The Canadian Wheat Board

[lakenheath]

Seems to me that the writing is on the wall. David Anderson is the MP from our area is a very strong opponent of the CWB. I'm sure he will have some good advice for Chuck Stahl.

Seems like a perfect time to dismantle the CWB. What have they done for farmers in the last 5 or so years? Seems to me they did a lot of screwing up and maybe even covering up.

Things are bad. Our local little paper is loaded with land for sale and people are scared to buy it.

The CWB is like the NDP government in Saskatchewan. You get kind of get comfortable with it, because it really hasn't hurt you too bad in the past, but really hasn't done you much good either. But when things get ugly, people are willing to take a risk with change, and hope for something better.

I never thought I would say it, but I think the CWB has ran it's course.

[parsley]

Lakenheath, there were two Parliamentary Secretaries appointed to the Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board



1. JACQUES GOURDE
Lotbinière–Chutes-de-la-Chaudière (Québec)

Jacques Gourde was elected to the House of Commons for the first time in 2006. He has a diploma in farming management and until recently was a producer and exporter of hay in Saint-Narcisse de Beaurivage. He was president of the Development Committee of Saint-Narcisse and parish council church warden for six years, and was involved in the organization of social and cultural events for the parish and the region. Mr. Gourde is a man for whom family values, agriculture and the environment are very important. He is married to Chantal Beaudoin and they have five children.

2.DAVID ANDERSON
Cypress Hills–Grasslands (Saskatchewan)

David Anderson was first elected to the House of Commons in 2000. He was re-elected in 2004 and 2006. Most recently, he served as Critic for the Canadian Wheat Board. Prior to this, he was a member of the Standing Committee on Agriculture and Agri-Food. Mr. Anderson has a Bachelor of Arts in political science from the University of Regina and a master’s of divinity from the Canadian Theological Seminary. He was born in 1957 and has been a resident of Frontier, Saskatchewan , for most of his life. He is married to Sheila and they have two children.

Parsley

[charliep]

Thanks for your comments Lakenheath.

Everyone treats this issue as black and white with the basic assumption loss of single powers means the death of the CWB. The assumption is this demise would almost be immediate.

I will make the bold assumption that the CWB provides services to farmer and the industry. I make the comment on the latter because grain companies use CWB grains as a low risk income stream (financed inventory without the reuirement to hedge, stable elevations/other tariffs, etc.) versus a new world where they will need to finance/hedge.

Does the industry need to think about a transition plan? What would the transition look like?

[lakenheath]

The transition would be very interesting. A person would like to see increased competition for our grain.

On the flip side we could see consolidation on the buying side of things. Would companies like the Saskatchewan Wheat Pool be poised to operate in an enivironment like that and compete with larger grain companies for our grain?

Maybe we would see more value added small enterprises popping up and competing for local grains.

[parsley]

Lakenheath,

1. The most important national function that the CWB has,is as sole licenser.

Parliament has instructed the CWB to be in charge of national licensing and that will remain in effect until Parliament says otherwise.

National licensing means every applicant. The CWB can demand a license for every load of grain moving from province to province, (they don't but they can), or from Newfoundland to Germany(sometimes they do).

The Act says there will be NO fee for interprovincial licenses. Period.

The Act also provides that at the present time, there is a $0.00 tariff fee for any export license.

The only chaange I anticipate in national licensing is that Western farmers will be granted export licenses IF they want one.


2. Most Agri-ville discussion is about regional marketing.

Regional Marketing, is dependent upon whether or not grain if OFFERRED to the Board. If farmers offer feed wheat only to the Board, that is what the CWB legislatively have an obligation to market.

So whether or not they get huge amounts, or small amounts makes no difference. The CWB is not obligated to sell it for the best price, either.
Just for what they deem "reasonable".


So the idea that the sky will fall if the 'single desk' disappears is unlikely. The CWB will be as viable as the people who support it, and from what the CWB tells us, farmer support is growing.

3. Western Elected Directors represent a regional interest, lakenheath.

Appointed Directors represent the National interest.

There would be a conflict of interest if the CWB had only Western farmers sitting at the table.

Ontario requires licensing. (They would/can complain the CWB steals the names of their buyers) Quebec requires licensing. Feed Mills require licensing. Flour mills require licensing.

