Life After CWB

[TOM4CWB]

I think Charlie that competition for the CWB would only make the CWB better. The hog situation in western Canada is a perfect example.

In talking to the soft white wheat people it is clear that the CWB must start looking after farmers needs, or the value added industry developed to make cookies and soup etc will have to import their wheat from the PNW USA. The CWB continues to subtract all the Vancouver freight off the farmers check, even when it is going to Lethbridge, Calgary, Edmonton or Saskatoon. This Must Stop. A Direct contract program with these mills would be the best in the end. I cannot see why when we are going to be an importer of this white wheat that this would not work. If the CWB would allow a seperate pool for soft white wheat, and allow producers to negotiate fair contracts, we could make this wheat work in Alberta!

This is only one example! Value adding CPS, CWES, and Durum could only help our whole Ag economy. Killing Soft White Wheat and stopping us from growing it is not the answer. The CWB can't get their head around the reality of grain marketing. They are to work on behalf of farmers. They are supposed to serve us and facititate our needs! This shows why changes must and will happen, wether some older folks want these changes or not!

Helen Keller was asked, what could be worse than not being able to see?

The answer is directly applicable to the CWB.

Helen's answer was, "Being able to see, but having no vision."

The CWB is so caught up in their powerful institution that they forget that they are on the planet Earth, in January of 2001, and that if they don't carfully facititate the needs of the farmers they are to market grain for, they will be history in short order!

[charliep]

Life After CWB

I should highlight to everyone that I don't work for the CWB but do have a different view because I worked there. My intention is to simply ask questions/get discussion going. I will do the checking on volumes/dollars of manufactured feeds that moves across the border.

I like to take things full circle and ask the question what life would be like in a completely open market or some combination of open/pooled market. What would happen to flows of grain into the US? Would they tolerate this? How would farm managers handle a more open system from a risk management, information gathering/decison making perspective? How would farm managers evaluate pricing decisions not only from day to day level in terms of futures market price changes but also differences in classes, proteins, quality characturistics, location, etc? Are western Canadian farm managers ready for this level of complexity in their pricing decisions? How would market price signals from grain sold in competition with other markets (eg. Australian to Iran) be passed on to you if they were different from those of US markets?

The simple answer to all the above is the market will take care of it. The questions that need to be asked go beyond the simple answer and into where we want our industry to be (a strategic plan). What will our industry look like in 5 to 10 years time? What kind of a marketing system/approach would support this?

Charlie P.

[Bridgette]

Charlie, As someone who has worked for the Board, your questions are pretty typical of the propaganda that the Board puts out in order to scare farmers.

You question whether the US would tolerate inflows of Canadian wheat under an open market. In case you haven't noticed, the US is ALREADY very upset about Canadian wheat coming in, mainly because they feel that the CWB is selling cheaply into these markets and competing unfairly against their own wheat. You may argue about the validity of the US stance on this issue, but as it stands, the CWB is much more of a threat for future US/CAN grain trade than the open market.

You also talked about risk management, and how farmers would manage risk under an open market. I do not understand this logic, since the Board does not manage risk at all. Rather, it is the farmer who must carry all the risk in growing and harvesting the grain, and has absolutely no control over the marketing or pricing of his product. The CWB is under no obligation to the farmer to deliver on a certain price target, his only salvation is to hope that a salesman in Winnipeg will do a half-decent job selling the grain. Most business people who depend on their marketing savvy to sell a product they worked so hard to produce, would find this idea rather absurd.

Having said that, the Board is rather good at managing its own risk, just take the delivery contracts as an example. The farmer must deliver on his contracts, but the Board is not obliged to take any of it. Being in a monopoly must sure be nice (for the monopolist, that is)

And speaking about being ready for the 'complexities of the market, let us not forget that most crops are already sold on the open market by farmers who are familiar with the so-called complexities and have made it part of their daily work. In the age of internet and instant communication, not to mention information availablity, it will be increasingly difficult for the Board to convince farmers that it can do a beter job than they, and that it is better for everybody to just stay ignorant. And even if some farmers are baffled by the complexities and want nothing to do with it, does it give them the right to forbid others to do it?

