CWB Survey

[chaffmeister]

Jag – first let me say thanks for taking the time and effort to answer my questions. Far too often, I ask questions here and either get rhetoric, insincere answers, sarcasm or no response at all. Sharing opinions (as you have said) and sharing facts is what its all about. (And thanks for the book references - I may look them up.)

Below, I’ve restated some of your comments, followed by my comment.


YOU: I think if there was more than one seller they would try to undercut each other to gain market shares bringing smaller returns the producers.

ME: Actually, what grain companies as exporters want is the highest priced sale – but not for the reasons you think. If one company gets a better price than the others, he can pay farmers more – be more competitive. The last thing a grain company wants to be is the guy with the lowest priced sale. Tough to make money competing for farmers’ grain with competitors that have better sales on.


YOU: With a variety of companies bidding for limited rail capacity, grain rail freights would escalate.

ME; Rail freight rates are regulated with the Revenue Cap. Railroads can’t “escalate” their rates. They’re stuck.


YOU: The export of grain would be dominated by the multinational grain companies which currently compete against the CWB.

ME: About half the sales by the CWB are made by AEs already, some of which are the multinationals (the CWB sells to the AE, theAE sells to its customer). Even small guys like Paterson and Parrish & Heimbecker export CWB grains now. They’d continue.


YOU: Unlike the CWB which returns all revenue less marketing costs multinational grain companies are in the business of earning profits for their shareholders.

ME: Your grain is already handled by these grain companies. They are already making a profit on handling your grain.
The CWB comes at a cost. It is unclear whether the CWB makes enough over “the market” to cover its cost and still give you a net benefit.


YOU: private grain companies exist to purchase grain at the lowest possible price to maximize their own profit margin.

ME: Sorry but that’s wrong. Grain companies do not exist to purchase grain at the lowest price. If so, they would love it when prices are in the tank, and hate it when they are sky-high. But they don’t care where the price is. If they handle a million tonnes of $100 grain they will make the same amount of money if they handle a million tonnes of $300 grain (all else being the same). The grain companies compete for volume. (I worked for one once – trust me on this.)


YOU: The CWB earns premium prices for western Canadian farmers through its size (world largest marketer of wheat and barley).

ME: Afraid they don’t. This just ain’t true. If it was, they’d prove it. I’ve seen data that shows a different story. And I’ve heard from buyers that say very clearly - no premiums.


YOU: …and through its ability to ensure customers of a reliable quantity and quality.

ME: The grain companies and grain commission take care of that. To suggest that without the CWB Canada would lose its reputation of a quality supplier (as the CWB has suggested), is simply wrong.
Do you think AU would ship crap wheat overseas? Next thing that would happen is that Cargill or Dreyfus would get those customers and AU would have fewer sales. Fewer sales, less volume, less revenue, no profits. Each exporter will do their damnest to provide better quality and better service than the next guy. Competition will discipline handling charges (yes Vader – competition does keep costs in line, even for big multinationals).

[Jagfarms]

Quote
"The CWB comes at a cost. It is unclear whether the CWB makes enough over “the market” to cover its cost and still give you a net benefit"
Unquote

CWB Administration Costs per metric tonne & bushel The info show the CWB administration costs since the 1994-95 crop year up until the 2002-03 crop year (the last crop year that is available). The costs are shown in dollars per tonne and per bushel.


CWB Admin Cost tonne BU
94-95 $1.86 $0.05
95-96 $1.92 $0.05
96-97 $1.70 $0.05
97-98 $2.51 $0.07
98-99 $2.81 $0.08
99-00 $2.70 $0.09
00-01 $3.26 $0.09
01-02 $2.68 $0.07
02-03 $4.03 $0.11

[Jagfarms]

chaffmeister

It is good to hear your side of it as I said my post is mostly based on my opinion. I see your side of it as well and I have been doing research finding out facts as well and posting the facts as I see fit.

It would be good to get facts and opinions from both sides and let farmers see all the facts and not just deicide the fate of the CWB based on thier emotions.

It looks like I myself can live with the CWB Administration Costs per metric tonne & bushel for now but will keep a watch over it to see how high it goes. I wonder how much more it went up since 2003?


Like I mentioned in the first post Other crops we grow that are not CWB crops are large green lentils, small red lentils, yellow peas, maple peas, Desi chickpeas, Kabulis, Rye, Canola, canary seed, feed barley maybe some dill, anise, corriander, flax, and mustard. We have enough markets on our farm to watch and for the few cents/bu the CWB is making from me it is worth it to us for now.

This past winter I did some charts up on growing different crops on our farm with the prices for the past 10 years of the crops and the yield we have been having. I did charts for farming 1/2 and 1/2 durum and summerfollow. 1/3 2/3 with Durum or wheat, peas, lentils rotation. Then I did cont, cropping with several different crops. The way it worked out was farming 1/2 and 1/2 just durum through the CWB I would have net just about the same money over the 10 year time with a lot less risk and less expense. That is the way it looked for our farm it could be different at yours.

Someone mentioned before that is nice to have the other crops to sell to get some cashflow happening.