Some are national, not regional interests, and as such must be represented by national representation.

4. About money. Participation by farmers in the CWB, will depend upon if the CWB pays well or pays poorly. It comes down to the dollar farmers get, and what kind of job the CWB have done of selling the past few years.

CWB marketing effectiveness is on the block. If the CWB has nothing to worry about, farmers will flock to them. The interim/final payment will tell the tale.

Parsley

[clancey]

Eliminating the CWB will not increase the world price of wheat. What it will do is allow you to time the sale of your grain.

No CWB may increase competition for what you grow, which may or may not result in a higher bid price. It may be that you are still selling the same international exporters as before. They are not going to pay more than they do to the CWB and, if as mentioned by an earlier poster, they perceive a higher risk and cost of doing business, that will come out of the bid.

Having said that, I expect those growers who are located in areas which traditionally produce very high protein wheat may do better because they will be in a position to extract the premiums. However, this will only work if farmers are allowed to deliver directly to U.S. elevators. That ceates the risk for the line elevator companies that if they will lose the wheat if they do reflect market premiums. People who grow generic qualities of wheat could have a tougher time because generic qualities attract generic prices.

It is simplistic to blame to CWB for the sad state of the agricultural economy. Over production of last year's winners, relatively low world prices, a strong Canadian dollar because of strong oil and base commodity markets, are problems that cannot be solved by changed how wheat is marketed. The cost-price squeeze in agriculture is real and it afflicts all farmers around the world.

Figure out how to force wheat prices higher; and then force lower the cost of proprietory planting seed and farm chemicals; and you will solve that problem.

[parsley]

clancey,

Look at it from my world instead of your world.

I live in the world of organics, where the prices are high because organics target premium markets in countries with a high disposible income, with many of the buyers in those countries being the highest income earners, well able to afford organic food.

So organics have established high prices, don't use chemicals and the buyer pays for the freight, (which includes some of your your advice).

My problem is that the CWB makes organics pay the difference between the initial price and the price the CWB have established in my market(my buyers $$amount on the export license), before I can get an export license.

Needless to say, the CWB pockets the difference. It probably goes into the contingency fund, or the fundraisers, or your pooling account, or whatever the BofD has come up with. Which have absolutely nothing to do with organics.

My complaint is simplistic because there is nothing complicated about it.

We are getting robbed blind, and have NO service provided.

It can easily be solved, clancey. All the CWB has to do is issue the damn export license to organic farmers, without the buyback. Just as they do in Ontario.

Solving this really isn't difficult.

Parsley

[charliep]

Parsley

Has anyone explained to you why allowing no cost export licences for organic farmers would negatively impact the operations of the CWB?

I will note that the CWB is almost there with the organic equivalent of the daily pricing contract and the producer direct sale contract. There are risks gor the farmer in that these two contracts likely do not track perfectly and from I know can only be used on a spot basis (can't forward contract). The programs also add cost to both the organic farmer and the CWB which do not result in value for either party. You have raised many other issues over time.

The discussion is not about single desk premiums or big multi nationals in this case but rather the inability of the CWB to even think about living in a more deregulated where they give up some control to other members of the supply chain. The question I raise is what small steps can the CWB to get them ready for a new world. This new world is coming regardless of who is in Ottawa.

[charliep]

I'll pick on the daily pricing. About 80,000 tonnes were signed up out of a potential 500,000 tonnes. How much is it costing to run this program?

I often ask myself (rhetorical because no one will answer me without bringing a lot of other stuff in) what the cost benefit analysis would be of running this program versus allowing 500,000 tonnes to be sold outside the current CWB system (no cost export licences or whatever).

[parsley]

charliep. we only have to look at what the CWB already does.

Multinationals already buy feed grains directly from the farmer, bypassing CWB marketing and pooling. The CWB named it Export Manufactured Feed Grain

Has it hurt marketing by the CWB? Not according to the CWB itself.

The CWB consistently defends EMF grains bypassing the Board. They claim it is good to get it out of the country. I agree. They claim it is good to value-add. I agree.

But when it comes to the durum farmer wanting to sell grain directly to the plant he built with his own money, as chaffmeister often reminds us, the CWB will absolutely not tolerate it. They claim it will destroy the single desk.. (But wait, the millions of bushels going through the feed mill and bypassing the Board doesn't?)