[parsley]

Charlie, you want to know what our industry would look like in a few years? Look at where it is now. Freight bills and $4.oo wheat that not one wheat or barley farmer can make a living on. All centrally planned. Carefully. By government and bureaucrats. And every farmer loses.

Look at those organic idiots. Designed their own system. Don't pay freight. Wheat is $8-$13/bushel right now. And you ask them if they are "ready for the level of complexity of pricing decisions..." ? Really.

In the meantime, the feed mills make money. You didn't answer my questions Charlie. Does the Pool do the EMFA buyback? Does the EMFA grain go through the buyback or does the CWB simply issue export licenses? I wnant to know how much grain the Pools put through the EMFA grain. These questions you can answer.

If you really believe in the pooling system you want farmers to continue to support, then answer the following question Charlie, ....Why isn't the CWB marketing all this grain that the feed mills are marketing and exporting?

Do you do as you say Charlie?
Parsley

[charliep]

I probably agree with most of what has been said to date. As I indicated, I don't work for the CWB/can analyze any market situation someone throws at me.

My questions go around the new marketing world we are moving into driven by customer needs/products that meet them versus our old world where we produced a product and then looked for a market. I agree that the current system with the CWB serving a policeman role as to markets that anyone can access won't meet the needs of the new world.

My question comes to what this new world will look like. Will grain companies in an open market do any better a job of hunting for value markets in a world of high through put elevators/set up to deal with a bulk commodity than the CWB does today? Are farm managers ready to move from a world based on individualism/confronationalism to a one where relationships/trust up and down the distribution system to the final customer are key? As you move from a bulk commodity system based on futures to a pricing system based on value/other factors with smaller volumes (niche markets), how will you know you are getting a fair price?

An example would be a value added industry that requires 1CPSR wheat 12 % to 13 % protein and is looking at locating on the prairies (this all hypothetical). The reason for this is they produce a noodle that requries this type of wheat/protein to meet consumer needs/preferences. A major part of their decision about where to locate will be consistency of supply of a product over the entire year and of the grade/protein requested?

What type of system could be set up to meet farm managers needs for delivery opportunities/profitable pricing opportunities? How will price signals for this type of market be passed down? How should extra price from producing a product that meets customer needs be shared?

Charlie P.

[parsley]

Then analyze this Charlie.....

1. Does the EMFA grain go through the buyback or does the CWB simply issue export licenses?

2. Why isn't the CWB marketing all this grain that the feed mills are marketing and exporting?

Parsley

[charliep]

As per your original discussion on EMFA, feed mills who process feed wheat and barley (roll, grind, pelletize, cube) and processed at facilities that are registered with Agr. Canada and subject to regulation under the Canadian Feeds Act are automatically granted export licences by the CWB. The rules around are highlighted in the previous discussion thread. Just to highlight the feed mix has to be a blend of at least two ingrediants, the wheat or barley is less than 75 % on a weight basis of the ration and repeating the grain has been processed in some manner (no raw seed that can be separated - e.g. in tact peas and wheat). I am still doing research on the dollar values involved.

Your question no. 2 involves the fairness of this - e.g. why should one group (feed manufacturers, pedigreed seed growers) have direct access to a market when this is not available to everyone (farmers, domestic flour mills, etc). The discussion to date has been good so I will leave it at that.

[parsley]

Thank you Charlie, for answering #1 question. You were open and easy to follow. We saw how evasive Tom Halpenny was when he responded.

I don't blame you for not answering Question #2. There is really no defense, and it is embarrassing for any CWB supporters out there to defend an institution that's doing a real number on farmers. CWB's issuing, to big corporations, no-cost export licenses, quietly on the side, and then telling pasta farmers in southeast Saskatchewan that they have to do the buyback so that all the proceeds can be pooled is unconscienable. Openly lying to organic farmers, telling them that a change in legislation is necessary before export licenses could be issued is unacceptable. (Check it out at prairiecentre.org)
You do not work for the Board, Charlie, and I understand that, and I do not blame you when the CWB does not address these very important questions. Tom Halpenny should be on the front line here. And he is not.