Last year we had large green lentils. They are still in the bin we have not sold one pound yet as the price is so poor and hopefully they do not downgrade worse than a #2. We have Canola that we sold maybee 10% just to get the tops off the binn and are hoping the price climbs. If the CWB was buying Canola with a pooling acount it would be gone already. We have red lentils that we have not sold yet. We have 2 years of maple peas that are using the space of 6 grain bins at this time that the price is very poor now and we will have to wait till maybee 2008 to sell. We have some desi chickpeas that have been in a bin for 5 years that there was no market for until now. We might clean and seed them as there is 2006 contracts with act of God for 12cents for #2 and 12.5cents for #1 available.

We just recently sold some Kabulis in the fall of 2004 that were in some bins for 3 years. We sold them at a good price but when we went to haul some some mould was in with part of them so we got discounted hard on the one load. But they still made money overall. I said I would never grow Kabulis again and this spring I broke down and purchased some Xena seed. I might try some yuma's as well.


So for us the special crops do help pay the bills but we are always hoping for a better price.


It is like that joke I heard and you most likely heard at one time about the farmer out in the feild one day and he stops the tractor and see's this cool looking bottle. He opens the bottle up and out comes this Geni. The Geni say's thak you for letting me out I will grant you 3 wishes. The farmer tells the Geni I know what I Want I only need one wish. The farmer wishes for Canary seed to go to 40cents/pound and Geni grants him his wish. The next year the farmer is in the field again and he comes accross the same bottle and he runs and grabs it and out comes the Geni again. The Geni says O you again what do you want this time and the farmer again says I want canary seed to go to 40cents/pound and the Geni say's I granted you that wish last year. The farmer say's I know but I am going to sell it this time.

I know I am like this myself. Back a few years ago I could have sold my canary seed off the combine for 40 cents/pound but I thought by Jan it would be 45 cent and I was worried about paying income tax that year so I decided to wait. I ended up selling it for 20 cents and it has gone down ever since. It might be the time to seed it now that the price has been down for quite some time.

[chaffmeister]

Jag:
There is evidence that the CWB costs more than just its admin costs. Read the first posting under "The Real CWB Balance Sheet" thread. Read more if you like, but its a long thread.

[chaffmeister]

Jag:
I wrote my last post without seeing your last one.

You are in a unique position. Most farmers could never hold production as long as you seem to. Most need the cash as soon as possible.

As I mentioned, take a look at the other thread. The CWB system has implications other than CWB prices and admin costs.

[TOM4CWB]

Jag;

I am a grain farmer from Alberta near Edmonton.

I have run against Ken Ritter twice in the last 2 CWB Elections, against Art Macklin in the 1998 District 1 election.

In 1996 the CWB refused to issue me an export license, after promising the license for the Pedigreed Seed; Canada Customs seized my Peterbuilt truck for 43 days in Milk River... but finally released it.

I need an honest CWB, and believe anything less will in the end destroy the CWB. So far the CWB has been far from truthful in many representations from the "single desk" benefits for growers to the Oil for Food AWB issue.

I must work and compete for my living; I expect nothing less for a CWB and it's workers: they need to be healthy and efficient... that will serve us in the best most honourable way.

[Jagfarms]

monopoly DEFINITION

monopoly (munôp'ulç) [key], market condition in which there is only one seller of a certain commodity; by virtue of the long-run control over supply, such a seller is able to exert nearly total control over prices. In a pure monopoly, the single seller will usually restrict supply to that point on the supply-demand schedule that will maximize profit. In modern times, the accelerated production and competition brought about by the Industrial Revolution led to the formation of monopoly and oligopoly. Since the notion of monopoly is antithetical to the free market ideal, it has never been popular in capitalist nations. In the United States, the most famous monopoly was John D. Rockefeller's Standard Oil Trust in the late 19th cent. Despite such legislation as the 1890 Sherman Antitrust Act (the first significant legal statute against monopoly), it was the Supreme Court that forced the break-up of Standard Oil, along with other monopolies. Since the 1960s, however, the U.S. Justice Dept. has occasionally been more active in attacking monopolies or near monopolies (such as AT&T and IBM); a major case in the 1990s involved the Microsoft Corp. (see Bill Gates).

Many governments, however, have created public-service monopolies by laws excluding competition from an industry. What resulted were generally publicly regulated private monopolies, such as some power, cable-television, and local telephone companies in the United States. Such enterprises usually exist in areas of “natural monopoly,” where the conditions of the market make unified control necessary or desirable to the public interest. Some socialists have advocated the extension of the principle of public monopoly to all vital industries, such as coal and steel, that have an immediate effect on the general welfare of the economy. By the 1990s, however, many public utilities in the United States and elsewhere were deregulated, allowing for competition and lower prices (see utility, public).

Aside from utility companies, privately controlled monopolies without state support are rare. However, the concentration of supply in a few producers, known as oligopoly, is not uncommon. In the United States, for instance, several large companies have dominated the automobile and steel industries. Since the Progressive era, the U.S. government has made most forms of monopoly, and to a lesser extent oligopoly, illegal under antitrust laws. The objective of such measures is to guarantee that price will be determined by market forces rather than by arbitrary price setting among corporations. In recent years oligopolies have grown through mergers and acquisitions. The government still grants temporary monopolies in the form of patents and copyrights to encourage the arts and sciences.

[chaffmeister]

Jag:
I'm uncertain what your purpose is in posting the monopoly definition. The CWB is not a monopoly - never was.