CWB Contract Buy Out

[charliep]

For those of you that are not on the CWB news release email, the following may be of interest to you.

http://www.cwb.ca/en/news/releases/2004/101304.jsp

Long and short, this year only farmers can get out of their fixed price/basis contracts and capture any gains on either (depending on when you signed your basis contract, you are still likely in a buyout situation that will cost you money). No mention is made as to whether you have to provide proof of feed wheat only or other documentation.

What are your thoughts on this? How is this handled for non board crops? Could you capture the futures gains on a canola contract (eg. 2/3 CW or sample and don't like the spreads)? What documentation would be needed?

I am not necessarily pro or anti this. My concerns would be around it being a one year program (an election year) and that it follows generally accepted practices used in non board crops.

[charliep]

Just a note is that the process is not as easy as indicated in the press release. You need a reason to get out of the contract (i.e. feed wheat only) and get a CWB farm business reps signoff. Everyone has signed a CWB contract/only has feed quality needs to work the numbers to determine whether to get out of the contract, deliver the feed wheat to the CWB even with the discount or work a deal with a neighbor who has higher quality wheat/share the benefit. The latter could potentially be outside your community (i.e. I can see someone from northern areas working deals with southern farmers).

The contract that could have the most financial pain is the basis contracts. Your pencil will have to be extra sharp here to compare alternatives.

[boone]

Incognito: I can't believe you have nothing to say about this generosity of spirit, or has "COLD TURKEY" (fumer)
got your tongue? [:<{)

[craig]

The only problem with the contract buyout is that this should not be a one year deal. This reeks of politics where we offer lots of goodies pre election. First the suggestion is made that this will not impact pool accounts so are we to surmise that if they had not implemented this program that the board would have loaded up their contingency fund at the expense of farmers using CWB fixed and basis contracts. A farmer does not sign into this contract as a speculative tool. These options allow farmers to forward price at what to them makes business sense. If a producer is liable for futures loses if he is on the wrong side of the market then he should also be rewarded if he made the correct decision. Producers should not be penalized if unforseen circumstances (hail, drought frost) make it impossible to deliver the grade required.There still seems to be this desire to penalize producers who want to operate outside the pool account and given the opportunity the CWB will act accordingly. If the CWB wasn't the only game in town then maybe the CWB would be required to operate in a more business like fashion.

[Incognito]

Smoking is what will be happening in 2-3 weeks to the crop that is written off.

My friends at the CWB think i'm on vacation....shhhh, you will wake em up

how do u spell election pandering n e ways?

[boone]

Incognito: If they didn't do as well pre-hedging this crop as obviously enough individuals have, so as to take this policy direction, it will take more than this to wake them up!!!!!!!!!!!!!!!!!!!!!!!! I keep hoping and praying as I see the Minn.HRS or Kansas HRW getting beat up through the summer that it is the CWB risk management, (excuse me for a minute sensing some nausea here) division locking in a profitable position. Or Sept. 20th A.M. locking in feed wheat on the behalf of the piteous few that still trust them.

[boone]

Post: Should be Aug. 20th I apoligize for this inacurate pronouncement. Would have sure been nice though.

[Incognito]

The whole hedging mechanism needs to be addressed. Not only grain, how bout currency? Did they learn anything from last year's fiasco?

When they publish a PRO and farmers make planting/selling decisions based on the PRO, what is done to protect it?

The Aussies seem to have it under control...we don't. If they want to be the sole provider in the wheat market, there needs to be an attitude adjustment. Once half of the Butch Cassidy show is leaving, that may help.

And what say you of your crop, Mr. Raccoon Top aka Daniel, aka Boone?

[TOM4CWB]

Incognito;

The CWB pretends this is a one time, once in a life time problem with PPO contracts?

Serious analysis from the start showed CWB contracts are seriously one sided... in the favour of the CWB.

What prairie (Designated Area)farmer had any serious input?

CWB Directors cannot even use these risk management tools; why should they care one iota?

PPO's are a hassle for the CWB, and they have made it worth their while... building a significant Contingency fund on the backs of the few who would venture into PPO country... and not trust the pool.

OH YA... we have no right to complain about the pool prices falling apart... farmers could have used those one sided PPO's to hedge... this spring. The PPO profits all going to the CWB... riskier than not taking a PPO at all...

Yet the poolers will be sharing the benefits of the Contingency Fund in the future... any time they wish to partake... on the blood sweat and tears of the backs of those who built that fund!

Feed Wheat could be a profit centre for the CWB and farmers... with just a little planning ahead!

BUT the CWB is too proud to seriously consider a realistic feed wheat program... unlike the AWB who beats the CWB by $40/t on feed wheat returns!

Why exactly do we put up with this?

Do we really have a choice?

Only in Canada you say!

PITY

[boone]

Tom4cwb: Poolers? You make it sound so dirty! Try consortium, bund, group sellers, combine, stinking little monopoly, but not poolers. You are 90% right here but no one not even us dyed in the wool types are all right all the time. Incognito, what sayest thou about my hat? I liked you better when you dripped nicotine on the restaurant tables of Lombard, Portage,Main,and Rue de St. Boniface. I think you guys are showing the signs of a stressfull year, I may retire to write the next biography of Tommy Douglas and do a little hail adjusting, like others of my trade.LOL