Farmers who want to stay in business are demanding accountability. And accountability is not a sister to Lies and Evasiveness.

[rosco]

You seem to be painting a picture of Big, Bad Uncle Sam, ADM, Cargill, and other world-wide agri-food players circling like vultures, and the poor, illequipped Canadian farmer being victimized in a post-CWB world. I receive approximately 60% of my profit from 40% of my acres growing non-board oilseeds and pulses. I have a vast array of tools available at the touch of a keyboard to research, plan, market and move these non-board crops. I realize that this is not so on every farm and that wheat is still king in some areas. So when you ask how will the Canadian farmer sell wheat and manage risk, I say the same way that I look after my Canola and peas.
Big Business understands 3 principles-Money talks, location, location, location, and volume of scale. I try to grow a quality product, and get every cent out of it that I can. Distance is a problem in this huge country of ours, and being close to a value adder would be a huge advantage. The last componet is the one, however, that I feel will be the way of the future. The huge farmer that can buy all his inputs at a discount has the advantage. What I see are farmers getting together into large agronomic units for volume buying. I know this is reinventing the wheel-agricultural co-ops, but there is still an advantage. There is nobody who can buy diesel, anhydrous, Round-up, or equipment as cheap as the big boy in my area(18,000 acres). This is the post-CWB world as I see it.

[chas]

Charliep good question for discussion before someone dismantles the CWB. Freedom to price grain and oilseeds is what the americans have now, have a good look at the sustainability of farming in the USA it is far worst there than here, just talk to some US farmers. The commodities market sets our price as we all know but not everyone realizes just why and how it works. The commodities market in North America was established aproximately 150 years ago so large grain traders could protect their purchase price plus handling, transportation cost and a profit into the future. When large amounts of grain and oilseeds are bought and sold into the future on the market it trends the price to remain the same(as it has for a hundred years or more). The market does not concern itself with the cost of production but only serves to protect buyers of scale. Individual farmers can not use the market in the same way because of the small profit involved (because of imput cost)and their small volume of scale to create sustainabiliy. Now Rosco, you enlightened me when you wrote that farmers joining together could obtain a discount in imput cost. How about forming farmer elected and contolled boards to hire the best people available to market and price are grain and oilseeds. The CWB is a good example of this theory but remember the commodities market still limits the pricing capabilities of the board. So the task becomes our capability to convince all farms in North America and Australia to form marketing agencies similiar to the CWB. These boards will cause the dissappearance of large grain traders and the commodities market. At this time a cost of production could enter the the pricing formula. Surplus? a fiqment of grain traders mentallity to gain profit. Surplus has never been a problem on my farm or anyone elses for that matter. I along with everone else I have sold every bushel grown each year since the late 60's and early 70's when there was an honest to goodness surplus caused by the upstart in the use of fertilizers that created yields that the world was not ready to consume. Surplus is not the problem so much now as the mechanizim for price discovery. Production is consumed annually with a small 60 day or less carry over. Think about it as farmers we price our product we don't market it. Marketing is the process of showing customers what they can do with are products, the quantity, quality and the availablity of it plus delivery capabilities. We need to control our product from the farm gate to the end user to gain sustainabitiy. I'am a professional producter, niche markets are a passing pricing phase in different areas that is non sustainable and value added is another buisness that I have no time for myself and would require the hiring of expert people to control it. Large corportations merge together to gain market and to control market. Maybe a new catch phrase, Farmers Merger to control cost of production and to obtain a sustainable price for their grain and oilseeds would be the answer. Rosco maybe we could get Bridgette, Parsley and Charliep to helps us spread the good word to all farmers of the different way to sustainablity in the agricultural buisness.

