Cheap feed grain?

[cowman]

In recent years all the grain farmers don't want to grow barley because you can't make much money at it. In fact if we didn't need to rotate canola every year would be nice.
I think the CWB needs to put a real high PRO on malt so all the farmers will plant lots of barley. Then when the crop comes off they could reject 90% of it as malt, thus providing lots of cheap barley for the feeders!
Now I say this in jest but I wonder if that happens to some degree?
When I was a small boy my father grew some malt that was accepted. The price was quite a bit more than feed barley but the catch was it had to be exported through Thunderbay and guess who paid the freight? No problem it still was very profitable. Well when it got to Thunderbay it was still malt but by the time it got to Montreal it suddenly wasn't malt! Now it was feed and the price barely covered the freight! That was the last time my father ever grew anything for the CWB! He still grew some wheat and barley but he never sold them another bushel! He was very bitter about the whole thing.

[sshiels]

This year we saw alot of high protein "malt barley" accepted in the fall. Guess what, we now are seeing alot of high protein feed barley coming back into the market. It is common practice for grain companies to select everything shown to them in the fall that is even remotely close to passing for malt. They have the option down the road to reject on the recheck samples, and the farmer is left with $2 a bushel feed barley instead of the $2.40 feed barley that was there in the fall. There needs to be some kind of payment put in place by the grain companies that guarantees the feed price at time of acceptance if the barley is rejected down the road. Of course, sometimes the price may be higher when it is rejected, but that shouldn't be a problem to deal with.

[TOM4CWB]

Cowman;

With Select winter wheat we just had the same experience.

When combining in August, the Winter wheat (we were told on multiple deliveries)was all #1 over 12px... on everything that was taken in as feed wheat, we had contracted half the crop into the feed market.

Now in January, the grade dropped to a #2, and the protein dropped over 1%, and we lost $18/t plus interest and storage.

The CWB was angry, but a "blend" at the terminal with tuff higher protein with our 13%mt wheat will solve this problem for the CWB... to the credit of the pool accounts of course.

WHAT A DEAL!

A variety specific select program... had to have it hauled on icy roads in 3 days...

[cropduster]

Cowman,your jest is a sore spot with me!Where were the free market cattlemen when grain producers went to jail?????????Quietly gloating to themselves?????????With the 2 million tonne carryout in feed grains supplied to the red meat industry by the CWB, could this subsidy be the source of some/alot of the pain in the cattle sector???Now NO market and they have tears in their eyes,after less than a year......Hard to feel sorry for fair weather friends...... but am willing to support true freemarketers wherever/whomever they may be!!!!

[cowman]

Actually a lot of those farmers who went to jail were free market cattlemen? Jim Chatenay for one? Jim Ness another?
The grain industry and the cattle industry in Alberta are fairly heavily merged? We need each other? Don't shoot us all because their are a few big feedlot owners who might have profitted from the CWB.
Now I consider myself mainly in cattle but I do own some grain through a crop share deal. I don't get a rent check but I do get a share of the crop at the market price less my share of the expenses. Do you think I was happy when subsidized corn came in and dropped the price of my barley?
Who do you think I sell that barley too? You got it...the cattle feeder and the hog barns. Somehow the grain farmers think if they had unrestricted access to the US they would all be living in clover. Well if feedlot alley crashes you are going to find out real sudden how easy it is to sell all that barley in the US. That border will slam shut so fast it will make your head spin. Do you think the farmers in the Dakotas will be happy to see all that cheap feed grain coming south?
I find it amazing that grain farmers in Canada rip the cattle guys and visa-versa! We are married to each other!
Now perhaps you like it better to be able to give away our grain to countries like Russia, Poland, Iraq? The Canadian government finances the deal, pays the grain farmer and then forgives the debt. This isn't a subsidy? I would suggest it is a 100% subsidy? I mean $750 million in grain debt forgiven in Iraq just last month?
As long as the federal government is financing your foreign grain sales then you shouldn't consider yourself free marketers.

[TOM4CWB]

Cowman;

The records will show long term financing of CWB sales is a very small amount;

$30.418mil were outstanding on the Agrifood credit facility (Indonesia, Mexico and Peru) down from $196.345mil in 2002. No defaults are on the books, and all payments up to date. (Page 56 CWB 2002-03 Financial Results)

No sales were made on the "Credit Grain Sales Program" in 2003. Iraq is certainly a special case, as we all hope for the best that these folks need encouragement to rebuild and stop killing each other, I hope you would agree!

[rain]

Someone explain to me how the CWB is the Feed Lot Operators friend? Does or has the CWB sold feed grains domestically at any time in the last 10 years?

[charliep]

I don't think they are referring to the CWB selling back to the feedlots. Rather, the issue is a lack of price transparency/arbitrage with the domestic feed markets. As an example, I suspect that the Cdn $190/tonne available in port position early this last fall would have given farmers a sniff at $3/bu right across Alberta in September and October. Today's PRO is a realistic view of the current international barley market but there is real risk the actual return could be lower with the current world ocean freight costs and potential differal of some sales until the summer when European crop is available/international prices could be lower.

