CWB Market Canola

[wd9]

Definitely, for a 2 billion dollar industry at the farm gate and 6 billion at the plate we need to invest more. By we, the whole industry, crushers, exporters, processors, farmers, gene jocks, all of us. The GRDC (Australian model) is not all peaches and cream, there are some major issues with that system too, like investment by private sectors in breeding etc.

Your mention of WTO is a great example. Looking at the grains and oilseeds representation in HK at the ministerial meetings it was estimated the budget for lobby to be around $250,000. For the SM5 sector around 24 million. Who's going to win? Barb Isman here is not to blame (OK last time I mention it), being cheap is where the blame belongs. Our success is limited to what we put in, and so far we haven't put much in - yet with great results.

The visionary would say invest in tommorrow for market access, promote a strong industry for investment and growth, effectively lobby so the government that is supposed to represent the majority does that and not have 9% of agriculture hold 91% of agriculture ransom.

These are the issues that need our attention, and just so I'm not misunderstood, to not squander already underfunded resources determining if getting an average price for all Canadian canola producers thru the CWB would be a viable future for the canola industry - let alone the track record of that organization's success in the value added sector.

Vader, any thoughts?

[Vader]

Before the CWB can make/facilitate any investment in value added it will be necessary to get either and change or an exemption from the CWB Act from the new CWB Minister.

The first area the CWB might consider is ethanol but I think that with todays crush margins that canola crushing/biodiesel might be a better place to invest farmers money.

And before any of that perhaps we need some indication from farmers whether they want to invest in the industry. The alternative is to remain haulers of water and hewers of wood.

[TOM4CWB]

Vader;

Leadership is the key here, why don't the CWB directors take the lead and organise a new gen co-op?

We can do this today, without any change or need to ask any Minister for anything! I believe there is $3mil avaliable from present fed. programs for newgen. farmer owned orgs.

Why haven't we done this?

[chaffmeister]

Vader, I asked you before in the thread “Who Controls Grain Handling?” and got no answer, perhaps I’ll get lucky here. Why should the CWB be involved in any investment for farmers? Beyond the fact that some farmers may disagree with how you would be spending their money, what does the CWB bring to the table other than farmers’ money?

Tom – I don’t think you need to look to the CWB for leadership with new gen coops. Not only are there many good leaders out there on the farm, but the CWB has a very poor track record when it comes to new gen coops – just look at the Prairie Pasta fiasco. But I guess you could say that was different – that involved a crop the CWB understood and was already handling.

Vader – comments please. (To this and to my questions in the other thread – please don’t drop that ball.)

[rbrunel]

I think this is a great opportunity to regain some farmer impowerment. If any of you have ever taken an economics course the law of supply and demand only work when the buyer out number the sellers. Look in the marketplace today. There are way more sellers then buyers. If you take a look at what the Quebec farmers have done to a large part of the commodities they produce, they have take steps to regain farmer power in selling products into the market place. They have a network of single desk/cooperatives that are MANDITORY. Speaking to the Quebec farm organization (UPA) President. He clearly stated that through there experience, manditory participation is the only way to regain market power for the seller. That is us folks. Now I am not saying that the CWB is perfect, but right now, for prairie farmers it is the only Non multi national that we have to work with. Do you think that Cargill, ADM is willing to give back any portion of there margin to you? I hardly think so. They just hope you stay alive long enough to build there Empire. Just a thought. Think about it.

[cowman]

I don't think it would be a good idea to have the CWB involved in either bio deisel production or ethanol production. Not sure if they could interfere in ethanol production but there would need to be some assurances that they couldn't hold up the show before any one invested there?
If the federal government legislates blending rules for gasoline and deisel fuel, one way or the other someone is going to produce it...whether it is bought in from the USA or whether the oil companies build the plants or whether farmers set up some sort of facilities? If the farmers don't set up the facilities then who will get the benifits?...I guess we all know the answer to that?
This is basically a new opportunity to benifit from a new industry. I believe it is important for the various levels of government to facilitate the creation of this industry in a way that farmers can benifit instead of multi national oil companys? It is time the government tried to do something for the agricultural industry instead of throwing them a crust of bread when they are starving?

