the crop year just past averaged below two per cent.

    Farmers routinely complain that the dockage in the grain they deliver is well below the maximum, yet they still get charged for “cleaning.”

    In short, we have the technology. Some exporters have already started making sales under the new terms. The fact that it is achievable negates the suggestion that this is a non-tariff trade barrier.
    Does it add extra cost? Absolutely. Instead of getting 97.5 per cent of the canola it’s paying for, this customer is essentially saying it wants to get 99 per cent. That’s going to come out of somebody’s pocket. That 1.5 per cent either gets absorbed by the seller or collected from the buyer.

    Chances are, farmers haven’t been getting that 1.5 per cent anyway. The question of who captures the value from dockage management in Canadian grain shipments has always been a bit muddy. That said, chances are equally high that grain companies will pass along these “extra” cleaning costs to farmers. So farmers’ unhappiness with this development is justified.

    There is also the issue of blackleg itself. Rather than make the adjustments necessary, namely extended rotations, to keep this disease at bay, the industry has decided it is more economic to continue its push for volume and rely on fungicides to keep it under control. It would seem that choice has some unintended consequences.

    The biggest fear within the canola trade appears to be that other customers will embrace China’s shrewdness, which will undermine Canada’s competitiveness in the export market. “Accepting costs without scientific justification today tells others we’ll accept it in the future,” says the letter from canola grower groups. You can find the full text on page 5.

    We expect the industry to protest this customer specification with all its might. But dragging the prime minister into what is essentially a contract dispute and tying it to Canada’s future trade with China, as indicated by Trade Minister Chrystia Freeland last week, is counterproductive to this country’s broader trade agenda.

    Frankly, the bigger risk to Canada’s export competitiveness will be its unwillingness to adjust to customer demands. This country is positioning itself as a world-class exporter and yet it acts as though customers owe it their business.
    When an important customer asks for special treatment, the question of compliance really comes down to how badly they want what we have to offer, and how badly we want — and need — them as a customer.

    Not a bad article.

    We farmers need to start having groups that claim to have our backs doing something instead of taking fees for lip service. Also we need farmers to start calling some of the shit that goes on shit.

    Grain companies aren't your buddy or friend or what ever you think. They are a buyer of your product and they will do anything to get it from you for nothing.

    Farmers wake up all ready Ag isn't about growing a crop its about getting the best price for it. Dockage has been deducted for years yet they add back in. Hm funny isn't it.

    #2
    and charge you for cleaning it out ? and why in the f$&k were we ever charged for dockage under 2.5% ?

    Comment


      #3
      Because a crook is a crook is a crook.

      How else do grain company families become billionaires!

      Name one poor grain company family?

      Comment


        #4
        In reality if anyone was policing the graincos anything under international contract specs should be counted as zero dockage.

        Transparency?

        Thanks elwin and gerry for showing whose side you were on.

        Comment


          #5
          Originally posted by bucket View Post
          In reality if anyone was policing the graincos anything under international contract specs should be counted as zero dockage.

          Transparency?

          Thanks elwin and gerry for showing whose side you were on.
          They can't say they didn't know and that there was a bigger issue than just on export side. Reread this article http://www.producer.com/2013/02/are-elevators-failing-the-grade/

          Comment


            #6
            At Pioneer in Wadena, when my wheat dockage was under 0.3% they said ZERO because it went into their CLEAN export bin? So has to be under 0.3% for some spec, why would export be 2%?

            Comment


              #7
              Canada is getting one fine reputation by resisting market requirements. And it's not that meeting 1% specs is impossible, not even difficult. Most Canola meets spec right off the field. Its the fact that our export standards are set to please the big grain companies. On the other hand, if the Chinese want clean product, why aren't they calling the special crop marketers. They would get what they want, no problem!

              Comment


                #8
                Is anyone in the form of farm groups speaking on behalf of farmers anymore?


                Why not just call the grain cos out on this?

                And where is the cgc for comments about what is bought at prairie terminals and what goes on the boat?

                Is no one policing or following the data.

                Statscan can call about my grain on hand and compile info.

                How about auditing the grain cos stocks as well?

                Transparency.....not there yet. ...it should be there in an open market.

                Comment


                  #9
                  I was wondering what size sieves the Chinese use to test dockage? If it's the same as Richardson or Paterson in Killarney it would shake out at 4%. The same sample would be 1% at Bunge Altona.

                  Comment


                    #10
                    That's a policing issue that the cgc should advise farmers and graincos of the proper procedure.

                    Grain commission has zero teeth.

                    Graincos are now self regulating due to the masterminds of gerry and elwin.

                    Comment


                      #11
                      Taxation (levy) without representation. .... the only way this fixes itself is when the majority of farmers say enough is enough. It's been mentioned before to apply for the rebates on the levy. All these jack asses running around claiming to represent farmers and in the end all they want is our money. Wheat canola barley cattle whatever, what have you done for me lately? You need to earn your keep, Not entitled to a paycheck! All these groups do is keep us divided so we don't agree on anything, most of the issues get politicized, if they weren't we would agree.I'm applying for every last dollar back till things change..... Or get legislated as a full blown tax

                      Comment


                        #12
                        Are you all sure you want policing and transparency ?? You may find yourself up the creek if they start checking for glyco in all the cerals and canola, I dont think it is regestered as a desicant but how many of you use it.
                        ?

                        Comment


                          #13
                          Good thing we are funding the canola council of Canada so they can spout their bullshit and come out with lofty production goals instead of addressing real issues like farmers having 2.5 Percent of our grain stolen by the system

                          Comment


                            #14
                            Macdon and Braveheart are right on the money

                            Comment


                              #15
                              If the terminals I haul to can make a little money blending, I am ok with that. They have blended away my problems for me more than once. I just hauled some 3.2 green canola and got paid for 1 price.

                              Comment

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