Neville Nankivell

[agstar77]

GMO's were approved before markets would accept them and before all the safety studies were done. The CCGA was in such a hurray to promote them we had our european market closed to canola. Like I said look before you jump. If someone wishes to jump off the cliff, by all means let him, but all of us don't have to end up in the hospital with him.

[agstar77]

There were no pasta growers , just durum growers. As I understand it was the business plan that did them in not the CWB, but then your mind is made up that it's someone else to blame.

[chaffmeister]

Re options as “wealth producers”:
If risk management does not help in producing wealth, why do it?

Let’s remember that risk = cost. The higher the risk, the higher the cost. Any time you can reduce or manage risk, you are reducing or managing cost. For example, without a means to offset price risk, grain merchandisers need to widen their margins. “Need to” – because the times the market moves against them, they lose in a big way. Yes, sometimes the market moves in their favour, too. Over the long haul, their “expected return” would be smaller than you think – but only because they were trying for big margins. The big payoffs are meant to pay for the big losses. When managing their risk properly with futures and/or options, they can narrow their margins dramatically – the end user pays less and the producer gets more.

If you don’t think that risk management – which includes futures, options, hedging in cash markets, hedging forex, contracting of all sorts, (even crop insurance) and so forth – is a “wealth producer”, I would beg to differ.

So Agstar77 – if you were taught at an option course that options are “merely risk management tools, not wealth producers”, I’m afraid your instructor failed you.

By the way - I like Parsley's answer too - options are tools used by those creating wealth. Very applicable as well.

[agstar77]

Unless you are an option trader , options simply lock in a value for your product which create the wealth, options in themselves do not create anything. I suggest very few option traders make money, however the exchange that sells you the option always makes money.

[AdamSmith]

Agstar77, you wrote:

When the Crow rate was eliminated ,farmers such as yourself said it would lead to prosperity and more value added . Guess what the Crow is gone and no one noticed benefits but they certainly noticed the added costs, So before I jump off the cliff , I want to know that Agriculture will be better for it.

And you also wrote:

Like I said look before you jump. If someone wishes to jump off the cliff, by all means let him, but all of us don't have to end up in the hospital with him.

Well, If I recall the removal of the crow did have a positive impact on the livestock industry. Along with some other regulatory changes like removing the pork boards monopolies, there was an incentive to keep feed grain on the prairies, the cattle feeding industry grew in Alberta, the pork industry grew in Manitoba. Maple Leaf built a huge new processing plant in Brandon. I don’t know if those changes had an effect on the expansion of canola crush capacity but I do recall it was about that time that Cargill built it’s Saskatoon crush plant. Of course BSE happened but that is something totally unrelated to this discussion, which has had a negative impact on the cattle industry. So as a result of these regulatory changes, growing feed grains became quite profitable for grain growers, that was until the 2004 frost which created a massive glut of feed grains on the prairies. Thus leaving the export market to buy up the oversupply. But feed grain exports can’t happen freely, the CWB controls them and, well, here we are today. Anyone with an unvarnished eye can see that this system can’t properly sell large quantities of feed wheat and especially feed barley. And that’s because the CWB single desk pooling system won’t or can’t use price to attract the feed grain into their hands. 7 cents per bushel feed barley initial price is proof of the CWB’s failed response to the unfortunate frost of 2004. This Agstar77 in undeniable and is un-defendable.

On your jumping off cliffs comments, who’s business was it, other than the duram growers who wanted to add value by making pasta whether there business plan was good or not. It should be none of the CWB’s business or your business or my business what others think and what risks others are prepared to take. You yourself said “ If someone wishes to jump off the cliff, by all means let him,…” To even suggest it was the Duram growers business plan tells me that you will accept anything the CWB propaganda dept. says, because it’s gospel. Even though it go against a principle (the cliff thing) that you believe in. This is why I have a hard time taking most Wheat Board supporters seriously. The blinders are a dead giveaway to a futile discussion and debate. The pasta project failed because the CWB wanted it to fail, period, nothing else. The business plan was built on the premise of zero restrictions and zero buy back of farmer/investor deliveries to the plant. The CWB said no-way and that’s where it ended. The CWB killed it.

[wd9]

Agstar77 - You are quite misinformed - here is what really happened. CFIA and Health Canada approved the technology in 1997ish. Also did the EU, and the United states, and Japan - our markets for canola. However after the product was grown in Canada - Europe changed their mind on accepting GMO's. Canada continued to grow GMO's hoping Europe would change there mind, after all approval is science based - right? That is what happened.

In order to continue growing GMO's the Canola Council, Candian Canola Growers, Grain Growers of Canada all support the policy of science based regulatory and approval - not utlizing socio-political factors that the EU now uses and was recently ruled against by the WTO decision on the moratorium. The other thing is the EU is not a very big market anyways. To fill the need for biodiesel in Germany, oil from a GMO canola can be crushed and shipped there anyways.

With biosafety protocols and adventitious presence issues, Canada can't grow non GMO canola anymore to zero level inclusion, so either they support it and push forward with science based regs or we simply don't grow canola anymore. While the push is on for realistic AP levels in shipments, it is a slow train on movement.