[Vader]

Sorry Chaffmeister, I have been home so little in the last few months. I have not had time to do the research necesary to answer the questions on the other thread and as I said I will start new threads when I do get to them.

On the investment in ethanol or biodiesel, TOM provided the answer. Leadership. The CWB can and will provide the leadership and will direct farmers money into this type of project. I don't think that a new gen co-op is the proper structure for an ethanol plant because of the variety of potential feedstocks. Biodiesel may be different in that the consensus today is that canola will be the desired feedstock. In time other oilseeds such as mustard or camelina may win out.

I was travelling in the US recently and the talk down there is that the ethanol plants are being sold to the big guys after the project pays for itself. They fear that ultimately all the ethanol plants will fall into the hands of non-farmers.

I think that as we venture into farmer owned value added facilities in Canada that governance and business structure will be key. I would venture to say that if the CWB had a controlling interest that it would be highly unlikely that these facilities would be turned over to the big guys. Depending on how the governance was arranged that could be as little as 10%.

To compare this to prairie pasta causes me to doubt your sincerity chaffmeister. The pasta business is overbuilt and there are many bankruptcies in that industry. Prairie Pasta never developed a business plan and took it out on the road for investors to consider. My understanding is that the preliminary investigation showed that the opportunity for profit was quite unattractive. The situation is very much the same when you talk about flour milling or malting. These are mature industries controlled by very large players. If you are going to play in that game you had better have your customers lined up and have very deep pockets.

Ethanol and biodiesel in Canada are fledgling industries. Farmers are in a position to profit from these emerging opportunities.

I would like TOM to explain how he thinks that the CWB could proceed under the existing legislation without the blessing of the Conservative Government.

[chaffmeister]

Vader:

How will the CWB rationalize getting into this kind of venture without 100% support from producers?

It’s unfortunate that farmer-led initiatives in the US are being sold off to non-farmers. But I guess that is their choice and I have to assume they are making sound business decisions.

Regarding pasta I am absolutely sincere. I believe the “plan” was to buy – not build – for the reasons you mentioned. (And yes, there were facilities for sale.) The profit potential had a lot to do with the ultimate purchase price. Not sure why they didn’t take that on the road except maybe the perception that it would be a tough sell; how do you raise money on a venture you can’t really talk about because the seller wouldn’t want details of its sale made public?

Mt point about the CWB’s role (and sincerity) relates to the latter episode where the CWB had said they would facilitate Prairie Pasta’s ownership in Dakota Growers with delivery options, etc only to refuse it at the last minute because their policy didn’t apply to investment in US plants (even though the CWB knew all along that it was for ownership in Dakota Growers).

Tom / Vader: You both know the CWB doesn’t have a monopoly on leadership.

[Vader]

I agree that the CWB does not have a monopoly on leadership. So let the best leader step forth.

[Vader]

A point about the situation with Dakota Growers.

If you are a producer at Weyburn, Saskatchewan, the value of wheat is a function of Minneapolis futures with freight backed off to Weyburn.

If you are a producer at Carrington, North Dakota, the value of wheat is a function of Minneapolis futures with the freight backed off to Carrington.

The freight back off from Minneapolis to Weyburn and the freight back off to Carrington are in the same ball park.

If you transport wheat from Weyburn to Carrington the value changes by the amount of the freight. The question becomes who is willing to pay that freight. Either the farmer has to absorb the freight or the buyer has to raise the price that he is offering to offset the freight. To date there has been no indication that there is a sustainable business model here.

The CWB has never sold wheat to Dakota Growers and in fact it is a rare occasion tht the CWB has sold any wheat to buyers in that "freight disadvantaged" area.