Thanks for your comments. I encourage you continue working with the CWB tools. During any given day, I can be working on Alberta governments market choice policy, providing my thoughts to the CWB on the mechanics of the pricing tools and/advicing farmers how to use these tools. So if I seem like Dr. Jekyl and Mr. Hyde, there is a reason.
I just want to explore you comments on the CWB's control of delivery opportunities and comparison to canola. The situation this year for most crops is large supplies with quality challenges (at least on the cereals). At the same time, world crop production was large in 2005 and other factors such as currency have not worked in Canada's favor. There are lots of challenges this year and we can all look at the impact on price.
I will raise the question as whether farmers can manage inventory decisions on their with price as a signal or do they need an agency that makes decisions for them using canola and wheat as examples. I will note that the situation is canola exports/crush are moving at levels above last year. Basis have been narrow at times which is a sign of good movement/buyers that require immediate supplies. Wheat exports are behind last year.
Facts in grain movement.
The grain industry system (handling and logistics) is based on flow. You can't have a system that does minimal business one month (perhaps when prices are poor) and expects to make up volumes the next month (perhaps when prices are high). There are other tools to manage price risk versus holding in the system.
The industry also needs to think about customer needs (particularly those that pay the premium prices). Customers like Japan come in for constant amounts every month. You either meet these needs (with logistics in a just in time world critical) or they take their business elsewhere. You are then stuck with customers whose only criteria is price and we are at a competitive disadvantage with most other exporters just because of distance from port and ocean freight.
Finally, you need to consider farmer needs. These include cash flow, profitability and storage (including issues around tough and damp grain stored in piles. Every farmer has different needs. I will comment that non board crops carry the weight these days on cash flow - a farmer needs money in the fall and canola/domestic feed grains/pulses carry the weight (acknowledging there are cash advances).
I will agree that the CWB pricing tools have answered some of the issues around profitability/risk management with some discussion around mechanics/lack of competition. Both crops currently have depressed prices so neither system (pardon the expression) can make a silk purse out of a sow's ear.
On the storage side (at least here in Northern Alberta), there is a big need to get grain into the elevator system to get it dried/moved. Farmers can move this grain into the feed system but it would be nice to have competition from an export market opportunity (particularly if the farmer thinks it will grade better than feed). The system decision about whether to accept has a major impact on that farmers viability.
I raise these issues because the single versus open market is more than just price. There also needs to be discussion about all issues of CWB operation and the impact on the whole grain marekting system of living in a more "deregulated" environment.
I just want to explore you comments on the CWB's control of delivery opportunities and comparison to canola. The situation this year for most crops is large supplies with quality challenges (at least on the cereals). At the same time, world crop production was large in 2005 and other factors such as currency have not worked in Canada's favor. There are lots of challenges this year and we can all look at the impact on price.
I will raise the question as whether farmers can manage inventory decisions on their with price as a signal or do they need an agency that makes decisions for them using canola and wheat as examples. I will note that the situation is canola exports/crush are moving at levels above last year. Basis have been narrow at times which is a sign of good movement/buyers that require immediate supplies. Wheat exports are behind last year.
Facts in grain movement.
The grain industry system (handling and logistics) is based on flow. You can't have a system that does minimal business one month (perhaps when prices are poor) and expects to make up volumes the next month (perhaps when prices are high). There are other tools to manage price risk versus holding in the system.
The industry also needs to think about customer needs (particularly those that pay the premium prices). Customers like Japan come in for constant amounts every month. You either meet these needs (with logistics in a just in time world critical) or they take their business elsewhere. You are then stuck with customers whose only criteria is price and we are at a competitive disadvantage with most other exporters just because of distance from port and ocean freight.
Finally, you need to consider farmer needs. These include cash flow, profitability and storage (including issues around tough and damp grain stored in piles. Every farmer has different needs. I will comment that non board crops carry the weight these days on cash flow - a farmer needs money in the fall and canola/domestic feed grains/pulses carry the weight (acknowledging there are cash advances).
I will agree that the CWB pricing tools have answered some of the issues around profitability/risk management with some discussion around mechanics/lack of competition. Both crops currently have depressed prices so neither system (pardon the expression) can make a silk purse out of a sow's ear.
On the storage side (at least here in Northern Alberta), there is a big need to get grain into the elevator system to get it dried/moved. Farmers can move this grain into the feed system but it would be nice to have competition from an export market opportunity (particularly if the farmer thinks it will grade better than feed). The system decision about whether to accept has a major impact on that farmers viability.
I raise these issues because the single versus open market is more than just price. There also needs to be discussion about all issues of CWB operation and the impact on the whole grain marekting system of living in a more "deregulated" environment.
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