So, now you understand where those organizations are coming from, and why it is important during things like the Percy trial, anti-gmo demonstrations, false media, and the loom burnings that go on in Ottawa, for the canola industry, we have to stay the course or we don't grow canola in the future because, big surprise, the world isn't fair.

Make sense?

[chaffmeister]

Agstar77:

1. Options don’t lock in a value. (Remember, they allow you to gain when the market goes your way and protects you when its not. No “locking in” here.)
2. You’re right – options “in themselves” do not create anything. It’s using them that does that. (Similarly, a combine doesn’t create anything – but using it does.)
3. Many, many option traders make money. (Not sure why this is an issue…)
4. Exchanges don’t sell any options. Option traders sell options.

Assume two business operators (we’ll call them farmers) have the same size operation, same cost structure, same customer base, same risks. Business Operator A does no price risk management (no futures, no options). Business Operator B manages his price risk with futures (forward contracts like DDCs) and options (minimum price contracts).

Over the years, Business Operator A has wild swings in revenue – but mostly he’s struggling because the good years – although very good – are not enough to make up for the bad years – which can be very bad (and beyond his control).

Business Operator B, because he looks at his risk management tools and techniques as an integral part of his operation, has not had the wild swings in revenue that Operator A has had. Rather, he has had stable (perhaps even boring) revenue streams – but no big losses due to having to accept ridiculously poor prices. He’s been able to put together a string of reasonable years and is in a much more comfortable spot that Operator A.

Fiction? I think we all know people that fit into both these categories – I know I do. Although their size, risk, etc may not be exactly the same, the big difference between operators is in the way they approach their business. I’m not trying to say risk management is the only saviour of the farm – I’m saying it is part of a professional farming culture.

Bottom line: those that manage both expenses AND revenues do better (create more wealth) than those that only manage expenses (and certainly more than those that manage neither expenses nor revenues). Options (and other tools) are excellent tools to manage revenues.

[AdamSmith]

Question to Agstar77;

Would you accept as a trade off , letting the CWB keep exclusive single desk authority of CWRS wheat only. All barley is removed from it’s exclusive jurisdiction, and all Non CWRS wheats are removed from CWB exclusive jurisdiction? This would include all winter wheat, cps wheat, durum and white wheat. No one gets 100% of what they want, but each get something that they do want. Of course the cwb could market these grains as well, only it would be voluntary producer participation.

Or is it still all or nothing, the WWII Japanese philosophy of better to kill yourself than surrender to the enemy?

[agstar77]

The problem with barley is it basically a feed grain outside of malt . We are shipping a low value high frt cost item to international markets. The value in barley or any feed grain is to use it locally in the feed market. I really don't think there is any great potential to export barley as a feed to compete against corn. We don't grow barley for the reason the returns aren't there. Since the CWB is basically export oriented I can see them getting out of the barley picture.

[TOM4CWB]

Agstar77

On Options;

Do you buy insurance for your vehicles and equipment?

If you do, this is no different than buying an option on currency... covering whatever direction (CDN$) in movement you need the coverage (Up or DOwn).

Exactly what the underwriters do on your farm insurance policy.

Options are simply insurance policies sold to cover market risk.

[agstar77]

Insurance and options are normally both used to prevent catastrophic loss. If you are lucky or good you might make money on options, but the sure thing is they are both a cost of doing business. I have no problem with someone buying puts or calls to protect their price, however anymore is speculating so why farm if you can make money speculating? It is very hard to time the market, if you can ,set up a brokerage. I don't need the work or the stress.

[chaffmeister]

Agstar77:

Funny how folklore works. Here are some FACTS in chronological order:

Prairie Pasta’s plans to “move up the food chain” was, very early on, frustrated by the CWB when the CWB would not allow these producers to process their own durum. This feature was felt by Prairie Pasta to be a key factor in getting farmer-investors. Even with the CWB’s refusal, the directors of Prairie Pasta continued to try to get this idea rolling.

Prairie Pasta’s subsequent business plan was aimed at buying existing capacity rather than building new (there were 3 facilities being considered). The board of PPP at the time decided that this concept (buying rather than building) when combined with no CWB support, would be too tough to sell to farmer-investors – so they scrapped the idea of buying.

Later, Prairie Pasta worked out a deal with Dakota Growers in Carrington, ND to allow Prairie Pasta to buy shares in Dakota Growers which would allow Prairie Pasta members to deliver durum to Carrington. At first, the CWB agreed to negotiate with Prairie Pasta and seemed to work out the details for Prairie Pasta investors to sell to Dakota Growers. Then, at the last minute, the CWB reneged on the deal.

So, let’s see. You have 600 Western Canadian durum producers (some figured the number would have been in the thousands if the CWB had stepped aside) anxious to invest in a farmer-owned durum mill and pasta plant. The biggest obstacle has been the CWB. If the CWB had simply allowed them to process their own durum, they would have raised more than enough money and then likely would have bought three facilities and would be processing durum as we speak.

Anyone who says the CWB was not a factor is simply ill-informed.