Who Controls Grain Handling?

[Incognito]

Well its 2:15 a.m.; our 10 month old daughter is just starting to sleep thru the night and what do we do? Go out today and buy a 9 week old dog... DUH!

RE the all or nothing approach. IF after all these years the rapport and support is not there from your loyal customers, that you couldnt not maintain them in a dual market environment, is not saying much for the goodwill established over the years.

Re timing: I think the CWB will get the same amount of time that farmers had to adapt to the WGTA going down the tubes - 8 months from the announcement to the reality.

IF the family farm had to adapt that quickly, i see no reason that the CWB, with all the years of goodwill built up, the best sales team, the best BOD, the best wheat, the best grading system, the best protein and the best record of defending the family farm, be possibly scared of going head-to-head with a grain company.

Or is it maybe that those same companies now complete 85% of the sales and the sales are actually THEIR customers and the goodwill is owned by the same companies not the CWB.

Its been 10 years since I've seen company sales stats- and alot can change in 10 years.

IN 5 years, i have a wife, two kids and a frikkin dog...

I don't buy into the "all or nothing" theory. As I've said previous, if the barley experiment would have been allowed to pass, you wouldnt be in this mess today. And where are the people who enacted that strategy today?
not in this business...

think about that this Sabbath!

[TOM4CWB]

Vader;

We have a transportation system with capacity limitations;

How much extra does it now cost non-board grains because the CWB is somewhat inflexible and difficult to work with?

Is the cup half full, or half empty?

If grain co's had contractual obligations to fill a boat on a certain day, at a certain port, with specified quality... perhaps it could cost less system wide for the CWB to share the power... and help grain co's and farmers be a reliable supplier of all "designated area" western CDN grains?

[Vader]

parsley, parsley, parsley, never anything constructive. Just personal shots.

Tom, there may be some slippage, but by definition a single desk handles all the grain. That is all or nothing.

Good will comes in many forms.

Canadian grain has a brand. That depends on maintaining the variety registration system and the grading system. How long will that suit the multi-national grain companies? Or will they want a more open american system? The CWB has been working very hard to develop its brand. You can now see the CWB logo on many products around the world that are made from Canadian grain. Companies like ADM do not engage in "branding" of american wheat because a competitor like Cargill might benefit. So there goes a lot of "good will".

Customers of the CWB have come to rely on a package of services. Some of those services depend on the size of the operation. In an open enviroment where the CWB only represented a portion of the trade it could no longer make the type of supply committments that it does today. Will that continue to suit the purposes of those customers. Probably not. They will simply move on. More "good will" gone.

If the volume of grain handled by the CWB shrinks then staff cuts will be required. In this new environment will every one of the CWB's employees remain loyal? This is highly unlikely. After all they have families and responsibilites. Perhaps their needs would be better served moving over to the competition. Perhaps they could start completely new companies and focus on some portion of the business where they had particular expertise. Much of the customer loyalty depends on the individual relationships with staff. Much of this will be gone. Lot's more "good will" gone.

How much "good will" can the CWB lose and still be recognizable as the CWB.

This is no slippery slope. This is "all or nothing".

I would suggest that the only people who are scoffing at this idea are those who simply do not care, do not understand, or are angry enough that they actually want the complete demise of the CWB. Those same people will say that I am fear mongering. For the rest of you out there I give you one consolation. Regardless of what happens, it happens to all of us. Perhaps if we recognize the severity of the situation we can regroup and form a new organization which will give farmers that market power which we so much need to survive.

There will be survivors. Some will be niche marketers like parsley. Some will be large players with lots of money like Tom. Many of us will transition to become employees of the multinationals, much like the Tyson chicken farmers in the US. Many will exit the industry, and although this has been happening since we first broke the land the process may accelerate.

Silverback, you talk about the day when farmers will make something happen for themselves. Are you talking everyone for themselves or are you talking about a co-operative model. If you are talking about everyone for themselves like parsley and tom then you are playing a dangerous game of musical chairs. If you are talking about a co-operative model then you are talking about re-inventing either the prairie pools or the CWB. Would it not be better to work with the existing CWB and make it better?

[TOM4CWB]

Vader;

You said:

"Tom, there may be some slippage, but by definition a single desk handles all the grain. That is all or nothing."

The CWB and it's directors are negligent; if they take the stand Rod Flaman took above.

The vast majority of trade would wide has a farm co-operative tied into the marketing chain; at some point... with OUT a monopoly.

Vader the CWB simply points out they are CHICKEN to prove the point they are progressive well managed marketers.

If the CWB IS NOT a well managed marketer... then who will even miss the CWB in five years?

