WCWGA press release

[wedino]

For Immediate Release January 31, 2005
Prairie Farmers Bear Brunt of CWB’s Costly Shipping Errors
The Western Canadian Wheat Growers has learned the Canadian Wheat Board (CWB) has been
caught with grain in the wrong export position and is now moving grain backward from port
terminals to meet sales.
According to industry sources, the CWB has railed #1 high protein wheat from the port of
Churchill to Vancouver to meet sales contracts to Japan. The CWB has also moved wheat by vessel
from a terminal at Baie-Comeau (a port near the mouth of the St. Lawrence) back upstream to
Montreal.
The full cost of reloading, shipping, and unloading of these shipments will be borne entirely by
prairie farmers through the CWB pool accounts.
“This illustrates why the CWB should have no role in grain transportation,” says Cherilyn Jolly,
President of the Western Canadian Wheat Growers. “Justice Estey made that recommendation in
1998, and yet his advice was ignored. Prairie farmers now suffer the consequences.”
The Wheat Growers note that if the advice of Justice Estey had been followed, the CWB would
simply tender for grain to meet sales as required. It would be the responsibility of the grain
companies and the railways to make sure the right grain gets to port on time, and farmers would
avoid these unnecessary costs. The CWB would in fact collect non-performance penalties if other
parties failed to meet their contractual obligations.
Jolly adds that this episode further illustrates why western farmers need the same marketing
choices that are offered to Ontario and Quebec farmers. “We need marketing freedom in western
Canada,” says Jolly, “so prairie farmers aren’t continually forced to pay for the costly mistakes of
others.”
The Association is writing the CWB to ask for a full explanation and for an accounting of the
costs. The Wheat Growers will also be calling on the Hon. Reg Alcock, Minister responsible for the
CWB, to investigate this affair and to undertake a full review of the monopoly and regulatory powers
the federal government currently bestows upon the CWB.
The WCWGA, an independent producer organization, has spent 35 years bringing forth
innovative farmer-driven solutions and will continue to lobby on behalf of forward thinking,
progressive producers in an effort to make farming sustainable and profitable.
-30-
For more information, contact:
Cherilyn Jolly Con Johnson
President, WCWGA Director, WCWGA
Tel: 306-354-2517 Tel: 306-293-2902

[Vader]

News release
CWB leverages single-desk to coordinate grain movement

Winnipeg – The CWB today dismissed as ill-informed criticisms of its current grain movement program, noting that the single desk is demonstrating its value to maintain premium markets for Prairie farmers during a challenging crop year.

"We secured a supply of the highest-grade, high-protein Canada Western Red Spring wheat at port position in Eastern Canada late in the 2003-04 crop year," said Ward Weisensel, Chief Operating Officer. "Instead of blending the grain, we retained it following the frost of August 2004 in order to ensure we would be able to meet commitments to some of western Canadian farmers' best and most loyal customers."

Weisensel noted there have been significant transportation problems in the last couple of months, including mudslides, continuous rain and extreme cold weather, which have delayed grain movement and delivery. In order to ensure sales commitments were met, the CWB moved 280 cars of grain from other ports to the West Coast.

"This is the power the single-desk gives western Canadian farmers," Weisensel added, noting international customers have clearly identified the CWB's reliability as an important factor in making it a preferred wheat supplier around the world. "Prairie farmers achieve premiums based on this reputation, and in my opinion, maintaining our good standing is extremely important."

The CWB made these comments in response to a news release issued yesterday by the Western Canadian Wheat Growers Association. Weisensel expressed his disappointment that the WCWGA did not bother to investigate the facts before issuing the release. He noted that the CWB would be attending a WCWGA meeting in Canmore February 16 and would be prepared to address any outstanding concerns directly.

Weisensel also noted that the CWB would continue to make incremental grain movements for the remainder of the 2004-05 crop year (the crop year runs from August 1 to July 31) if necessary to maximize returns for farmers.

Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. As one of Canada's biggest exporters, the Winnipeg-based company sells grain to more than 70 countries and returns all sales revenue, less marketing costs, to Prairie farmers.


For more information, please contact:
Louise Waldman
Manager, Media Relations
Tel: (204) 983-3101
Cell: (204) 479-2451

[Incognito]

"280 cars of grain from other ports to the West Coast."

280 cars = 25,200 tonnes

reload freight unload = Mininum $55.00 to $75.00 a tonne.

25,200 X $55 - $75 = $1,380,000 to $1,890,000 dollars.

Watching the CWB spin a news release.

Priceless.

[cropduster]

And am wondering how many times in recent history(last 10 yrs) these donkeys have done this?????????

[melvill]

Hey, cropduster, got that hemi crate motor ordered yet?

The last time a significant non-Board grain was railed from east to west to meet unusual export situations was, I believe, in the summer of 1988, when one or more of the grain trade railed a significant amount of canola from T-Bay to Vancouver. Seems to me nearby basis at that time was close to $100 over. Anyone remember that? Have I got the year right?

[mcfarms]

This whole situation relates to one of the initiatives I have have strongly suggesting to CWB types in any discussions on future direction I have been privy too and that is all grain should be held in segregation on farm until needed to meet sales. Storage should be paid to maintain stocks in famrers hands until the market calls them forward. Proper information gathering and stocks availability and quality data must be aquired much quicker and used more strategically by the board, interchangable delivery options must be entertained. The cost of the transhipment would have built more than a few bins in western canada to have held this product. It has to be a push pull not a load and hold system. Stocks out of position is something that needs to be questioned in any company no matter the spin that is put on this, granted this is an unusual year and Japan is a premium customer we must play ball with. However its time to learn from our mistakes and improve this system the improvements are doable lets make sure they get done.
The directors phone numbers are all listed on the website.

