AdamSmith agrees 100% with Ken Ritter

[AdamSmith]

Yes It’s true, AdamSmith does agree 100% with Ken Ritter.

There is no such thing as a dual-market. It is a jingoistic phrase deliberately meant to soft sell a divisive proposal. There is either a Single Desk or there is an Open Market. Nothing else exists.

Let me a little bit psycho-analytical here, and a little bit critical of the anti-monopolists with this question.

Why should we expect people to embrace the open market concept for wheat and barley when we, ourselves can’t even be clear in describing what we want?

Using these jingoistic phrases like dual-market, dual-desk, market choice, voluntary CWB etc. etc. etc. is probably only coming across to people who may be uncommitted to one side or the other as open market supporters seem to have something to hide.

A certain very influential American political commentator has made the point many times that “Words mean things”. Sometimes the difference between someone accepting something or rejecting it can be simple words one uses to describe it.

For the last ten years or more we have conceded to the CWB that the open-market is a bad thing because we can’t even use the phrase “Open Market”. Mr. Ritter makes the point there is no such thing as a dual-market and he uses the phrase open market in the negative. Our side never uses the phrase “Open Market”, not ever. So, the media, the politicians, the general public, and most importantly farmers, never here the phrase “Open Market” in the positive.

This may seem like a meaningless little rant, but …..

[TOM4CWB]

Adam;

Is there a reason "Market Choice" DOESN'T mean an open market?

[TOM4CWB]

Adam,

If the CWB marketed Canola, on a voluntary base; why wouldn't it be a "dual market" in the CWB context?

[AdamSmith]

My point Tom is that "Market Choice" doesn't sell (the concept of) an Open Market.

Home Depot doesn't sell biffys or loo's or cans or thrones, they sell toilets.

Clarity is important.

[AdamSmith]

Precicely Tom, you said why wouldn't it be a "dual market" in the CWB context?
Why should the CWB join the real world when everyone else will bend over backwards to make this about the CWB.

It's not about the CWB, it's about the ag industry, it's about primary production, it's about those individuals who are trying to make a go of it farming. It's about Canada growing it's market share instead of it shrinking.

The CWB has framed the argument that the demise of the CWB means the demise of everything else. But that's not the case is it? Yet people are bending over backwards trying comfort the CWB that there is still a need for the CWB and that if we do this or they do that everything will be great.

The truth is, nobody knows that for sure. The truth may be that this industry has zero need for the CWB and that the CWB may dissapear altogether.

I guess what I'm asking is should the CWB be artificially proped up when there may be zero rational need for it once we adopt an open market?

What's the point of the CWB existing for no other reason other than keeping it there for the CWB's sake?

Does this make any sense to anyone or am I just loopy?

[TOM4CWB]

Adam;

You may be overreacting a little!

Agricore United has a dual market for edible beans in southern Alberta.

About 80% are pooled through Agricore United; yet anyone can grow all the edible beans they want... with any other company they wish to grow them for.

Hog boards have done well in western Canada, they just joined CAFTA; they have a dual market as well.

Our election promise was for voluntary marketing; with the CWB to remain as a choice. Of course Ritter is going to bluff for as long as he can.

The CWB is an entity that has a monopoly... life would be much harder if they actually needed to earn their living... instead of having it handed to them on a "single desk" platter!

[AdamSmith]

Here’s some more ranting and personal opinion.

I read on the web this morning a comment be Gerry Ritz. He stated 10% of farmers want the CWB gone altogether another 10% want the CWB monopoly preserved at all cost and the other 80% want the CWB to remain but still think farmers should have a “choice”

This is what I see as going to happen.

The Tories stick their finger in the air to see which way the wind is blowing and after a year and a half of dog and pony shows and bitter fighting amongst farmers they come up with some half baked plan to ensure the CWB survives the change. Granting concessions to the CWB and propping them up with mega dollars and so forth. Meanwhile, Ritz’s 80% are pleased because the CWB is still there.

Problem is, all the concessions granted to the CWB has rendered any real positive results in the profitability to this industry to be nil. The grain companies will still taking 50 cent per bu. to handle wheat instead of 15 cents. There will be limits to how much we may actually sell off board. Innovation will still be stifled. But the CWB is still there. The CWB still controls transportation and controls the elevators. CWRS is still king. Profitability hasn’t improved, the industry is still dysfunctional, but it will be a success because the CWB is still there.

Now here is what should happen.

The benchmark of success can’t be the CWB still being here, the benchmark of success is the marked improvement in profitability for farmers and a marked improvement in how smoothly the industry functions.

The existence of the CWB or any other company for that matter must be viewed as being irrelevant if we want to do this thing right!

[carebear300]

Well said, whatever system we end up can be called whatever you want but has to put more money into farmers pockets, and that is the only thing that matters!!!!!!

[parsley]

You've artculated the the key to success for farmers in one short phrase, Adam Smith:

"The existence of the CWB or any other company for that matter must be viewed as being irrelevant.."

Farmers are fighting for survival.

The CWB needs the Corps.And vice-versa.
(ie.The Multinationals would have to hire staff to ource grain for them. Farmers pay for soucing right now.)

Once farmers can bypass both, the cost of handling per/bu will go down. Benefits like that will begin to flow to farmers, but more importantly, the players in the system will not be able to download what should be part of their operational costs, upon farmers.

The Board of Directors are acting like they are on a frantic spending spree with the DA farmers' credit card. No consideration given to expense!

Parsley

[sawfly]

not to disagree but a couple of points.
handleing charges for wheat. not to say that high charges for wheat are good , but grain companies havent been swimming in profits. if a free market reduces rates.
where do the companies make their profits, its gonna come from some where. is wheat subsidiseing handleing other grains?
you may not be saveing anything ,just moveing the cost to other grains.

