CLW - Canadian Lentil Board

[lakenheath]

Yes, this one is kind of "out there". Many will think this is crazy. But, do you think we could extract more money out the lentil market if our production was "pooled". We are the major player in worldwide lentil production. We could be the OPEC of lentils. Seems like every country in the world produces wheat, so the CWB in theory may not be as effective as it would be in marketing something like lentils that should be in tight supply. Lentil acres are only going to go up Canada. Albeta is just discovering what Saskatchewan producers have made and a large number of other Saskatchewan producers haven't even gotten on board.

New variety that yield higher, have better chemical weed control and disease resistance are coming on board. If you think we overproduced this year, just wait and see. Buyers know that there are going to be huge tonnes of lentils to pick and choose from and farmers are forced to sell for cash flow. They are not stupid.

Once again. We have power in numbers, but are not using them.

Tell me I am crazy.

[Incognito]

FNA is looking at the idea. Western Producer had the story over a month ago; so you are not re-inventing the wheel nor way out there. You may want to read up on your FTA and NAFTA agreements Canada signed. Once you find the agreements search: monopolies then single desk selling.

[charliep]

Perhaps I have the same question. Durum and lentils are similar in many ways. In the case of durum, the CWB makes the decision about how much farmers carry. In the case of lentils, the farmer does. In the case of durum, the farmer delivers when called for and recieves a prescribed initial payment. In the case of lentils, the farmer delivers when they chose and recieves full cash. To the extent the CWB controls prices at the processing level (domestic human consumption price), there is an impact on farmer investment in communities. Farmers have invested in pulse processing plants in Saskatchewan (both good and bad results). They can sell to these processing plants at whatever they choose to with their decision based on which market puts the most money in their pocket.


Farmers make seeding decisions in both cases with no outside influence other than profitability. Obviously (at least hopefully) ability to turn both lentils and durum into cash a driver in this decision. Lots of crop in the bin at the end of a crop year should be a signal not to grow either crop. Inventory information is readily available for both - our customers know how much is available in Canada.

Prices are determined by world markets with perhaps some ability to influence by withholding product.

Would lentils work better under a single desk system? Would durum work better under an open market? Would a hybrid like Agricore United runs for beans work?

[TOM4CWB]

Charlie and Lakenheath;

I spent a fair bit of time working on this issue in Saskatoon.

1. A fair minded discussion about the CWB marketing is near impossible at this time. Tempers are at a near historic high point.

2. Elastic vs. Inelastic markets... some customers will not take over a certain tonnage of food... no matter what the price is. Columbia/Brazil buying lentils would be a fairly good example. In Columbia we have had 95% market share.

While other markets like India;

In Yellow peas: an approximate 1% difference in price creates a .8% change in consumption.

3. Carry over in peas will very likely be below 800,000t this crop year, while in lentils we will have enough lentil to supply next years market... with a little carryover of 05 crop for 07.

SPG did a study;

"Market Muse: Saskatchewan - Lentils - From Gate to Plate"

by Mercantile Consultants Marlene Boersch, she did a very good job of explaining just what has happened. THis study is on page 26 of the pulsepoint January 2006 Magazine Volume 6 Issue 1.

Every one of us needs to study this investigation, the US import situation,

Page 37 SPG explains the SPG position regarding U.S. Peas and Lentils entering Canada. These are an excellent marketing eye opener!

Interesting closing thought.

A buyer from Brazil that imports lentils there brought to the attention the plight of the lentil market in Canada.

THe Brazilian end-user said:

"The price is $450/tUS. It has averaged this price over the last 5 years. It is still the same price today!" Why should he pay more?

Currency, freight, handling, all these costs have gone up. Grain Farmers in western Canada have a problem... as do the Aussie grain growers that responded in Saskatoon.

1. A high currency, no matter what country the grain grower is from... destroys the farm sector if it depends on exports!

2. Freight cost is key to competitive advantage , the Crow gave us a major cost advantage... and now that it is gone... we can't compete especially when the promised "level playing field" did not materialise on the trade front.

Marlene commented on "single desk" marketing. Her best example of a well working grower association is Columbian Coffee. Not a manditory single desk... but growers working together in a large association can, if well managed, in certain market conditions get a slight premium.

But a large down side exists.

If the marketing agency is poorly run... it is a reck for everyone.

It appears that close to $30/t is missing on our high quality wheat today.



ANy one can get a premium in a rising market.... but what happens in a falling market?

Quality, Loyalty, Trust, Service, and Integrety will go a long way to go through these valleys... if any one of these attributes is missing.... the relationship falls apart and we are back to square one!

The CWB is at square one... and we are also at the same stage in the lentil market!

Drought (Shortages in 02 and 03);

Poor Quality;

Transportation Stike;

Strong Canadian $$$;

Failure to keep or open markets to a level trade arena;


One could say the perfect storm!

Going to George Morris seminar in EDM. for the next 2 days... will report back then!

[clancey]

When I was trading lentils, we thought that a Canadian Lentil Board would be a swell idea because you can make more money from a board and you won't face as much local competition in export markets.

The CWB does not do its own logistics on export sales and does not sell direct to many markets. A CLB would likely follow the same pattern supporting the efforts of major exporters.

Establishing a CLB might not be hard. As I recall, the enabling legislation for the Saskatchewan Pulse Growers gives it the right to become a marketing board -- without seeking input from growers. In fact, I think the same is true of all check-off based commodity groups in Saskatchewan.

However, Canada's dominance of export markets may be in doubt. If the next iteration of the U.S. Farm Bill maintains the current level of support for peas and lentils, acreage in the USA will continue rising quickly. Of course, most will be marketed under a free enterprise system.

And that brings us to the question of whether Washington would approve of such an action. Western Canada looks like it will get its way and see the Conservatives return to power in Ottawa.

The hugging and hand holding that will ensue between Republicans and Ottawa will preclude any support from Ottawa for a CLB -- this despite that fact the Conservatives both do and dont' support marketing boards and do and don't support the CWB. Like Bush, what is said depends on what you want to heard.

In summary, making a CLB may be doable for 2006-07. It will likely be more profitable for big companies than the current situation. It will be opposed by Washington and therefore probably by Ottawa. Farmers will still get the world price for lentils less the cost of marketing, managing, pooling, etc.