Milling Oats vs Milling Wheat

[Vader]

I don't think there is a direct comparison to todays spot price,(which might indicate that someone, somewhere is willing to buy a few truckloads) and the availability in the market place for another boat load of durum.

The US system trades small lots all over the country. People are trying to assemble boat loads. They may in fact have made a committment before they actually have an entire shipment. They may be caught in a bad basis situation. The price goes up and the price goes down. Grain is trading between producers and traders, between traders and elevators, between elevators and grain companies, a multitude of individual trades. That is how the US system works. When the dust settles somebody somewhere ends up with (perhaps) a complete shipment of grain to some destination in the world.

The CWB relationship with its customers is distinctly different. The available supply is known. The quantity, the quality and the location. The logistics are pre-determined. The sale is negotiated on price, delivery, various finance and service conditions. The grain is called into position and the sale is executed. Very clean, very efficient. This makes for a consistent premium over spring wheat that is in the range of a dollar per bushel.

When the market is satisfied and will no longer absorb additional product at that price premium over spring wheat there are no further sales made. That is how the premium is maintained.

[TOM4CWB]

Vader;

A reasonable person would expect Canadian Durum products to be marketed the same way as US product... if the same type of system were being used. Like in Oats. No huge amount of Oats hits the market all at one time either... on both sides of the 49th.

The argument actually many turn to CWB marketing tactics... if it were to lose the "single desk".

Rationing out small amounts (of grain product)... instead of selling in boat loads is where the average "designated area" producer of grain operates.

It is the purpose of the marketer to accumulate and deliver the product in larger lots... not the initial producer of the ag produce back on the "designated area" farm... or US farm... whichever side of the 49th it is grown.

Even in a vertically integrated operation south of the 49th... (I am sure you might agree)the operator of the production unit would not normally be responsible for ship loads of grain.

Thanks for the explanation... seems to me itproves my point even better!

[Vader]

I think you have missed my point entirely.

Yes, individual producers deal in small lots of grain. The spot prices in a completely open system can be indicative of a variety of situations which do not relate directly to the demand of the export market. Sometimes brokers get themselves into a short postion which result in strong spot prices. The degree to which that same broker is willing to go long also does not need to be representative of an export demand, only the brokers appetite for speculation.

Since there is little opportunity for brokers to work the durum market in Canada you are not going to see those spot prices. I will not pass judgement on whether that is a good or a bad thing. Brokers certainly add liquidity to the market but at what cost?

The Canadian Wheat Board has not ability to provide the "brokerage" function. Their job is simply to market the wheat offered to them, and to do as best they can to maximize returns to farmes. To that end they do not sell the entire durum crop. The CWB will sell roughly 3.5 million tonnes of durum this year which represents about 60% of world trade. Farmers produced much more than this and inventory levels will increase.

Why do farmers grow so much durum? Probably because it pays better than spring wheat. Why does it pay more than spring wheat. Probably because the CWB only sells that amount of durum wheat that durum millers demand and does not sell durum wheat into non-durum markets as would be required if the plan was to sell the entire durum crop.

So, you see the Canadian market does not operate at all like the American market. Perhaps that is a good thing considering that American farmers depend for their survival on Government subsidies that are many times greater than those which Canadian farmers receive.

No please go on and tell me that I have once again proved that you are right.

[TOM4CWB]

Vader;

The market is the market... be it Canadian or USAian.

It is a world market; and the CWB is a single player in a global situation.

If we charge non-comptitive prices... substitution occurs... other producers ramp up production... and our durum sits in the bin till we sell it for less! Quite simple.

Single nation Grain Monopolies are a tool to reduce food costs in that nation... just as the CWB got it's monopoly to supply the commonwealth with cheap wheat and barley starting in 1943.

In the early 1950's the English House of Lords overruled the Canadian Supreme Court to maintain the CWB monopoly.

Extracting a premium for our grain was never a objective of the CWB Act... and never will be.

In September 2005 the CWB Legal beagles are still argueing in Canadian COurts with great fervour that the CWB has no duty of care to maximise "designated area" producers wheat/barley returns. Instead they pledge allegence to the crown and lawless Liberal arrogance!