Isn't it time the CWB WOKE UP?

[TOM4CWB]

Ag trade without monopolies;

The CWB,
The AWB,


I hope You get the point Vader.

[agstar77]

Hey T4 are you also for getting rid of the monopoly our two railways have over grain movement or is that okay? are you satisfied with their service ? If not will you set up your own transport system to compete with them? This is basically what you are saying when you want to get rid of the CWB. There will be a new monopoly , grain company "A" or grain company "B" . If you think they will treat you better, then you also believe in the tooth fairy. They might however contribute to your new private healthcare insurance that you will soon need. lol

[charliep]

Has anyone thought about a CWB in a more open market? What would the transition look like that would give the CWB the highest probability (not guarantee) of survival? Allow a certain amount of grain to be marketed outside the CWB (10 % or a 2 mln tonnes as an example)? Allow niche marketers (would need to be defined)to market directly to customers? Move certain commodities (eg. barley) outside the CWB system first?

What CWB services would farmers use in an open marekt? What relationships would the CWB have with the grain handlers and railways? Does the CWB in fact have to own assets? How much money in a contingency fund and how financed?

Don't see changes come quickly regardless of outcome tomorrow so there is lots of time to ask these questions and to come up with solutions. Vader - I think the CWB should be prepared to discuss/look for feedback in an open/transparent system.

[Incognito]

Vader:

I'm not picking on you personally, so please don't take it as such - you are the only one with spheres to post here while the rest of the BOD read the posts but won't get involved. This site is bookmarked by more bureaucrats than you can ever imagine at the Sir John Carling building.

One question and one question only:

Does anyone care of the sustainability of the farm?

Throw away all the rhetoric, all the diversity and animosity and that should be the underlining theme. That and that alone.

The farm is mired in red ink, negative net farm incomes and spiralling costs.

Would a million dollars be better spent on an educatonal process to teach farmers how to use the CWB marketing tools available to them rather than a project in China?

Do the multinationals (i despise that word - if you have an office in China are you not multi-national as well) have the farm's best interest at heart? Does the CWB?

Give me ONE solid example from either side that you may offer.

We've brought this industry to the lowest common denominator - we need to regroup and start over - and if that is new gen co-operatives then so be it. Everyone is fighting for their own little piece of the pie; however, in doing so, there arent even crumbs at the farm level.

If the industry margins werent so despicable in CWB grains, Vader, I may tend to agree with your single desk seller rant. But how is it that the CWB stands by and lets it occur?

Some one mentioned it within the last few days in here: divide and conquer. Its an Esmond Jarvis tactic, a Gordon Machej tactic and I have little proof that it does not exist today.

Until such time that all farmers band together; east and west, and excericise true market power, this industry is headed to hell in a handbasket - faster.

23 dollar margins in wheat; 85 dollar canola crush margins is pathetic and whats left at the farm level...

Vader, we have had words on the ADM's of the world in the past on here; what sets you apart from them as to what you are doing for the farm level?

Whats stopping you from becoming a fully integrated corporation like the AWB and please don't tell me the Act, the government or bureaucrats, because with as much effort as the CWB has taken to keep the status quo on changing it for the betterment of farmers, the changes would be completed long ago and no one would be looking at a January 23 election result or an April 30 WTO result wondering what will happen. The future should be mapped out. Thats what a good corporation does.

Farmers expect the ADM's and Cargills of the world to be greedy - they don't expect it from within. For the same reasons you have sought out alternative markets because the current manner you were farmining was not sustainable, every other farmer is feeling the same.

Thomas Miekle of Oil World recently spoke in Saskatoon and said that the short term outlook for canola was not positive but the longer term was. I had an opportunity to ask what his def of short and long term was later in the day. Short term - 6 to 18 months. Long term - 3-5 years. My answer to Thomas was the financial situation is so ugly at the farm level that short term is tomorrow and long term is seeding.

One thing i will agree with you, the WTO is not working.

The only way farmers can get a level playing field is to subsidize to the same manner that the US and the EU are with outright subsidies, ethanol subsidies and bio-diesel subsidies. I put mis-guided faith in the WTO for too long. 2013 is light years from here.

Regardless of the outcome of the CWB, farmers cannot continue down this path. IF in fact the CWB does represent 70,000 farmers in western Canada, what has been done to insure the viablity of the farm other than fight for the single desk?

If it is a one dimensional fight, how is that any different than any one fighting to end the monopoly? A singular purpose with the outcome still not in the best farm interest at heart.

In a Lorne Hehn speech on the Continental Barley Market; one of the CWB's wordsmiths, coined the phrase: "It's time to walk the talk."

