Grain World???

[WRAPper]

Incognito

If what I am told is correct the numbers that use the ppo's are not large, but increasing as producers become more comfortable with the terminologies and the options.
The question should however be what percentage of farmers should be using the ppo's or what percentage of the most profitable farmers use ppo's.

Adding a forex basis to the pool would be like buying crop ins. You could use it or not but I believe it makes sense. Do you believe it makes sense?

Something I have advocated to the CWB when I have had the chance is that here or gone the board has a tacit responsibility to make the tools available in order to educate producers on the marketing of cereals in a world market.


This would be one such tool.

[WRAPper]

Tom

You know who I am and you know I respect your mind on these matters what do you think of this forex basis idea , I know it's an idea that shouldn't have had to come now at a late stage in the game but going forward would it have merit?

[Incognito]

Of course it makes sense...but without an educational component to it - its useless. The reason the uptake on PPO's is that most do not understand them.

Rather than spending 2 million dollars on a planned media blitz to to maintain the single desk in the next 12 months, why not take that 2 million dollars and educate farmers on the tools that they have before them that way when the dual market is in place, they are not at a disadvantage to the 5% that are already using them.

Take the staff off the "save the CWB campaign" and put them in the country educating farmers...

The CWB's mandate is to "maximize returns" ...

What they have been doing with FOREX, the lack of education, and wrecklessly spending money defending the single desk would put a normal board of directors at risk within their fiduciary responsibilities.

I cannot understand why farmers have not challenged their fiduciary responsibility to protect pool returns and maximize returns to the farmer through FOREX management.

[wd9]

Incog, the fudiciary responsibility is not to farmers, but to the government, you know that.

[WRAPper]

Incognito

I do agree with what you say and I would rather more effort go into the education as well, much as I said above. However at some point farm mamagers bear responsibility to seek out this knowledge and ask the questions too.
Last spring I took it upon myself to put together a local ppo session and had our FBR come and spend some one on one time with local producers. I made a point to invite everyone I could think of in this area by phone. I had a good turn out but not everyone. One person asked me to get the materials and drop them off to them. So far I haven't made it there with them. You can only lead the horse to water.

I will have to do an informal poll at the local bonspiel of those that attended and find out how many used ppos now that haven't before.
As much as anything there has to be a mindset change ,sad to say and hard to believe but I feel there are still a fair amount of "lazy" marketers still out there. Myself at times among them.(though not very often)

Those numbers are dropping and as farmers get more used to and involved with the ppo's they should drop further.( and as the older generation of farm managers retire)
The only danger I do see is this are the ppo's getting too complicated in some areas, all in order to maintain certain status quos.
I do like the idea of this and I will continue to bring it to those that I can ,and until someone tells me it won't work and shows me why I believe it just might. And I'd be real pleased to get feedback from you(all) on just what needs to be done to make it what we need.

Thanks

[Incognito]

Good luck Wrap...

I've been on the PPO educational kick or lack thereof for 2 years and it has fallen on deaf ears..

Perhaps you need seed the idea with Butch Harder or Art Macklin (they are not in my database) and they can bring it forth...then if it comes from the grain gods, the CWB will buy in.

[chaffmeister]

WRAPper:

You didn’t ask me about your forex basis idea but since those that you asked (Incognito & Tom) didn’t respond yet – I’ll take a stab - if you don't mind.

If I got your idea figured right, the CWB would offer forex rates that you could contract with the CWB. But from here I get confused – is this contract a forex contract in which you could actually lose or gain? Or are you locking in a rate that is ultiamtely used to calculate your CWB grain payments? You probably have it figured out, I’m just not clear on it.

What about this: The CWB could offer its current PPO contracts, but optionally in USD. If you wanted to manage your onw forex, you would select the PPO contract in USD. The CWB would publish forex rates daily and when you want to lock in the forex, you would contact the CWB and advise them. Then your PPO contract would be converted to CD – using the rate you selected.