[Vader]

Tom, I suspect that it would make many people very happy if someone would admit that the CWB was a pawn of the government and was carrying out some subersive plan to **** a pillage farmers.

The reality is that the CWB is under a governance structure that is comprised mainly of farmer elected directors. They are the "brains and concience" of the corporation and their fiduciary duty is to the farmers, without whom the CWB would certainly have no purpose.

No matter how much you shout and scream about religious rights and freedoms, social responsiblity and morals you really answer to no higher authority than your own pocket book.

Simply arguing that we should grow more grain and sell it for less money is a travesty. Perhaps you would survive in that environment. Perhaps you would be around to pick up the pieces. Perhaps you have enough cash to purchase a share of the pie when the majority of the farmers go broke.

Tom, is survival of the fittest your game plan? Are you taking a big fat long position in the market. How many millions do you have at your disposal? What payoff are you looking for?

[TOM4CWB]

Vader;

Speaking of the Crown:

Did you know the Toonie just about got called the Moonie?

Guess why?


Because the Queen is Bear on the back side!

Understanding Reality is my number one asset in farm management... not cash, not tradition, not habit.

Loving my neighbour as my self... thus loving my LORD through actions is my blessing in this life... not material things.

I can be happy with nothing... just as happy in plenty... doesn't matter as we all end up in the same place 6ft under in the end!

THis is why HOW we get where we are going is what determines where we end up in the end.

Respect for others... including the right to choose and make their own decisions... is a principal God instituted...

Great Discussion!

[parsley]

vader,

Your state

QUOTE
They are the "brains and concience" of the corporation and their fiduciary duty is to the farmers, without whom the CWB would certainly have no purpose.

UNQUOTE



Perhaps,in your mind, your rhetoric about the CWB Directors elevates both status and importance, but I just want to remind you that the CWB Act is in effect and is clear:

1. The Directors' feduciary duty is to the Corporation. Not to farmers.

2. The Corporation's Purpose is clearly defined in the CWB Act.Not by farmers.

3. The Corporation is governed by the CWB Act.

4.The CWB Act is imposed by the Parliament of Canada.

5.Parliament appointed Minister Reg Alcock to oversee the CWB. Not by farmers.

6.The Minister can overide ANY decisions made by the Board of Directors.

7.The B of D claim they try to attend political functions so they can access their own appointed CWB MInister, which indicates the Minister-Board relationship is that of a waning suitor.

8.The deliberate decision, (you say in another thread)by the Board, not to market the grain offered to the CWB, during these cash-strapped times, indeed, shows where the B od D's conscience lies.

9. Do $500.00 per day, per diems, for
the Directors correspond with the idea of conscience?

Could you better explain your word "brains"?

Parsley

[JACKFLASH]

Vader:
Getting back to Durum. Prairie Pasta had a miller in North Dakota that would buy substantial amounts of Durum. Now the logistics made it profitable for producers in Southeast Sk. and Southwest Man. to send Durum there.
Yet the CWB made the buybacks out of reach to get into that mill. Why would the CWB stop ways of getting tonnes off the prairies and creating more demand for Can. Durum?

[Vader]

Tom, would love to continue the "discussion" but you seem to have ventured into some nether region of the english language where I am completely lost.

parsley, I say brains because it is the job of the "Directors" to direct. This takes brains. Innovation. Planning. Succession.

Jackflash,

Talk to the Prairie Pasta people. Their business plan showed that the pasta business is a very slim margin business and the business plan failed to convince anyone that there was a positive case for investment. In the case of selling durum wheat to Carrington there is a basic freight differential that puts that geographic area of the country at a disadvantage. It is very rare for buyers in that area of the country to be able to rationalize this disadvantage and come to the table. Again, ask those who were involved to explain it to you.

[TOM4CWB]

Vader;

Strange.

6 years ago... seemed you understood exactly and perfectly what the real purpose of our mission was... on this little blue planet... third from the sun!

God bless you and yours this Christmas Season!

[Vader]

A lot has changed in 6 years and I have an awful lot more information now than I did back then.

Would be a terrible world if we were not allowed to change our minds when new information is available.