From a farmer's point of view the best answer to this industry may be to let it implode and start over; otherwise the divide and conquer theme will last for another 25 years.

Best,
LW

[Incognito]

Vader do you work for the CWB??

[Vader]

Good post Incognito. The most positive I have seen in a long time.

The main problem is oversupply. I feel it is time for a supply management approach. Someone said recently that all of the Generals in the United States believe in supply management. General Motors, General Electric, General Mills.

Until demand exceeds supply grain prices will be low. Yes there will be weather events around the world but that is a game of musical chairs that I personally do not care to play. Too often it is us that have the weather problem and others capitalize on our misfortune.

My first thought on supply management is to increase consumption through biofuels. Because I sit on the board of the CWB my first thoughts are ethanol. The Husky plant at Lloydminster will use 300,000 tonne per year. At one tonne per acre three such plants create a demand for one million acres. The current government mandate of 5% biofuels will create a demand for about 10 such plants but under the ethanol expansion program at least five of these plants will be in Eastern Canada where their preference is to use US corn. So 5% is a good start but will take years to create a really significant demand to alter the S & D's.

Nevertheless there is a positive economic case to be made for ethanol. New builds in North Dakota are expecting 38% ROI and a three year payback but they have more lucrative government incentives than we do here.

I would advocate that the CWB commence constructing ethanol plants immediately. I would advocate using a portion of the money in the contingency fund and allowing farmers to make equity investments through some form of checkoff. I would create a stand alone subsidiary with a separate governance structure and farmer equity. I would plan on building at least three such plants as quickly as possible based on a sound business plan. The minister of the CWB would have to grant an exemption under the CWB Act and I would challenge the new Conservative government to do just that.

Similarly I would look at biodiesel. I see the pros of biodiesel as the better Net Energy Value of 3.2 versus 1.8 for ethanol and the fact that canola crush margins right now are in excess of $100.00 per tonne. On the negative side the economics of the business plan are not as strong. I am anxiously awaiting an economic analysis being done by Hartley Furtan at the U of S.

These projects may have a positive ROI for farmers and I believe that the CWB can create a business structure that will keep the enterprise in farmers hands. I do not think that the CWB will repeat the scenario that we saw with Sask Wheat Pool where creditors eventually own everything. I think that proper governance is the key, especially independant outside directors with appropriate industry experience.

I don't think that ethanol and biodiesel will effect the S&D's fast enough to see a change in commodity prices in the time frame that we need to survive.

High energy prices will drive the ethanol and biodiesel equation. High energy prices may provide an even better answer when it comes to Nitrogen fertilizer. Can we grow a crop of nitrogen fertilizer economically? How high do N prices have to go for this to be possible. How many pounds of N per acre can we grow?

Kevin Hursch says that there is not a single crop out there that pencils out to a profitable result for 2006. Have we projected the returns from a green cover crop? I know that a green cover crop will not generate cash flow in the current year, but it can provide upward of 100 pounds of N over the following three crop years.

Did you see the article on the front page of the Western Producer about a month ago. The headline was Organic yields equal to conventional. I am NOT suggesting that anyone switch to organic. What I am suggesting is that growing a green manure crop may in fact generate a positive cash flow.

Now what if the government actually paid you say $50.00 per acre to do this. And lets say that they put $625 million on the table each year for four years. That would have the potential to reduce cropped acres in Canada by nearly 25%. How many acres would you sign up for Incognito?

I know that Canada does not set grain prices. The US does. But if the program works in Canada why would it not also work in the US. The US government is dropping 19 Billion into US Agriculture each year. How much of that 19 billion would it take to cause a 20% acreage reduction? I'm thinking about 2.5 Billion per year. That's 50 million acres, or 50 million tonnes of something.

The push back will come from grain handlers, railroads, fertilizer companies, and chemical companies. The question for government is who is more important. Who forms the base of the triangle of the agriculture industry. It is the farmer. The health of the industry depends on the health of the farmers. Simplot can scale back. CN and CP can carry more intermodal traffic. Bayer and Monsanto have enough money already.

Canada will save a huge pile of natural gas which can be exported to California for electrical generation and would produce more foreign exchange dollars than selling wheat to Korea for $1.75 per bushel. Each acre of green manure will save all of that years fertilizer and will result in at least a 50% reduction of fertilizer applied the following year. Farmers would use 25% less chemicals. 25% less fuel hauling grain to market. Less electicity for aeration drying perhaps. 25% less wear and tear on your combine.

Just imagine how Kyoto friendly and WTO green box friendly this program would be.

It would be very hard for the US to point at the CWB and say we are driven to sell our entire crop and can only do that by undercutting their prices. We would be part of the solution instead of part of the problem.