And when it comes to organic, they not only claim that allowing organic farmers to bypass the CWB will destroy the single desk, they name call as well.


charliep, there would be no cost to running a programme allowing organics to bypass the Board.

$0.00

This is why:

1. I will apply for an export license.

2. The CWB will grant it.

3. I export, with NO buyback.

4. The cost of issuing the license to me is supposed to be paid by the Federal Government according to the CWB Act, so no money comes out of your pooling accounts.

5. No volume limitations are necessary.

6. At most...A fifteen minute job, between faxes, and 30 seconds if they set up online export applications

This lack of flexibility and reason is why the CWB lacks such credibility.

The Board is destroying themselves.



Parsley

[Incognito]

Parsley:

How many MT of organic wheat is sold every year in western Canada?

Best,

[parsley]

Look at A
Look at B


A. Single Desk Scenario(what we have)

(CWB Act @ Licensing and Marketing in play)
1. Parsley applies for license.
2. CWB denies Parsley the license.
3. Parsley sells grain to the CWB
4. Parsley buys back grain.
5. Parsley loses $$.


B.Dual Marketing Scenario(basic need)

(CWB Act @ Licensing and Marketing in play)
1. Parsley applies for license.
2. CWB grants Parsley the license.
3. Parsley ships grain and makes $$

Very simple solution.

The amount of grain is immaterial, incognito, perhaps 1% of total DA production. Some is fed to organic beef. Small amounts compared to the millions of bushels of feed grains bypassing the CWB.

Approx 1000 organic grain producers, usually value-adders.

So what am I missing here, charliep?
Incognito?
TOM4CWB?

Parsley

PS Listening to Vader on the radio today left the impression that every Designated Area guy will go stone-blind, if he once tries touching his single desk.

[lakenheath]

I hear you Parsley. One of the major problems with the CWB is that they are way too slow to change. Organics is the perfect example. Make the damn change. But, no. For some apparent rediculous reason, they won't make the change. It really makes you wonder.

And what blows my mind about Vader is that he is an organic grower.

[Incognito]

Parsley:

"guy will go stone-blind, if he once tries touching his single desk."

Is that like the Parable of the teenager and a woody?....LOL

[chaffmeister]

To get an export permit, DA farmers are forced to sell their wheat to the CWB and receive the initial price and then “buy-back” their wheat from the CWB at a price that the CWB considers to be the market price. The CWB indicates that the market price is the price that the CWB would have sold the same grain for in that same market. This way, the CWB argues, the pool remains intact; the independent farmer’s exporting activities do not dilute the pool since the sale goes through the pool, just as if the CWB sold the grain.

BUT – the CWB does not sell organic grain. So, on the buy-back for organic grain, the CWB argues that it simply sells the grain to the organic farmer/exporter at the price for conventional wheat in the same market as the organic wheat is being sold. According to the CWB, the “organic” farmer gets to keep the organic premium.

The CWB argues that it must do the buy-back on organic grain sales because if it allowed organic farmers to sell wheat directly, it would take away markets/sales from the pool. In other words, the sale of organic wheat would dilute the pool account; all other farmers in the pool would lose.

BUT – organic wheat doesn’t compete with conventional wheat. Organic wheat from Canada only competes with other organic wheat sources. The organic market is completely separate from the conventional market. There is no substitution, arbitrage, or competition. If an organic flour mill doesn’t like the price of organic wheat (or the quality, or he can’t seem to find any), he doesn’t buy conventional wheat and try to pass it off as organic. If a Western Canadian farmer sold organic wheat into California, it in no way would take away any sales opportunity from the CWB trying to sell conventional wheat into California. There is no way the CWB would ever lose the opportunity to sell into that market because some rogue organic farmer beat them to it. Nor would there be any price effect on conventional wheat.

THEREFORE – organic farmers selling wheat directly to organic markets would not deprive or deny the CWB any sales opportunities in any way whatsoever. It is impossible for sales of organic wheat to interfere with the CWB conventional sales program.

This is a no-brainer. The CWB contributes nothing to the organic market and is a tax on the Western Canadian organic farmer seriously diminishing his competitiveness.