CWB IP Programs

[TOM4CWB]

Charlie;

Now the distractions are out of the way...

$2.50/t premium for Hard White Spring Wheat.

Let me see;

1. I must deal and contract with a specific grain company... one selected by the CWB, not me or my management team. Cost... could be easily $3-5/t.

2. Hard White Spring Wheat has higher seed cost (Cert. seed only), lower yeild, less flex on shipping, I. P. requirements... no blending with other spring wheats within a farm unit... what is this worth Charlie... $10/t?

3. Hard White Spring Wheat has no 14% duty at the US border... this should be worth, maybe $20/t?

4. Hard White Spring Wheat is worth in real value, about $8/t more in higher flour yeild.

CWB expects us to grow a product... for a $2.50/t premium... and supply the pool accounts with an extra $40/t in value.

Is this the power of the "single desk" at work or what.

I believe Hard White Spring ...IS... the right hard wheat to grow... that it does provide a better product for our customers... that it SHOULD be worth significantly more... don't get me wrong.

So What do we do Charlie?

How do we fix this problem... Alberta growers (the fastest innovators, fusarium free, with the most to gain from Hard White Spring) being required to subsidise the CWB pooling accounts just one more time...

Anyone got any ideas?

How could the CWB take such a super new product; value adding product (Hard White Wheat) and reck it so quickly?

[charliep]

No answer to your question other than to note the premiums are not a reflection of actual value but rather the CWB's view of what farmers should recieve as a result of growing these crops.

What price signals should a farmer be given? How should the supply chain relationships be developed to ensure the product can move through the system from farm to customer?

[furrowtickler]

Good call Tom, an I.P. program for $2.5/t - a plain slap in the face. would the ave. joe put inovertime for $.25/HR?
But, your out to lunch on the most inovative,sorry!!

[TOM4CWB]

Furrowtickler;

Which CWB other program is more innovative and has the potential to create more value for both producer and end user?

[JD4ME]

Tom
Went to the source and asked the question of a fellow I have met in the past that is with the CWB. His explanation is that White spring acres and production is expected to jump alot this year thus limiting the need for a large premium to get farmers producing. And yes they are hoping to get around the 14% with it if I read his sentiment correctly not something they want to be too loud about way before the crop is even seeded up until now most of the white wheat has been going to the asian market as they are the ones that have really been wanting it. I haven't grown it yet because the yields haven't dollared out about cwrs with the pro's being similiar.

[charliep]

A question in my mind is when they are setting this program (5 months before the crop is seeded and 8 - 9 months before harvested), how is the $2.50/tonne established. Why not $5/tonne or $10/tonne? In private industry, the company would likely make an estimate of the premium that would need to be paid to entice farmers to grow with the remainder of the premium (if any) being pocketed by the company (keeping in mind they also take the risk of selling for less than the premium offered). The strategy seems to be the same with the CWB with the exception that the pool absorbs the premiums/risks and is subsequently shared with everyone.

My thoughts are the CWB should be estimating the size of the alternative wheat markets that can sold at premiums and contracting acres to satisfy. The benefits should be paid to the farmers who signed contracts and not redistibuted within the pooling system.

What are other thoughts on how the CWB moves from a commodity based marketing system to programs that produce grain designed for specific markets?