[TOM4CWB]

W****r and Incognito;

The CWB has made it illegal for the present directors to be involved in any PPO... including the EPO.

This insanity is bearing fruit... the technical knowledge is kept away from directors... keeping the system from evolving into a user friendly daily cash price system.

Pool pricing needs to be the option... daily pricing the norm.

[chaffmeister]

Incognito:

Think about it - everything the CWB does is aimed at protecting the institution. There is the belief within the CWB community that without the single desk – without pooling – the CWB is toast. So protect the pool, protect the desk – at virtually any cost.

When you look at everything the CWB does in terms of forward contracts with farmers, every one of those programs is designed to protect the pool – first and foremost. These contracts are sub-optimal, costly, and a far cry from what is really needed. Perhaps the CWB is only offering these contracts to satisfy those that asked for options.

I think this may be the answer to the question about the lack of training on these contracts provided by the CWB. It makes you think the CWB doesn’t want to see them succeed. If they did and the PPO contracts showed better returns than the pool, they may weaken the support for pooling.

Also – think of this. Sales are made by the CWB in a way to average out the year. They don’t want to have PROs weaken substantially throughout the crop year – or risk a deficit. That weakens the support for pooling.

Forex is not managed. What would happen if they took their foot off base, locked in some FX rates and had that market go against them? They’d likely have to admit to “speculating” on forex and that would weaken support for the CWB’s single desk.

What I don’t get is this. Why is it the CWB says it can’t or won’t manage forex risk but is selling more grain on a CIF basis (that is, delivered rather than FOB), thereby taking on more risk? In fact, at the peak of the ocean freight market spike a year or two ago, they were even talking about needing to get more involved in the ocean freight market – in order to manage the risk of these rates moving higher. Rumour was that they were talking about locking in rates on a long term basis – in order to manage the risk. (It would have been the ultimate in bad timing.) But they won’t touch forex (supposedly) – because, according to the CWB via Tom “THe CWB can't do anything about exchange risk... they say no-one can predict the future”.

Go figure.

[Incognito]

Your theory is the closest thing to reality that I've seen in print, Chaff.

Everytime a farmer hears "maximize returns", they should replace it with maximize smoke up their *ss.

A class action suit challenging the fiduciary responsibility of the directors might be the best way to have this settled. For 14 years, doing nothing on FOREX was the right move; today when it is time to MANAGE currency risk, its speculating? It was speculating when they did nothing for 14 years.

Read any other quarterly report from a public company that has USD transactions and it is likely they mention risk management for currency and it isnt frikkin predicting the future. Oh ya, thats a REAL coroporation.

There is a lawyer in Regina who chases ambulances, I'm sure he would be up to the task; however, the income situation on the farm is so dire, there is little to no extra cash available at the farm level.

It is win at all costs at 423 Main. Nothing has changed except now they hide behind the 10 elected farmers. The old Chief Commisioner probably had the same spin doctors that this President has. When the bureacracy doesnt change, neither does the mentality.

In 1989, the then CWB Director of Grain Transportation, Western, wrote a memo to the Commisioners suggesting that barley and EVEN durum should be opened up to exports outside the CWB. 1989. And in 1989, he didnt trust anyone to write that 4 page memo inside the CWB. A copy went to the Ag Minister and the Minister of WD.

His reward? A muzzle, an office on the 6th floor by himself and a new title, Special Assistant to the Commisioners.
The CWB tactic has been in play for some time Parsley. Humiliation, alienation, intimidation.

At what point, if ever, do farmers realize they are being screwed with their own money? Whats worse is some actually seem to enjoy it - maybe they get free samples of KY in their final payments.

[chaffmeister]

C'mon, Incognito. Don't hold back - tell us what you really think.

And have a cup of coffee before you tear into your Agriville postings at 4 or 5 am!

[Incognito]

I'm 0-11 on roll up the win...frustration must go somewhere...lol