[wmoebis]

I have to question how much grain has been delivered this year or in the latter of last that was within the specs. of shipment at hand. Then after it was delivered by us the commercial grain companys blended it with some of the mass amount of lower grade wheat to up the grade of it. there by increasing thier returns for themselves.
If these inland terminals were licensed as terminals, as they should be, this couldn't happen and we would have control of our wheat from bin to port. Any blending for grade improvement would be ours instead of the grain companies.

[Incognito]

Hey McFarms:
R u in Manitoba?

[Vader]

mcfarms is right. The system we have now is not able to take advantage of on farm inventory because there is not overall plan to gather that information.

Information is power and is worth money. What percentage of farmers would be willing to provide accurate inventory information to their marketing agency? Could this translate into more money for your crop?

If there were tradeable delivery opportunities would farmers be able to respond fast enough delivering stocks from farm position to customers to be effective. The reason for the current situation is the need to have stocks in position to respond to customers demands.

The CWB has a long way to go to get the maximum value possible out of the single desk authority that is granted to it. To do so requires that farmers participate as full partners in this selling arrangement. Orderly marketing places severe constraints on producers and its success depends on realizing all possible benefits.

[Incognito]

Quote:

The CWB has always said that would be pure speculation and refused to do that. The risk of dollar movement is hedged as soon as a sale is made to eliminate the potential erosion of value between the time of the contract negotiation and the payment

Unquote

Is it not pure speculation selling 1CWRS 12 - 18 months before it is harvested?

Just wondering where the line is drawn at currency versus quality of wheat. There seems to be a dichotomy here. Both have the same end result.

[TOM4CWB]

Vader;

I am simply amazed at the "single desk" comments.

Farmers across western Canada have been cross blended for years on grade... and do you know of any grain companies getting rich on upgrading?

NOT.

It is all about volume... handle...

If a #1CWRS is a scarce grade that the CWB needs... the spread between a #1 and #2 should be $25/t, not $8/t.

Pure and simple, the CWB has caused this problem 100% by themselves, and got exactly what they asked for!

A low quality #2CWRS to the maximum quanity of the grade... my farm included!

Would you truly expect anything else?

[Vader]

The spread between #1 and #2 is definately contributing to the problem. The CWB has difficulty changing that spread when necessary because of the requirement to go to the Federal government for permission to change the initals.

Part of the solution to this problem is for the CWB to take over the management of the initial and adjustment payments. This is being forced upon us through the WTO process and the eventual removal of the government guarantees.

I would ask how are these risks to be managed without the government guarantees and to what extent should Western Canadian Agricultural producers be compensated for this loss.

A standard 80% EPO on everything would pretty much solve the problem but should farmers be stuck with that cost? Or should the Government help set up a large enough contingency fund to backstop the risk management program?

Another important aspect of the government guarantees is the cost of financing the purchase of the crop. When the CWB or any grain company purchases grain from a producer the ultimate consumer of that grain has not yet paid for it. So whether it be the CWB or a grain company somebody has to borrow some money in order to pay the farmer for the inital purchase price. So there is a cost of borrowing built into the transaction. At this point in time the purchase of the wheat crop in Western Canada is financed by the CWB and it is done at the same credit rating as the Federal government. When the CWB loses the government guarantees that credit rating will be eroded and the finance cost will go up. Farmers will bear this increased cost. This is another quantifiable loss that we will be burdened with as a result of the governement bargaining away the guarantees in the WTO process.

Will farmers in Western Canada understand the potential costs of losing the governement guarantees and voice their concerns loudly enough so that adequate compensation is made?

[mcfarms]

Tom
I read your comments about blending not making the line companies money, why do they do it then? Of course it's always been a good source of revenue for them and may be one of the biggest inpediments to implementing an on farm stored system, however even this is no reason not to continue to stive and find ways to use this system we have for the time being to gain better returns for producers. And yes Vader I was a little bothered to say the least when the spread between 1 and 2 cwrs didn't move a little wider to preserve all the 1, though I believe from conversations with terminals that the 1 is for the most part being held seperately and not blended down.

[Incognito]

Companies buy as high as they can and ship as low as they can. Period. If you don't - you are soon road kill. But in doing so, the quality of our grain is going backwards.

They are segregating 1 CWRS and keeping it segregated because they expect tenders to go for plus 8 to plus 10 dollars over for 1 CWRS.

They are plus 4 to plus 6 already. So rather than give the incentive to the farmer, the companies are getting it. If you have 1 CWRS don't settle for your normal $4.50 trucking premium. Think $9.00 to $10.00.

Fair and equitable only works in unions - no wait, it doesnt work there either. Farmers with 1CWRS 13.5 should be livid. Farmers with Canada Feed should be sending thank you cards to the 1 CWRS areas.

And while I am venting, whats with 4 CWRS...? Initial is the same at $84.00 for 4 CWRS and CWFW. Pro's have a $12.00 spread. So much CF has been bought as 4 CWRS the integrity of the pool is threatened.

Why the blind eye, Vader?

[Incognito]

Re: Farmers understand the effectiveness of the Gov. guarantee?

What do you think? Farmers and industry argued about the Crow/WGTA until it went from 13 billion to 7 billion to 1 billion.

Farmers argued about the CWB until the WTO will make the changes for Canada.

In order to go forward, you must learn from the past. We havent.