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.
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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.
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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.
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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.
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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.
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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.
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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.
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You see Nejar, the CWB is the best marketer of our grain as they always get the highest price - always.
Just ask Vader.
We need to stop asking so many questions and just roll over and go back to sleep for the next 50 years - again.
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silverback, you are putting words in my mouth. I did not say always. But if you look at my previous post, there is hard evidence that at least in durum wheat into US mills it is rare for the CWB not to get a premium.
Think about gasoline. How often would you find that premium gas was being sold cheaper than unleaded. When the CWB has a premium product then the selling price will always have that premium attached to it. If you can compare apples to apples, ie., exactly the same quality specs, the same delivery position, the same finance package etc. etc. then I am sure that you would find very small premiums accruing to CWB sales. Perhaps the value is more on the flip-side in that the absence of the CWB would allow farmer to farmer competition to drive down prices especially in those high value markets where the single desk premium is greatest such as Japan.
Customers have told the CWB that they value the quality of the Canadian product but not as highly as the CWB values it. In fact what drives customers to pay a premium to the CWB is as much to do with the service as with the product. And that service is a package which includes Canada's variety registration system, the Canadian Grain Commission and even our pesticide management system. So again you see the value is not so much created by the CWB as it is preserved by orderly marketing. It is like the water runing through a Hydoelectric dam. Either with the dam or without the dam the water is going to run downstream (grain flowing to the market place). But with the dam in place you control the flow and generate a lot of power that would not be there otherwise. The CWB creates a resevoir of energy that enables farmers to have more market power through the orderly release of grain through its marketing system.
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Are you saying the wheat board is in charge of the Grain Commission and the pesticide management agency? How good is the wheat board at assuring world wide customers of easy, prompt access to the grain they want? I believe that our transportation system is not efficient enough and constantly creates problems for our customers. If I need to buy something, I will sometimes pay a little more or buy something of lesser quality if I don't have to go through the hassle of a vendor who makes it difficult for me to get it home.
One more question Vader. You think the Wheat Board is the only thing we need in Western Canada. What would happen to the board if it only marketed 2/3 of what it does now? If the volumes of a crop year were cut by 1/3? I am guessing they would find a way to survive. Why then would it be wrong to compete to buy that 1/3 from an open market? If the board is so good at what they do there should be no reason to fear that scenario, everyone would sell through the board anyway, right?
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No, silverback, I did not say that the board is in charge of the Grain Commission or the PRMA, I said that they form a package of services. And yes that package includes transportation which time and again has given us a black eye. That part of the package does not do us any great service and certainly causes our customers to want to consider alternate suppliers. The railroads and the west coast grain handlers are not "team players".
As far as handling 2/3 of the grain it would be the same as in my hydroelectric dam analogy, if 1/3 of the water is leaking away you don't generate nearly as much power.
People always ask why the board is afraid to compete. Fear is not the right description. The CWB's position is simply that competition is not good for farmers. Competition is good for the people who are buying the product. If we were not in an oversupply situation perhaps it would be different. If our customers were beating down our doors for the last scraps of grain in the bins then competition would drive prices up. Right now as the world produces the largest crops in the history of the planet competition drives prices down.
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Once again I stand in awe of the comments made by you Vader.
"Competition is not good for farmers". How utterly ridiculous that comment is. You are obviously saying that the grain companies are evil entities that are going to destroy the farmers of Western Canada, and the CWB is going to save us by controlling our lives and our grain. Right?
If this is the position of the CWB, why don't you put out a press release to all farmers clarifying your point?
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