[TOM4CWB]

Vader;

You said: "I am completely lost."

Hope you find what you are looking for... truly... I am trying to help!

Peace be with you!

[parsley]

JACKFLASH,

Some pasta plant information in a USDA report at:

http://72.14.203.104/search?q=cache:XQy_7HZMbiIJ:www.usembassycanada.go v/content/embconsul/fas_twica22_2004.pdf Prairie Pasta %2B CWB&hl=en

and this is what it said:

"CANADIAN WHEAT BOARD BLOCKS PRAIRIE PASTA PRODUCERS:
Late last week, the Canadian Wheat Board (CWB) blocked the attempts of the Prairie Pasta Producers (PPP) to establish a successful value-added venture for their durum wheat. PPP had been in discussions with Dakota Growers Pasta Company (DGPC) over the last several years to work together to add value to Canadian durum by
processing it into pasta for Canadian and American consumers. By acquiring shares into DGPC, this
would give the PPP member the right to deliver one bushel of durum per year to DGPC. Earlier this month, after PPP concluded a share offering with DGPC, the CWB informed PPP that they do not
qualify as a new-generation co-op under the CWB’s New Generation Co-op (NGC) policy rules because
the processing would take place outside of Canada. This effectively killed the share offering. The
transaction had been conducted with full knowledge of the CWB and was done according to the CWB’s NGC policy, but this was the first time that PPP had been informed by the CWB that they were breaching the CWB’s NGC policy. This is not the first time the CWB has hampered the PPP goals of creating a valued-added industry for durum wheat. PPP is a new-generation co-op of Saskatchewan farmers that who originally got together to build a pasta plant in Saskatchewan. The CWB’s buy-back policy made the original venture too costly and cumbersome."

Vader,
I find your terms "Innovation. Planning. Succession. ", presumptuous and out of place; in fact plain scarey.

Succession to whom? Sounds as if you are planning to turn the CWB's pooling accounts over to the Liberal party of Canada.

Just so you know, Vader, farmers in Western Canada aren't dead yet. And we don't need the CWB to make succession plans for us.

Parsley

[JACKFLASH]

Parsley:
Thank-you for the information.
Vader I know we have a 2MMT glut of Durum in Western Canada, and yes it is going to take time for it to move thru the system
Now it is a market signal to decrease production, and fringe growers like myself will not seed durum next year,but there still is alot of Durum going to be seeded in 06. It could be 07 before a price recovery will happen.

[parsley]

JACKFLASH,

Italy is prolific with pasta-makers. This is what marketing experts at www.delverde.it say:

QUOTE
So, at Fara San Martino, on the slopes of the Majella, two of the most well-known brand names of Italian pasta were established. One of these has many particular characteristics: it is a young dynamic firm which immediately set its sights on the international market, winning an important position in a specific area, that of high quality pasta. This is Delverde (www.delverde.it): it has a turnover of 45 million euro, 220 employees and 58 per cent of sales achieved in the export market, mainly in the United States of America and Canada. We asked Giorgio de Gennaro, the managing director, what strategies were used to break into the international market.

"We chose to turn to those markets which, because of their nature and economic standing, were able to take on a product which falls within the upper level of the market. This is the case of the United States of America and Canada, where today we firmly hold a 8 per cent share of the market.
UNQUOTE

We've got the durum. We've got the young folks. We've got the drive.

We've got one impediment.

Parsley

PS
Oh, at:
http://biz.yahoo.com/ic/130/130919.html
I found it interesting that Italgrani
has a mill in North Dakota. You realize, JACKFLASH that Italgrani and the CWB are old pals?

Here's from their website:

"Italgrani U.S.A. puts the flour in the pasta. The company provides durum and semolina flour manufacturing services. It purchases grain from midwestern US farmers, as well as through the Grain Exchange in Minneapolis. Italgrani U.S.A.'s products are sold under the Aurora Semolina and Aurora Star labels. The company operates mills and grain elevators in Missouri and North Dakota, and it distributes products to pasta makers across the US by railcar, truck, barge, and airplane. Italgrani U.S.A. is a subsidiary of bankrupt Italian grain producer Italgrani S.p.A."

Hmmmmmmm.