dual system debate 101

[rosco]

I support the board for a lot more than just pricing my grain for me. I need the spring and fall advances, and the board does a good job of market developement. Just reading all the threads about the CWB that are currently at the top of the column, one would get the feeling that a lot of farmers feel that the latest WTO talks could be the end of the boards monopoly on "designated area grain." So why does the US want the board gone? I've heard that they claim the board dumps wheat too cheap. If that were true, why can't we get rid of every kernel we grow. The phone should be ringing off the hook. Instead the board has the "A" at 80%. That would tell me that the board calculates that they can sell 80% of what we grew at the published PRO price. To take all the grain and try to move it would pull the price down for everyone.
I find it hard to put the blame for the price of wheat solely on the board. Big world crop, rising Canadian dollar, subsidies in the EU and US, & high ocean freight all contribute to what we get. Canola is traded in an open, free capitalist market. Look at the price. Peas aren't on the board. Look at the price. We consume far more barley than we export, so I would argue that the board would compete for the barley, not pull the price down. Besides that, cheap subsidised corn can come north because of the wonderful free trade deal(sarcasm, in case you missed it).
The board is far from perfect. It needs something to push them to hustle a bit more. What that could be, I don't know. And don't tell me a dual system. The board can't exist that environment. They have no elevators, no terminals, how would they export? Agricore/ADM, for example, does. Agricore/ADM could pool grain, give you a yearly average of their sales. I'm sure they would come up with a program that would duplicate what the board does for the less than stellar marketers out there (and I'm one) to move wheat and barley. In a dual market, why would a farmer sell to the board, only to dump it in the Agricore pit? ADM could sell to anyone in the world, assuming that they are not being sued in court by them. They would set a price just high enough to beat the board's PRO, (just like feed barley now) and get the grain they need. The board can't get into a bidding war for grain, and it would eventually kill the board. Then we are in the same situation as Canola and peas. For guys like T4 that live to study charts, that may be fine, but its not for me. Guess I'll have to either learn or hire someone.
I welcome all reasonable debate on the topic of a dual system.
Rosco.

[TOM4CWB]

Rosco;

I do not live to study charts... far from it!

Timing and fundamentals are key... along with a realistic marketing plan that can turn a profit by design.

1. Grow what a customer(s) want you to grow, that has a reasonable expectation of profit. Being in the seed growing business means being ahead of the market by a couple of years if possible.

2. Allow the customer the opportunity to participate in the market risk... to create stability and less cost for them... a trade off of extremes to lower risk on both sides of the market.

3. Pool when it is good for both parties... buyer and seller. Works best when the actual consumer is connected with the grower... Responsible to each other directly.

4. Greed will kill any good project... a reasonable small profit for all involved... is the expectation for everyone.

5. A relationship of choice is key... we choose integrety, responsible communication of problems, honest expectations, and expect the project must benefit all... or it is not a good project for any one individually.

These are the keys to a responsible relationship in business... that can bring all together and create wealth for all!

THis clearly allows for competition... and I believe is healthy to build respect, trust, and faith in a business relationship.

No one party sets out to take advantage of someone else in the chain that goes from production to consumption of a product! All must trust, communicate, and execute all responsibilities in a faithful respectful manner that conserves the assets of each participant in the chain.

I believe the CWB MUST evolve into this type of relationship with "designated area" grain producers or it is doomed to fail and be destroyed.

Hope this helps!

[lakenheath]

Tom you seem to be describing the the perfect world. A well oiled economic machine. A beautiful supply and demand symetry. And it would work without outside influences. And it would work with players that are honourable and trustworthy. But therein lies the problem. The last words anybody would ever use to decribe the Cargill's and ADM's of this world are honourable and trustworthy. The biggest recipe for disaster is having honourable and trustworthy farmers selling into a corupt system. And God bless Canadian farmers, but when in the last time acres were cut back because the demand was not there. Sure, some farmers do, but the majority have a rotation in place that works for them and that is what they grow. Trust me, we do not want to become the the USA, though sadly we are. A country were litigation runs wild, coruption is overwelming and the big an rich run the country. It's a corporate version of Stelin's Russsia, but the government is merely a puppet for the big boys such as Cargill.

[lakenheath]

4. Greed will kill any good project... a reasonable small profit for all involved... is the expectation for everyone.

ADM's interpretation:

Greed will ensure profit....huge profit is our goal every year.....it is the expectation of our shareholders....

Do you think the Board of Directors of these multi-nationals gives a damn of the farmer'share of the profit.....answer, no.

They farmers will not go extinct, because the government will keep them going, though barely.

[TOM4CWB]

lakenheath;

Herein lies the cup half empty... or half full!

We choose partners who, over time, Respect, faith, hope, and Integrety do what you consider impossible.

And guess what a farmers challenge is?

Making the impossible... possible!

[wd9]

Roscso re:
I need the spring and fall advances,

The Agricultural Products Marketing Act (AMPA) legislates the cash advance for both board and non board grains. The CWB administer board grains, Canadian Canola Growers administer non-board grains except for Manitoba corn done by Manitoba Corn Growers.

Proposed legislation before the election were to allow any financial organization to manage the advance, but since the election call all is in hold along with the other proposed changes to the Act.

If the CWB exists or not, cash advance will continue to exist because of AMPA.

