Impact of the Loonie/Ocean Freight Rates on Prices

[parsley]

Vader, Maybe the CWB ITSELF gets more money, but it hasn't been passed on to Designated Area farmers. When you compare profits in farmers' pockets for Board grains vs non-Board grains over a 50 year period, the CWB hasn't performed favorably.

When I look at the CWB, I give it a 20 year glimpse Vader. Lets look at the demurrage charges Prairie farmers have eaten. You will undoubtdly want to reference a neutral-demurrage month as does the CWB when it suits their purpose.

The point is, prairie farmers have eaten unbelievably high demurrage costs over a long period of time and
demurrage has every potential to eat out profit from prairie farmers again in the future.

Let's learn something from the past if we want to stop the drain from the pooling accounts, Vader.

Let's start at the beginning, Vader. I want the bleeding to stop. The question is do you?

Parsley

[Vader]

Tom, it is not apples to oranges.... it is wheat to wheat and you can find equivalent grades and equivalent sales. When you compare those equivalents you will find that the Eastern millers pay eastern farmers less money than they pay for equivalent CWB grain.

An Eastern farmer put it to me this way. The Eastern miller looks at where the local farmers next best option is which is generally the export market and then they widen their basis accordingly.

Eastern farmers have no bargaining power. The CWB does.

[Vader]

Parsley, I am glad to hear you admit that the CWB gets more money. Your statement that the farmers do not get it is a reflection of the averaging effect of the pooling system.

In fact the farmers get every penney of premiums earned by the CWB. The CWB only deducts their admin costs (which are as I have mentioned before are substantially offset by interest earnings.)

Producers discontent with the CWB I believe is largely due to the pooling system, not single desk selling. Single desk selling makes extra money.

Pooling prevents proper market signals from flowing through to producers. Producers do not see the premiums from our best markets nor do they see the bottom end of our sales program. All they see is the net effect of the sales to countries around the world over an 18 month pooling period.

Perhaps we should move to a contracting system where you sign up acres for a particular destination market, not unlike the Warburton ontract. I would suggest that we go one step further and remove that contract entirely from the pool. The only question then is who would get to grow for that contract. Perhaps there would be a contract acceptance level in accordance with the ratio of acres offered to the volume required for that customer. Cash price, act of God, 100% payment on delivery.

[TOM4CWB]

Vader;

Eastern Millers have just as much ability to arbitage DNS/NS Hard Red Spring prices to 3CWRS as they do to CERS wheat.

If the CWB offering price is not competitive with US Hard Red Spring... guess what... the miller will buy the US Hard Red Spring wheat. The CWB cannot control imports to stop this arbitrage of markets.

Quality for quality, service for service provided... we are parity priced with Ontario Wheat... and US Wheat.

Unless there is some US Wheat import restriction the CWB is controling we don't know about Vader? Is this what you are saying?

Or are you expecting us to believe Millers pay the CWB more... because you are nice guys and deserve it apart from the product provided?

[charliep]

Vader

I have to challenge the point that eastern farmers have no bargaining power whereas the CWB (I notice you don't say western farmers) does.

First, I haven't seen the hard data to support this the CWB price premium that is talked about versus Ontario. If this was a game of liar's dice, I would asking someone to lift the cup. Second, I question why this statement is relevant to a western farmer.

Eastern farmers have choice of marketing alternatives (including Ontario Wheat Board), timing sales, who to do business with, etc.

On the western side, farmers have one choice of one marketing agency (albeit with pricing tools).

The real question is whether on a year in year out basis, which system returns farmers the best returns. The eastern system has moved to an open market. The western payments still includes timing of sales, pooling of returns across different customers based on returns to pool, freight adjustment factor, assumed grade spreads in the pooling process, etc. As the CWB has said over time, you can't compare a market that provides a spot price with a pooled payment. You can only compare the actual annual results of the two systems - which one provides farmer the most money.

As a note, I find it interesting the Canadian National Millers doesn't complain about prices. If they were being gouged/pay premium prices, they would seek another system. The current system likely provides a fair price for millers. It also allows them to negotiate as an industry on price versus individually. They all buy differently in terms of timing but their daily quotes are the same adjusted for location. As is indicated in Tom4CWB, they have choices as to outside markets.

The benefits the millers and the CWB recieves doesn't necessarily translate into farmer benefit. The farmer result (payment/price) is the pooled value.

[parsley]

Q. What is the point of having a single desk system that does not benefit farmers?

A. To benefit the employees and the Directors and the Government hanger-oners.

Q What is the point of doing away with pooling, keeping the single desk and going to privileged contracting?


A. To benefit the friends of employees and directors and the Government hanger-oners.


Vader, your claims that the single desk brings in more money is another one of those "CWB facts", authorized and validated and authenticated by,the sole expert on the CWB, yes you've guessed it, the CWB.

And the CWB is about credible when it comes to facts as Chuck Guite.

How in the world can anyone spout off so much Board mantra? From attending Liberal fundraisers?


Parsley