AAFC Investigation into Farm Income Crisis

[TOM4CWB]

Vader,

Just the person I was thinking about !

We have a neighbour that took out a EPO.

It was for 80%, on Hard White wheat, for $3.30/bu.

Now I know CWB Directors cannot do PPO's but, they should still be responsible.

His Hard White turned out to be feed.

He was told this EPO could be converted to CWRS... now the CWB says no, that can't happen either.

The CWB is asking for $27/t to liquidate this EPO, on 220t.

THis is Dispair in action for a farmer.

This is intimidation.

THis creates fear, anger, resentment, frustration... and might I also point out a lack of liquidity for farmers.

The CWB promises to only charge the "cost" to liquidate PPO's.

There is no CWB cost, as the grain was never delivered. If it was never delivered, it could not be sold, because the CWB didn't know the grade... just as the farmer didn't know the grade.

We are seeing fall assesments broken all the time now, that promised a 2, 0r 3, which come back Feed, even with excelent falling numbers.

What gives VADER?

[Vader]

Ask this farmer to get the current explanation for this situation with the CWB. There may be a new options available to mitigate the losses.

The CWB directors function is to establish policy not to be hands on in individual cases.

The overriding policy is to indemnify pool participants and to have the user pay for the programs that are being offered. If the CWB uses risk management tools to offer program flexibility then these costs are passed on to the user. If problems in program delivery are identified and if program redesign is in order then certainly that should be undertaken forthwith. Participants should be aware of the obligations created under contract.

Tom, I am sure that your observations of deficiencies in the producer pricing options have been noted and have been part of the impetus for program review and reformulation.

[Vader]

from the CWB Bulletin

Bulletin
At a glance

The CWB has released the Early Payment Option (EPO) discount estimates for the new feed wheat EPO which will be offered Feb. 7, 2005. The 80 per cent EPO is expected to cost between 25 cents and 75 cents per tonne, the 90 per cent EPO to be between $2 and $4 per tonne and the 100 per cent EPO to be within a range of $11 and $15 per tonne. EPO discount prices will vary with grain market activity and CWB sales.

[SW1-32-5-4]

The mistake most people make is that they actually believe the drivel that drops from the lips of the cwb. These people at the cwb are protecting a kingdom and a way of life for a breaucracy not accessible by freedom of information. Only when this diabolical organization is on the access schedual of the freedom of information act will there be any acountability and transparency. Until then we will be subject to this liberal sewer system.

[Vader]

So if the CWB were subject to access to information what question would you ask?

[TOM4CWB]

Vader;

Make the CWB accountable, through a fair transparent third party "access to information" process, then you can be sure many, many, questions WILL be asked.

[TOM4CWB]

Vader;

Why isn't this process already avaliable now

[Vader]

I will give you my response. Not sure what the CWB's position is.

The access to information is applicable only to government organizations. Try to get information out of the likes of Cargill. Look how they treated the government when they were asked to open their books.

The CWB is much more open and transparent than their commercial conterparts. Details of transactions are private between parties at the request of the parties. The customers of the CWB want this privacy and details of transactions will remain private forever if that is what the customer wants.

The CWB is moving away from government not towards it. I know that you will argue that the CWB is government controlled. Whatever government control that exists at this point in time will be greatly diminished or totally eliminated over the next while. When that happens all request for the application of access to information will fall on deaf ears. A situation not unlike that you see today.

So get over it. The CWB is open and accountable. Ask your questions. Do so in good faith. Be persistent (like I have to tell you that Tom). Be reasonable and realistic. Look at the annual reports. Attend the corporate accountability meetings. Work with the Director in your District. That is the democratic process that is in place. Work with what you have and you will be much more effective than continually lamenting what you don't have.

[wmoebis]

What parts of the CWB does the gov't control now? I don't know, I thought they were independant we pay all their expences. So I was just wondering what is under the gov't control.

[TOM4CWB]

Vader;

When the CWB is under the same corporate control as every other company in Canada, I will certainly take your advice.

Until the CWB has true corporate shares;

Works on the base of competitive advantage and responsible leadership;

Must earn the right to deserve my wheat through being an efficient service provider...

There is NO WAY you can honestly claim the statements as presented above to be true.

Before 1988 the CWB had no monopoly over farmer's grain in the "designated area".

The CWB Act did not change, but CWB's management sure did, as did the Liberal's attitude towards grain farmers in western Canada.

THe CWB used to give us a base price before April 30th... a gov. gauranteed price at that.

ANyone selling feed barley or wheat in 04-05 will experience the true value and purpose of the CWB...

Certainly it was not and is NOT to maximise the returns of grain farmers in the "Designated area".

[Vader]

wmoebis
What parts of the CWB does the gov't control now?

The Government has control over the appointment of 5 of the fifteen members of the board of directors. The CEO is one of those 5 appointments but the selection of that individual and his remuneration level are determined by the board of directors.

I don't know, I thought they were independant we pay all their expences. So I was just wondering what is under the gov't control.