The other quirk is although it seems the CWB is not charging a fee to administer the advance like CCGA and MCGA, the board simply takes the administration costs from the pool. Just like the glossies say "All is returned to the farmer except marketing costs" which include advance administration.

[charliep]

As a note, I would check the list of accreditted exporters/domestic processors to see who the CWB major business partners are. I guess the argument is farmers what the bigger multi national companies market access/economies of scale but at the same time want single desk to have one voice in negotiation. Leave for discussion.

If agriculture needs competition and new markets, does our current system foster it? Does our current system encourage innovation and investment in processing - particularly by small and medium sized businesses? Are the pricing/risk management needs for these businesses the same as for a bigger multinational? Can a one size fits all marketing system work for everyone?

[Vader]

tom, you said

"We choose partners who, over time, Respect, faith, hope, and Integrety do what you consider impossible. "

Cargill, ADM, Bunge and Dreyfus control 70% of the world trade in grain. Soon you will have no choice.

It will be like the chicken farmers in the US. Tyson offered the chicken farmers such a good deal that Tyson got all the business. Once Tyson had driven all its competitors out the tables turned. The chicken farmers now refer to themselves as "chicken barn janitors"!

Do you want to see how fast things are changing. Bunge is twice as big today as it was a few years back. They did this through acquisitions and mergers. Who will the next acquisisition be? Have a look at Cargill and Better Beef. The largest beef company in Canada buying out the second largest beef company. And so it goes! The pace is staggering, especially in Canada. If I remember the story in the Globe and Mail last week Canada has the fastest rate of mergers and acquisitions in the world. We must be ripe for the picking.

[gwynplaine]

Wouldn't that be a government issue, vader, having little or no anti-trust legislation? Hence wouldn't our efforts be better served by lobbying for increased competition, or anti-trust laws with teeth rather than bickering about who's screwing us worse?

[lakenheath]

They are blind to these facts Vader. They are going to learn the hard way. Tom's fantasies will be nightmares sooner than later.

[TOM4CWB]

Vader;

We had a great ABC convention; many good discussions on these very issues.

Another Monopoly really got the big slam... the CGC and grading inconsistancy/lack of integrety of Certificate Final of a boat load... as it seems the CGC will not stand behind Certificate Finals all the time.

CWB in handling/transportation to port logistics got the big work over...

Third party interference(the CWB) doen't make for a good coordination between railway and handlers on some days!

I note Vader:

That the near monopoly situation on buying entities has come more BECAUSE of the CWB... Grain CO.'s must deal with this "single desk" and need to create a force close to the one they deal with... which invites concentration of our industry!

Play with fire... and others learn to fight fire with fire!

We had a Very good presentations by Mr. Len Penner of President of Cargill and Mr. Brant Randles President and CEO of Louis Dreyfus Canada.

You should have been there!

Mr. Penner discussed "What does it take to be in the Agri-food Industry"

Mr. Randles took a run at suggesting... How we could improve marketing and Transportation Logistics to improve our western Canadian bulk grain handling system.

[Vader]

Tom, it is quite amazing how you can blame everyting on the CWB, including corporate concentration. Do you really think that the existence of the CWB has anything to do with the size of Cargill, ADM, Bunge, and Drefuss in the whole wide world, and the pace at which they are buying out their competition? Do you dream in technicolor?

[agstar77]

Just when you think you have heard it all!! Tsk Tsk T4.

[TOM4CWB]

Vader;

Economics 101.

Economic reality is what it is... not something I create out of thin air.

WD9 I believe stated the 4 producer theory... somewhat in jest... but reality in economics none the less.

You must admit that power and wealth in one group will tend to align others to balance the other side...

To deal with the first group's market power and wealth effectively...

Equilibrium, the pendulum swings back and forth... common economics well known.

The EU gathers strength... to balance the US...

Brazil, S. A./Asian economies band together against the US/EU in the WTO.

THe Alliances grow... gain; power, influence...

Why do nation states and Corp's do what we do?

Survival/Strength from the worldly perspective is actually quite simple isn't it?

[Vader]

Sorry Tom, I totally disagree with your contention that the multi-nationals grew in power to offset the power of the CWB. Totally ridiculous. Someone who has a solid economics background told me that you can actually quantify market power. He said that the amount of market power that the CWB has is insignificant compared to the multinationals. Just look at the corporate earnings of Cargill, ADM, Bunge, Dreyfuss and ConAgra. Together they control around 80% of the world trade in grain. In wheat alone that is 100 million tonnes. The cwb's share of wheat trade is about 20 million tonnes per year and the cwb does not trade in corn, soybeans rice, sugar etc, etc, etc. How can you say that the CWB has concentracted market power and is to blame for the concentration of the grain traders?

Tom you are totally unbeliveable.

Now where I do agree with you is that the pendulum needs to swing. Farmers around the world need to "band together" to balance the power of the multinationals. Let us simply divide up the world markets and prorate the production amongst the farmers. Let us assume that we actually have supply management on a global scale. Then let us set the price so that farmers can make a living. Just like General Motors. Let's base ag products on the cost of production.

What is the alternative. Farmers will all but disappear. Just go to any large farm meeting. Have a look at all the grey heads. Who are we kidding? Agriculture will have a rough go if we keep doing what we are doing. Or are you the future of agriculture Tom? Can you show us the way? What is your plan? Divide and conquer? Whose plan is that?