Farmer Owned Inland Terminals Support CWB

[Incognito]

No one seems to know how or what consensus was used to send a letter off to the Minister of the CWB. I havent seen the letter; however, enough has been made of it that where there is smoke there is fire. Maybe MSchell from can shed some light on this issue.

Some questions:

1) What do you think the CWB traded to get their support?

2) What happens to farmer shareholders who don't support the ITAC position.

3) Who drafted it - who signed it?

If farmers have shares in the Inland Terminals, you have a right to know. Best place to ask - your annual meetings...

[parsley]

Incognito,

The sound of silence.

Okay, I'll play.

I'll pretend I'm the CWB and conjure up some hypothetical trading material in response to your hypothetical question #1:

Of course, all of us understand that the CWB would never, seeingst they have an Elected Director compiled Code of Conduct, never stoop to this kind of shenanigans, don't we?

Okay.

If I were the CWB, I would hunt down the Inland Terminal Association representative who is a loyal CWB supporter, and I would personally call him and say,(no Scott Brison type emails either):

"Look, we need some help fighting to keep the monopoly right now, If you send out a letter of support for the CWB, we will see that a lot, and I mean a s*$%load of grain will go through your terminal, and an export license will be available to you whenever you apply for one. We're the only game in Canada that can hand them out."

"And..... that license won't cost you a cent." My word. Not traceable because of Access to Information."

"cc me a copy of ITAC's letter of support for the CWB monopoly, and your wishes will be granted".

That's what I'd do if I was the CWB.

Parsley

PS Now, if I were, for example, Louis Dreyfus, I wouldn't exactly like this ballgame because I will start bleeding profits.

PPS, AdamSmith, you're 'it'.

[chaffmeister]

I don't know anything about this letter but I wouldn't be surprised to hear that that the ITAC members support the CWB.

The CWB gives the smaller shippers "countervailing power". In today's world, the terminal opeators gladly accept shipments from all ITAC members and other non=terminal owners - like Dreyfus. Much of this grain is being exported by the CWB - ITAC (and others) handles it in the country, the terminal operators handle it at the port. ITAC members do no exporting.

Now fast-forward to a world without the CWB. Now, ITAC members not only need the terminal operators to handle grain on their behalf, they need to get someone to sell it in the first place. If it's the same company as the terminal operator, there's a conflict. If there is a shipping bottleneck, the terminal oparators will favour their own shipments.

These small shippers (ITAC members) often feel squeezed out of the canola market - I think they fear the same will happen with wheat.

Parsley - ITAC members don't have an issue with export licences because they don't export - they just handle grain, mostly on behalf of the CWB.

(Sorry for jumping the queue - I know you invited AdamSMith to comment next, but I can't wait for him.)

[agstar77]

No it must be a conspiracy, it can't be as simple as that!

[parsley]

ITAC members handle grain, mostly on behalf of the CWB, as accreditied agencies. I agree.

Can terminals sometimes operate with a not so public dual function?

(You will recall that Feed Mills were suitably quiet about their ability to buy directly from the farmer under the Export Manufactured Feed Agreement, accompanied across the border by a secret custom-designed CWB permit).

Can Terminals, NOT acting in the capacity as accredited agencies, taking off their Accredited Hats, so to speak, quietly bypass the CWB (with the CWB's blessing), export truckloads of grain accompanied by a CWB license in hand, bypass the pooling accounts, to help balance their accounts at the end of the year?

And how would a competitor even find out?

Don't forget, it's an interesting world we live in.

Parsley

[Incognito]

What if the CWB guaranteed tonnage to Terminal One ...enough to make it viable through a letter of intent..

Support for the CWB single desk is a contentious issue - why would ITAC alienate themselves if there were no tradeoffs?

Conspiracy - no Agstar ...just common sense.

[AdamSmith]

As I understand it, not all ITAC members were consulted before this letter of support was sent. So there is a little internal intrigue at play here as well.

What was the trade off ?

My guess is preferable car allocation and preference for grain tenders. For the one or two terminals who “made sure this letter of support happened,” basically, a guarantee of lots and lots of cars and lots and lots of grain to ship.

The farmer owned terminals and the CWB are new best friends, they are the grain business’s version of a high school’s “our s—t doesn’t stink” clique.

In the U.S. grain elevator handling fees run around 5 cents per bushel, how many of these operations, built on a promise of 50 cents per bushel will be able to compete? ITAC members are the most vulnerable so it would make sense to me that they would be more than eager to maintain the status quo.