So in a post-Liberal government I would ask the new administration to give the CWB the right to own capital assets like ethanol plants and grain terminals. I would ask for the right to market other grains on a voluntary basis so that we could see how successful the CWB could be in that environment. I would ask for the freedom to appoint our own outside independant directors. I would ask for compensation for the loss of the government guarantees (they can blame that on the Liberals).

My objective is not to protect the single desk but to use it to the advantage of farmers. I want farmers to move up the value chain. Flour milling, pasta manufacturing and malting are mature industries with large players who have very deep pockets. Ethanol and Biodiesel are fledgling industries where farmers can engage particularly if government shows a will to support farmer ownership. However once the plants are built, the plants are built. We need to move NOW or Husky and Bunge will do it first. (I'll pick on Bunge for a while instead of ADM).

I am very optimistic. But we do need to work together and focus our efforts on the real problems not our idealogical differences.

Rod Flaman
CWB Director

ps. see my post under Crop Production and Forage - Legume Plowdown

[silverback]

Incredible.

I request the right for the Auditor General to do a comprehensive audit of the operation of the CWB and tell us if it has been properly adding value to the "Designated Area's Farmers". Then, after disclosure of the results, we are then given the right to decide (by open election of actual producers) if the CWB deserves to continue operation .

Live by the sword, die by the sword.

[TOM4CWB]

Silverback;

Notice that Vader refuses to recognise that the CWB does not have any where near a monopoly in the sales of wheat and barley. The CWB has a monopoly on what it buys from "designated area" grain growers ONLY.

It is sad that the CWB's religion of "single desk" is a monologue of misguided rascals who have too much of our money at their disposal! By Gov. Fiat.

[TOM4CWB]

What a joke here all this time you think that Vader, or Rod or whoever you are that you have the interest of the farmers at heart!! Vader your a joke you have a nice cozy farm that you go to and have some fun on making yourself feel real good about yourself. Meanwhile you pull down your 3 figure salary from the CWB, just in case the play farm don't make any money!! This is serious shit to me Vader don't give your half long page post saying you know what the solution to us making money is. Vader your the root of the problem. I can see why being the director of the CWB why you want to get your dirty little hands on ethanol, and biodiesel, steal some more from the farmer. Like Tom4cwb said why don't you answer any questions about the monopoly about wheat & barley Mr. Bigshot. I hope for some reason the Conservatives get in and you Vader are the first to get the axe, then mabye you would farm for a living rather than a hobbie!!!!

[cowman]

Couple of things on here I don't understand?
Does a CWB director make a "3 figure salary"? If so that is pretty low? I mean the max would be $999! I assume there is something wrong with that quote? Or else the CWB directors really are doing it out of the goodness of their hearts?
The second thing is someone mentioned that the railways are like public roads? Not sure about CN but CPR does own the rail lines? Or am I wrong there? If so how can it be that they offer the abandoned lines for sale? If CN and CPR do own the rail lines then it would be more like a "toll road" than a public road? Are you obligated to let everyone on that line if it is private property?

[Vader]

Silverback, you might want to go back a couple of years and have a look at the results of the auditor generals audit of the CWB. It was in general very positive. You can also have a look at Richard Gray's benchmarking study of the CWB. It was also very positive. Phone him up. Ask him about his meththodology. Talk to the auditors who went over the results to see if the numbers that were fed into Richards formual were appropriate. Don't take my word for it. Do your own research.

When I first came to the CWB we would occasionally be shown a sample sale comparative. I was concerned that these samples were perhaps only indicative of the best sales being made and asked that Directors be shown the entire sales process from booking of the sale to logistics to finance and collection to auditing. After this was done I requested that Directors be given the chance to select for themselves which sales were shown at board meetings. Staff went one better and now place a book in the board room at every board meeting with each and every sale made by the CWB and comparative values made by our competitors. You can ask any CWB director what they see in that book. I can tell you that the vast majority of sales in that book show that the CWB earns a premium over its competitors for comparable products and markets.

I know that very few people who read these posts will accept my word for this and will demand to see that information with their own eyes. I am afraid that the CWB would lose all credibility with its customers if it did not maintain confidentiality and those numbers will never be made public.

There are ten farmer elected directors. They are there to be your eyes and ears. Invite your director to a small informal meeting. Grill them for a couple of hours. Weigh their character to see if they deserve your trust. It is their job. Don't take my word for it.

"Live by the sword, die by the sword." ......... An interesting quotation with dark undertones. Easy to make these type of allegations. Not so easy after you have done your own due diligence. Idealogical hatred must be a depressing state to live in.