provincial wheat corp

[chipper]

Charliep. Could you ever see a day when the AB govt. backed a trading corporation that covered the CWB export licenses and producer direct sales for individual farmers with there own grain. Small mills and processing facilities could then do business on a cash basis without interference from outside forces. What issues would be involved? It seems grain companies can do business without buybacks from CWB but individuals cannot.

[charliep]

I will leave for discussion other than to comment than the grain company effectively does a buy back the same as a farmer. Or perhaps more accurately the farmer is forced become a grain company. The one major difference is the grain works on margin between their buy and sell price. Because the farmer is still at risk for the final payment and the relationship between the buyback price/total payments are not fixed, there is still lots of price uncertainty in this transaction. It only works if the wheat can be sold at a premium or their are grading/quality factors not able to be captured by the CWB otherwise.

I invite others to comment on your proposition.

[parsley]

Chipper,

The only way you can get through Customs with a load of wheat or wheat flour is with a CWB license, not an Alberta license. Ontario tried! Parliament says only the CWB can issue the license. But at least the CWB will give Ontario farmers/millers/companies licenses, for NO cost and NO buyback.

The CWB tells every one of us in the West that the Act requires the only way we can get the license is if we do the buyback. That is not true.

The Act does not say that.

Parsley

[charliep]

chipper

Seeking your thoughts going into this discussion?

Market choice and/or no cost export licence world would be a much preferred route in comparison to another government agency/new set of rules. Having said that, what things could be done to encourage use of the CWB buy back to establish more direct relationships with processors/export customers?

[chipper]

Parsley. I have a hard time understanding that " if the CWB is the positive political force that the advertise to be" , then they would have no problem giving individuals no charge buybacks across this whole country. One has to believe there are othe adjenda's running the board and resisting market choice by individuals. The main reason I see the CWB in place is to protect the individual farmers right to a reasonable market price. Aside from aiming at reasonable price, they organize shipping and have the ability to politically sell big picture Canadian products to foriegn markets. In reality, the CWB, governments or companies as well have no way of knowing where my profit margins need to be to sustain my goals for my farm and furtherance of my community. I need to sell grain for a profit, so the arguement for all sides remains at a stalemate. Either one is just as evil or just as good as the next if there is not to be right of choice given to individuals. If one big business controlled markets, it would be the same as the CWB or other government agency. As I said in another line earlier, If one has total control, then one has to take total responsiblity for the state of the community. If the controlling body controlled with true benevolence, then that body would use every tool posible to extract maximum yield from the prices available. Time averaging pooling doesn't work because there are other forces and cycles in place that will work against this. With no charge buyback costs, one could work out direct negotiations at prices supportive to ones situation with a mill similar to a feedlot or other hogbarn or feedmill. At least in that situation the farmer has an easier route to do a basis contract with the buyer and then directly hedge his product with some type of Winnepeg futures month of the commodity he is dealing with. He has a predetermined price risk where he can make a decision about which crop to grow. As it is now, say I do a buy back for $25 plus basis and handling by a grain company. I am still at risk to a CWB price taker mentality that has no concience if price goes up or down. I may never know final price outcome until pooling period for that commodity is done. Without understanding the mentality of the CWB's postion on marketing the product, I becomes a speculator with a cash position and this is a scary place to be. At least a farmer as grain company knows the margin he needs to have to make a sale and sticks within his budget. The CWB really has the same situation whereas it doesn't really care what price the commodity trades. It sets whatever costs and passes this on to the farmer. Some times the farmer wins and sometimes he doesn't. The farmer is still forced into making decisions with unstable information. Even if the CWB would let farmers do basis contracts on what wheat the have in the bin instead of growing crop, then one could would have a chance to stabilize the risk with proper hedge decisions.

[parsley]

Good Morning Chipper;

There are two views:
1. a no-cost buy-back;
2. A no buy-back licence.

The two might be considered to be the same thing, but they are not. The first means that the farmer must still sell to the Board (and become a trader/buyer for buying back) but there would supposedly be no cost. This is remaining within the CWB monopoly system.

# 2. which is how eastern grain (and all other exempted grains and products) is handled. This is OUTSIDE the CWB monopoly system.

#1. is full of complications whereas # 2 is very simple.....grant a licence and its done.


#1 sells to the Board and therefore goes through the buyback, whether it's a $0.00 buyback, or a $0.53 buyback A $0.53cent buyback still kicks you into the pools. So can a 00 cost buy-back.

(As we've seen, the $0.53 can be altered, at the whim of the Board, at any time during the process, and you may get a bill one year later saying you owe $2.28 as per Torkelson)

$0.00 cost buybacks, although tempting, do not guarantee price stability, they afford the Board the opportunity to target and 'price-punish' critical applicants, they do not accomodate those bypassing mass transportation, and they do not facilitate forward contracting.

This is the option bureaucrats love. A different option for each applicant. Different for each province. Different for each sex. Different for each farming category(conventional, organic, mixed, ). Different for interprov/export applications.

It's a bureaucrat's dream with departments running out their ears and they will chase it every chance they get.

#2 want a NO-BUYBACK export license so they can bypass selling to the Board which means no buybacks, no pooling. Left to the big bad market!

Seedgrowers do this, and they like it, but they can also enter the pools if they want. They bypass the Board and use the Board. All the big feed mills negotiated to completely bypass the Board. Ontario does. Kamut growers do. They don't want money subtracted from their cheques for demurrage and transportation!

All of them negotiated their circumvention status, the Board didn't pop the idea in their suggestion boxes!

Many DA farmers want to become part of this group. I do.

Where do you want to dedicate your focus, chipper?

Parsley