As a livestock producer, I would not be basing my market plans on assumed cheap feed this summer and going into 04/05. Barley acres are likely to be down this spring given the signals from this last year (malt - poor selection rates and relatively low prices and feed - concerns around the health of the livestock industry). Reliance of this next years crop on timely rains (poor soil moisture) has potential to play havoc with yields and the amount used as pasture/forage. Finally, this next years will be large given reduced culling this fall. How many heifers got bred this summer because of reduced market opportunities/optimism about the future?

The demand side for feed barley has potential to be up depending on when the US border opens and for what classes as well as decisions around when animals are put on feed. This will be the toughest year ever to forecast the demand side.

[charliep]

Missed some words above.

"Finally, this next years CALF CROP will be large given reduced culling this fall. How many heifers got bred this summer because of reduced market opportunities/optimism about the future?"

Sorry about that.

[charliep]

I might also say things are interesting on the US corn side. New crop corn prices are high (CBT Dec 04 corn futures $2.80/bu plus) but reflect the need to attract extra acres/achieve at least a trend yield of 140 bu/acre to meet the domestic usage plus exports needs for 2004/05. Again, lots uncertainty but there is optimism in the coming year.

[cropduster]

You make some valid points regarding the debts Cowman.The reason for my immediate frustration isonly until pressured by the Barley Growers did ABP write a letter supporting marketing choice (Jan 26/04).CCA can`t find their copy of the letter(do they need our copy?)Should mixed operators attend the gathering in Red Deer this weekend on the promise that those groups will make public declarations to free markets or is this gathering simply misguided infighting???

[TOM4CWB]

Cowman;

Take a look at any feed wheat price in an Alberta elevator... it is just about a perfect match with the 90% PRO for CPS wheat. Until March 31st... a farmer can lock in and cash out 90% of the PRO from the CWB.

If instead we were to be offered a cash price... I would be very surprised if the feed wheat price was not higher to reflect the 10% larger CWB cash price.

THis has happened year after year... if livestock producers don't have to compete with the CWB/World price... because of pooling... livestock will be the choice of many to market their own grain through... plus in most years in the past quarter century, the George Morris Centre showed feed grain prices in western Canada were some of the lowest in the G7 nations.

Certainly a CWB feed wheat price (PRO) of $2.25/bu farm gate in Alberta surely is not forcing any livestock producer to pay a fair price for feed wheat today... with US Corn @ $2.80US especially!

[parsley]

Cowman;
The federal government doesn't finance any of my foreign or domestic grain sales and I consider myself a free marketer.

Parsley

[cowman]

Parsley: Well I guess none of your grain went to Iraq then because the Canadian government definitely did finance that sale...and wrote it off?
I'm not here trying to tell you we have a great system. I do believe our grain farmers have got ripped off on feed grains...not disputing that! Maybe if the system was fairer I'd still be growing grain!
The ABP does not speak for me, just like I assume the CWB does not speak for you? The ABP represents the large feedlots and Packers, NOT the cow/calf guy.
In 2002 the drought was ugly in my area. Barley was almost non-existant due to poor yields and the fact so much of it went into silage/greenfeed. My cousin, who farms my grain land, got the crop planted early and actually got a fairly decent crop off. Yields were about 75% of normal but with the shortage the price looked promising.
Then in came the subsidized corn and down went the price. I sold my calves that year to the US as a whole lot of others did...close to 500,000 calves heading south...while the barley sat in the bin.
Now where was the government protecting my barley prices by keeping out subsidized corn? I assume the CWB kept prices right up there?
Never forget, you the grain farmer, do get to elect your delegates to the CWB! You continue to vote in single market reps, so the only conclusion anyone can come to is the majority of you want this organization to market your grain! If this is not true then throw the rascals out! I will further note that my CWB riding has consistently voted in a dual market candidate(Chatenay) and we are basically a cow/calf area! And I will further note, when I vote for my CWB candidate(although why I get a vote I'll never know) I vote for Chatenay! So I'm doing my small part to get rid of the CWB...how about you?

[poorboy]

Cowman,

Perhaps the fact that you get to vote on CWB elections is part of the problem. Each producer gets one vote, it has no correlation to how much CWB grain that you grow. Why should producers who hold permit books and grow only non-board crops get an equal vote? Your vote should somehow be tracked corresponding to your tonnes of CWB deliveries on the next election and see if there is any difference.
With the age of computers it would be very easy to compare the outcome of one vote per permit book to a vote of so many tonnes delivered last year.

It is also not right that in the cattle industry that there are so many organizations. The cow-calf producers do not fairly represent the Canadian cattle industry no more than the feedlot and packers represent the cattle industry. In most cases the cow-calf producers are poor businessmen and have no idea of bigger picture in global beef trade. And yes, I am a cow-calf producer. It is about time that a united front was found for the cattle industry.