Other than in the case of a shortfall in the initial payments there is no transfer of funds between the CWB and the Federal Government. Farmers pay all the operating costs of the CWB. The borrowings of the CWB are guaranteed by the Federal Government and for that reason they require that the CWB submit their annual business plan for approval. Also because the initial and adjustment payments are guaranteed the government requires that they approve the setting of those payment levels.

Under the current WTO draft agreement these guarantees have been negotiated away by the Federal Government. In the absense of these guarantees the CWB will be setting their own initial payment levels and will be entirely responsible for the risk management. The delay that was caused by the approval process will be eliminated and producers will receive their CWB adjustment, interim and final payments in a more timely fashion. Much of the criticism about the CWB not operating in a commercial fashion will end.

The CWB could move to make a payment like the 80% EPO the standard rather than continuing with the current government guaranteed 65% initial payment. The cost of this 80% EPO program although minimal would be entirely carried by producers. Perhaps some compensation from the Federal Government would be in order since they are the ones who negotiated away the guarantees at the WTO. This situation is very much like the elimination of the Crow Benefit. Perhaps farmers will be better informed this time and will negotiate for a better outcome.

[Vader]

<TOM4CWB posted Jan 29, 2005 23:06
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Vader;

When the CWB is under the same corporate control as every other company in Canada, I will certainly take your advice. Until the CWB has true corporate shares; >

Sorry Tom, there are many other corporate structures that do not involve share ownership. Co-ops, Trusts, Non-Profits to name a few. There are other aspects to "ownership" other than equity. Ownership can be manifested through control of an entity or through the receipt of benefits.

The most valuable component of the CWB is the single desk. How would you award "shares" to producers which would represent each and every producers fair value of the single desk? If you look at what happened in Australia they implemented a check off which raised almost a billion dollars over a period of 10 years. I suspect that the Australian farmers received share value based on their financial contributions. How much cash would you like to inject into the CWB today to bring the CWB up to the same equity level that the AWB has?

The AWB equity has risen to over 1.5 billion and they have invested in crop input and service companies in Australia and they have invested in what milling in China. Is that the direction the CWB should be heading? If the CWB chooses not to move in this direction will other wheat exporting countries lock up a large share of the export markets with these type of business arrangements and bilateral trade agreements?

By the way did you know that the USA has signed a bilateral trade agreement with Morocco that will give them preferential access to the Morocca durum market. Up until now Canada has supplied virtually 100% of the Moroccan durum market.



<Works on the base of competitive advantage and responsible leadership; Must earn the right to deserve my wheat through being an efficient service provider...
>

This is exactly the basis on which the CWB funcions. The CWB competes on the world market for sales in a highly competitive environment. The competitive advantage of the single desk is well documented. Even the leader of the European Union has quoted the figure of $10.00 per tonnes as being the advantage of the CWB and this is the reason why the EU and the USA want the CWB dismantled.

As far as responsible leadership this is also self-evident. The corporate review at the CWB resulted in staff reduction levels in excess of 100 positions and resulted in savings of millions of dollars per year. Further examples of responsible leadership is the adherence of best corporate governance practices and the review of the entire operation of the CWB by the Auditor General.

Tom, you mention efficient service provider. See my comments above about the corporate review. The CWB's admin costs amount to less than 10 cents per bushel and are offset almost entirely by the interest earnings through the effective management of the long term accounts receivable. The net cost of the CWB to farmers is nearly zero.


<There is NO WAY you can honestly claim the statements as presented above to be true. >

Tom, I am insulted by suggestion that I am dishonest. I believe strongly in the truth and have taken great pains to substantiate my beliefs. I do not take the CWB at face value.

<Before 1988 the CWB had no monopoly over farmer's grain in the "designated area".

The CWB Act did not change, but CWB's management sure did, as did the Liberal's attitude towards grain farmers in western Canada. >

There were many changes to the CWB Act in 1998 which resulted in the current governance structure and many of the flexible marketing options that you have today. The marketing mandate of the CWB did not change and the CWB remains the exclusive authority over the export market. Were it not so the CWB would not be a single desk marketer and would lose its most imporant competitive advantage.


<ANyone selling feed barley or wheat in 04-05 will experience the true value and purpose of the CWB...

Certainly it was not and is NOT to maximise the returns of grain farmers in the "Designated area". >

Farmers marketing into the world export market are facing burdensome stocks resulting from a world record crop of spring wheat, a world record crop of durum wheat, a world record crop of soybeans, and an incredibly large world record crop of corn. This is a reality that is forcing commodity prices to record low levels. If the CWB is able to move Canadian branded products into this market at a premium then there is still a net benefit to Canadian producers. The price levels that we are seeing are market signals and we must each respond to those market signals in the most appropriate manner.

The mandate of the CWB is to maximise returns to produers in the designated area. My fear is that maximising returns does not equate to profitable returns and that we must all address this problem in a much more constructive manner rather than harping away at each other.