[sawfly]

if we are going back to square one. re grain co.s and board. you must also open up rail access to anyone. or regulate no discrimination against single car shippers.
its a bit of a dream thinking you can deregulate this industry into prosperity. While market signals and inovation are great, the bottom line is our competition has deep govt. pockets backing them up.

[wedino]

Sawfly, I disagree with your statement "but grain companies haven't been swimming in profits". Look at WIT (Weyburn Inland Terminal)financial statements, they've done excessively well handling grain.(mostly cwb grain)

I agree, rail access has to be opened up.

[AdamSmith]

I guess it all depends where you live in the prairies but in my mind value added industries, trucks and competition for the land are the biggest competitive factors for the railways and in that order.

Whether we like it or not the RR companies do own the railbeds, the tracks etc. These aren't public roads they are in reality private property.
No matter what kind of agreement, short of expropriation, we come up with, the RR companies still have the power to dictate the terms in which open access could happen. It's their property and I do believe in the concept of property rights.

My attitude has been, that I can't afford to push grain over those damn mountains. Grow more of what stays within the province or region. I just love seeing those hog operations here in MB. I don't think any of my barley has left the province in the last five years. Feed wheat is the same.

Open access is just an ANNOYANCE to the RR companies, value added is a THREAT. There is a huge difference.

The CWB talks the talk of value added but they don't walk the walk. Parsely is absolutly right the CWB, the Grain co's and the RR's all need each other to keep doing what they've been doing. The grain co's get handling revenue the RR's get the freight business and the CWB gets to keep it's power.

None of those entities, Grain co's, RR's or CWB want to see Brewing Co.s buying direct from farmers or ethonol plants buying direct or any one else for that matter.

We as farmers DON'T need to be owners in these value added companies BUT WE DO NEED them to be here and to be able to buy direct from us.

Open Access keeps farmers from looking at the real solution and the CWB is right there, in like a dirty shirt, making sure farmers keep looking the wrong way.

[chaffmeister]

One thing at a time (sorry for the length):

AdamSmith - The reason we talk about a dual market is because the anti-CWB faction lost the federal plebiscite on barley marketing in 1997. The question in the plebiscite was whether you wanted to see the CWB totally absent from the barley market – or not; no middle ground. 62% voted to keep things the way they are. More importantly, only 38% voted to punt the CWB.

It was all in the question. The year before, 66% of Alberta farmers said they could support an open market, even if the CWB was part of it – as an option. And we know through leaks that the CWB itself has commissioned surveys covering the whole Designated Area that agree with the Alberta vote.

So to satisfy 2/3rds of the farmers out there (or more), you promote a concept that’ll get you there. Bingo – you have the roots of the “dual market”- where you could deal without the CWB (as you want to) and you could sell to the CWB (as others want to). You would have a choice. The plebiscites of the 90’s showed that’s what would get support.

So the term, the approach, and so on, wasn’t to mollify the CWB, it was aimed at getting more farmer supporters. It’s just marketing. As a floor trader I know used to say “forget the steak, you gotta sell the sizzle”.

I would hazard a guess that if the open market supporters had drawn a line in the sand and pushed to simply close down the CWB completely, the debate would never have gotten this far. If there was no middle ground, no compromise, the rigid CWB detractors out there would be considered an unimportant extremist fringe group. I’m sure even the Conservatives would have had a different plank in their platform.

Adam – You may be right - the CWB may be irrelevant. It certainly hasn't proved its worth to me. You make a lot of good points; I particularly appreciate, “should the CWB be artificially propped up when there may be zero rational need for it once we adopt an open market?” To me the answer is a clear and emphatic, no. I would hope no one is talking about that.

The road to get where you know you need to be isn’t always a straight line. I learned long ago, progress is best made through evolution, not revolution. (I know this won’t make Parsley happy, but it is what it is.)

As for the CWB’s stance that an open market (sorry – dual market; to me it’s really the same thing) is the demise of all that we hold near and dear – knowing what I know about the CWB culture, I would expect no less. I for one am confident that the majority of those out there that really matter – farmers – will get tired of the CWB's rhetoric as we get to know more and more about what the CWB does (and doesn’t do) for them, the market, and the Western Canadian economy.

If there’s a role for the CWB in an open market, it’ll find it. If not, it’ll be dust in the wind. Markets are funny that way – they have an uncanny ability to employ the correct resources if allowed to (freely). But then a guy with the name Adam Smith knows that already, right?

So, for me there are a few immutable truths when it comes to the CWB debate:
1. A dual market IS an open market, as long as there are no restrictions, no limits, no quotas, and no forced compliance.
2. Both market concepts engender choice; if the CWB is a player in either, that gives you one more choice.
3. Most people can embrace choice – it’s just so damned democratic.
4. Few people like to be told what to do. It’s a freedom thing. This applies to both sides of this debate.
5. What Ken Ritter says is a lot less important than what farmers say.

[AdamSmith]

Here's another point on value added.

I just come in from loading a B- train with barley. It was going to a MB colony. But I didn't sell direct to the colony, I did involve a grain company. But not a multi-national or even a big Canadian one. I sold through a small MB company called Delmar Commodities. I've sold probably 80% of my feed grains to them in the last five years. The grain never sees an elevator it always goes direct to the end user. Their cut is small compared to the main line companies probably in the 5 to 10 cent range. But I know I'm going to get paid and paid pmomptly and I have good confidence that my weights are true. So I happy giving Delmar a dime but we can't afford to give any company 50 cents for what others can do for a dime.

It's a win-win -win for the three entities involed in the transaction.

Knowing you are going to get paid, fair and prompt is key.

But I would have no trouble dealing with say Anheuser-Busch directly. I think that would be great.