Canadian Wheat Board

[Vader]

tom4cwb, I agree with you. Initial prices suck. We need to completely delink from the federal government so we can set our own initial prices without government interference. On low value grains like feed wheat the default program should be a 100% EPO or guaranteed delivery contracts.

[Vader]

nejar, get off you philosophical butt and go manufacture something. The fact of the matter is that without the CWB the playing field would be severely tilted in favor of the larger players. Because of the CWB all manufacturers purchase at the same price, a distinct advantage for smaller players. In fact CWB pricing policy makes central Saskatchewan the cheapest place on the continent to acquire raw grain for processing. Go do your homework.

[nejar]

Vader
"the cheapest place to buy in the world."
Sitting on my philisophical butt - What does that tell you about the CWB

[Vader]

no nejar, not the cheapest in the world. The cheapest on the continent because of the freight advantage. Grain is priced at export position minus freight. If you want to buy grain from the CWB in the middle of the prairies you get the greatest freight back-off.

[TOM4CWB]

nejar;

The highest freight backoff does mean the cheapest price in the world! You are right!

The highest costs, with the lowest price.

[Vader]

tom4cwb, the lowest price in the world is probably somewhere in central Ukraine or Russia or Khazakiston. Take black sea wheat and back off the freight to central Russia and you will probably find the cheapest wheat on earth. They do not however have the costs that we have. They pay for their freight in funny money. Their ownership costs are hard to determine as they come out of the commune system. They don't use much in the way of fertilizer or chemicals and for many, their equipment is ancient if they have any at all.

How does $50.00US per tonne back off to central Ukraine? That is $1.65 CDN at port. Does this put $1.25 in the pocket of the Ukranian farmer? Does that make the Ukranian farmer profitable? I don't know. But they keep doing it.

Does China buy any Ukranian wheat? Argentinian prices can be competitive with Black Sea and China certainly buys from Argentina, especially when they produce more than they can sell to Brazil. How do you move a large volume low quality Canadian crop into the world market against this type of competition? You can't do it at a profit and it certainly isn't sustainable.

The only solution is to find alternative uses for low quality wheat domestically. That means either livestock or ethanol. Both are good. Ethanol would seem to have more long term volume potential. Energy demand is huge and continually increases.

Lets quite harping on the CWB and recognize the real problem and work toward a solution. Lets develop markets for non-milling wheat in Canada. Let us discover the needs of these markets, and breed wheats with specific traits based on these needs. Wherever necessary let us change regulatory systems to facilitate these ventures. And perhaps most importantly lets make sure that government is onside and recognizes the importance of success of this sector.

[charliep]

Vader - First, a thank you for your participation. The discussion is excellent.

1) Just a comment on how much our quality has struggled over the past 4 years - not a farmer/organization issue but mother nature. I have heard one CWB official comment that the bottom end of some of our 2 CPS/3CWRS/etc. was of poorer quality than Ukraine, Russian and Argentine wheat. Our customers judge our product by how it performs in whatever their are manufacturing/milling.

2) I would watch how Canada measures competitiveness for these eastern block countries. Based on my trips there, the Ukraine is a basket case in terms of financing, regulation, grading, etc. - all the things Canada prides it self on. Where I did see success is supply chain relationships where farmers (supported techically and financially) can move specific quality through a commited logistic and quality system (usually backed by one of the multi-nationals but not always) to an end user. Watermelon to Sweden. Strawberries to Russia. Sunflowers to various locations. Why not malt barley to China set up by a multi national and monitored by someone like SGS. To illustrate, the phone system in the Ukraine is a basketcase - old technology/poor service. Everyone has a cell with service likely better than ours - newer technology from Europe. Canada cannot be sitting still - we will get passed.

3 We all agree on the need to develop new markets for wheat in Canada. The disagreement is looking at not only the lower end of the quality spectrum but also encouraging innovation and investment at the upper end as well. The question is how we do it and whether the current marketing system allows this.

[nejar]

I was in Australia in 2001 and they were already marketing white wheat to Japan under contract. In 2004, 3 years later, Canada wakes up and starts to promote white wheat. Why so slow?

I for one don't have faith in our bureaucracies to keep pace with world markets.

New market niches I'm convinced here in North America where price is not as large of an issue as quality. The organic farmers have already figured it out and are haveing to deal with the CWB red tape to market their product which I think is absurd.

Vader, some people think that the CWB is the problem. Maybe we could share some thoughts on defining the "problem" which is low prices and high input costs. What has to change any who should be changing? I don't think the Canadian farmer can carry on the way we are and survive long term.

[TOM4CWB]

Nejar;

The Hard White wheat is a good case in point, and a conflict for the CWB.

CDN Hard White can easily replace CWRS in bread making, Ausie Hard White cannot do this.

But the CWB does not market our Hard WHite into bread markets I am told, to maintain the CWRS market I am told.

It is good to see the DPC come up $10/t in the last week, we are still short $15/t or the PRO is at least $10/t too high. At any rate making farmers sign up before quality is known is insane, and you know it Vader.

Still no comment VADER on the GOC initial CWB betrail of every grain farmer in western Canada.

I guess the minister will play the political game and increase initials when we go into the next federal election. SICK.

[Vader]

tom4cwb, I am not happy about low initials or low grain prices. Low initials are a function of the low grain prices and the GOC guarantees. When the GOC no longer has a financial interest in the CWB as a result of the WTO concession to give up the guarantees that will no longer be the case.

If you are unhappy with initial prices you can take a look at the EPO where you pick up the cost of guaranteeing a higher initial. You should take this very seriously since in the absence of GOC guarantees the EPO's will become much more of a fixture in doing business with the CWB.

I personally would like to see every CWB transaction done at a minimum 80% EPO. This would be less distortive for domestic pricing, would enhance farmers cash flow, and would eliminate the possibility of a deficit in the pool account.

The sun is shining (finally). Going combining today. Hopefully will not have time to be on Agri-ville for the next couple of weeks.

[nejar]

I was also wondering if the stories of the CWB low ballin the price of grain around the world in order to make sales were substantiated.
This seems to be one of the complaints from other trading partners. Any thoughts

[Vader]

Lentils started out yesterday at 17.3% moisture but got down to 13.9% by days end. Looks like a great forecast. Might actually get the rest of harvest done and not have to use the aeration fans.

nejar, I would guess that someone like you made up that rumor and 10 more like you will pat you on the back and say how right you are.

After 10 or 11 trade injury cases by the Americans they have not been able to provide one shred of evidence to support what you are suggesting. In fact after surveying their own mills in the US the Department of Commerce found that US mills paid more for Canadian Durum wheat than for US durum 59 out of 60 months over the period in question.