It may be just that simple.

[parsley]

You know the old birdie, that big black/white magpie, was singing the song that three of the terminal's CEO's signed the letter, on behalf of the entire ITAC.

Some of the left-in-the-darkers are not happy. Some investors are really ticked.

One of the CEO's defended the 'I-love-the-CWB-letter' saying the CWB is their best income/business.
Can't kill a cash cow.

Does ITAC know that their cow is not in calf?

Dry cow = no calves to sell, and no milk.

Parsley

[Incognito]

3 of 11 Terminals = a majority.

3 of 15 Directors @ CWB = a majority.

Can you see the difference?

[chaffmeister]

I think Incognito hit the nail on the head when he called this common sense. ITAC is in a pretty tough spot without the CWB out there selling wheat. I don’t think there’s any hidden agenda or trade-offs other than simple business. (I could be wrong; I’ve been wrong before. Once.) It’s possible that the ITAC member’s that wrote this letter feel that it's in their best interest to keep the CWB around in some form. The CWB may not have done any urging or lobbying here at all (although it probably did). No increased car allocation, no favourable tenders needed (although I wouldn’t discount these completely out of the picture – after all, it’s a strange world out there).

As farmer-owners, these guys are in a tough spot on this – they farm and so could feel they’d like to see the CWB gone, but they also own a terminal that relies on the CWB.

If I was a member terminal "in the dark" on this letter thing, I’d be ticked off for not being consulted. Before going off the deep end and throwing your support behind the wrong horse, there are many other options that should be explored.

First, there are other “exporters” out there that you can build relationships with. Some might be surprising – how about Bunge, or Dreyfus, or AC Toepfer – or even a Japanese Trading Company like Itochu (which owns Columbia Grain in the US). Even Parrish & Heimbecker, who has a nice little export office in Vancouver that quietly goes about selling all kinds of stuff overseas. There are others. None of these candidates have terminals, but all could do a very nice job selling grain for ITAC members. And would be keen on having grain origination in Western Canada. There would still be the issue of needing the use of terminals operated by your competition, but that’s what you’ve got now.

Second, how about aligning yourself with a new dual-market CWB? (In other words, don't support the old one, be there to work with the new one.) The CWB has always said that, in a dual market (whatever that is), they won’t be able to compete with the same companies that are handling CWB grain. But how about the dual-market CWB working with those that don’t export? Smaller book? Yes, much. Competitive? It could be, with the right mindset at the CWB. The CWB does not need to be omnipresent to play.

If you want to keep competition in grain handling, you better look to ways that keep these small operations around and not beholdin’ to the big four.

[parsley]

Sure the terminals are in a tough spot, but they have to look at where they will end up down the road. Any CEO worth his salt looks 10 years down that road.

Western farmers need to know they are going to make some money in order to keep farming, and industry endorsing 'more of the same, boys' sends one more signal that there is no change coming.

Partnerships will decide who survives.

Dreyfus marketing for SWP is a marriage that will probably work well.

Three farmer co-op terminal CEO's have endorsed the CWB, but perhaps the sharefolders haven't had their final say.

Parsley

[chaffmeister]

Parsley – my point exactly. Why would you hitch your wagon to a dead (or dying) horse? There’s a lot of good fresh colts out there.

And your point is well taken – farmers need to see some leadership to change for the better.

[Incognito]

Does Dreyfus market for SWP along with AC Toepher, Parsley?

[parsley]

What are the contracting terms. do you know? What % to market? Isn't SWP supposed to be soley supplying the concrete?

If I were a multinational, I wouldn't be keen to build concrete in Canada for the grain trade, as all feed mills, elevators, grain cleanng facilities etc. are "designated as works for the general advantage of Canada". Imangine!

The current legislation never ceases to horrify me.

Most of the multinationals access a lot of countries now, for the CWB, don't they incognito?

Aren't most CWB sales handled by the Accreditied Agencies anyhow?

Parsley

[chaffmeister]

I thonk Incognito was asking about Dreyfus and SWP - what arrangement (if any) between LDC and SWP are you talking about? (I have the same question.)

As for Accredited Exporters doing the sales - I understand it's about half of exports (give or take). But this really doesn't mean much - the Japanese Food Agency (one of our best customers) buys exclusively through AEs - but its a tender process whereby the AE simply facilitates the deal. The CWB still "controls" the sale. I think its more tradition than anything.