[charliep]

This is good discussion and I appriciate everybodies contribution.

A couple of comments and then a question. In spite of the tough times we face in the crop side of the ag. industry, I am an optimist. One of the areas I have seen change in my 25 years in the business is a more pro-active consumer who is demanding (we'll argue about willing to pay for) certain types of food products. These opportunities could be anything from organic grain, to specialty canola oils, to herbs (even heaven forbid I would suggest, the GMO issue in canola may offer an opportunity). Even something as specific as a flour mill than wants to contract for 1 or 2 CWRS wheat 12.3 to 12.8 protein - 1 unit train (100 cars) arriving at their flour mill every week for a full 52 weeks. They need the consistent quality because this is what the bakery demands to bake bread that meets the housewife buying requirements. They require the consistent supply because their plant is designed around minimal storage capacity (just in time arrival).

Acknowleding all the concerns people have expressed about the current system (and hopefully putting aside for the moment), what things could happen to allow us to do a better job of meeting customers needs/wants/requirements? What will you look for in relationships in value chain (all the groups that handle/add value to your grain up to the final consumer)? As we look ahead, are there positive steps that can help farm managers capture more value out of this chain?

[ValueChainFX]

Well folks, this looks very interesting and somewhat the same conversation that is happening in many areas of the agri-industry. Chas, I am here mainly because you directed me here, so I have 2 cents to put into the pot as well! If you believe that the global economy is being built on niche markets, then you best check the back grounds of some of the countries we are dealing with! If you believe you are going to take on the big guys head on, all the power to you!

My goodness, this is your business, our Canadian product is fantastic, our producers are capable of making dramatic changes. The world market is demanding Value Added products, but you also have the options open to you to take part in many Canadian agri-aliances that can increase your operations value as well! I am not a strong grain guy as far as knowledge goes, but my retail /wholesale background plus my experience in the supply chain tells me that the time to build the infrastructure for your future is now! If you don't then the big guys will always have the front row seats!

Just my thoughts! Feel free to visit my web site and send comments to my e mail,

e mail
valuechain@home.com
website

http://valuechain.homestead.com/index.html
Have a good day all hope to hear from you soon!

[parsley]

Can you imagine the disappearance of corporations in our country? Big or small? they are wealth creators. Telling wealth creators in any country that you don't want them or need them and that you want to get rid of them is as silly as a ram's tongue-quivering ritual. Especially when our country's political flunkies carry their hat and empty $$$bag in hand to Wall Street with predictable repetitivity to beg funds to service a national debt that is a out of control. We need lots of wealth creators and we need industrious people and we need lots of smart people. And we need to treat them well and if we don't, we will have fiscal refugees.

Farmers have traditionally been wealth creators, and they are changing and forging ahead at an amazing pace., and they are becoming noticibly intolerant of the agricultural so-called expertise and services that are provided for them. Or forced upon them. Often by those who were not capable of running their own farm. Many "professionals' are being replaced by digital servants and there will be many technical innovations that will further displace employment. It is the bureaucrat who has to fret more about the future than the farmer, because the farmer and the corporations have a common-interest....to create wealth. rosco recognizes that corporations innately understand that they cannot kill the goose.

You want more farmer-controlled Boards? We have a CWB model perfect for your world Chas,not mine, where farmer-elected Boards wield unlimited fistfulls of farmer dollars to 'manage' a monstrosity that serves few. Certainly not farmers. And that Chas, is why the CWB is dismantling. CWB regulations have traditionally complicated and suppressed commerce, and we have generationally observed that helping farmers produce wealth is not part of the CWB's overall plan. One could even say that the CWB very often makes the market illegal and has made the law look ridiculous. The only price discovery the CWB makes is whatever price the Board dreams up at a given particular moment. Pooling is for those denied licenses by the CWB on Whim Day. lrhm in another thread can tell you about the kind of silence he gets when a CWB bureaucrat gets hit with some tough questions. No accountability.

I want to do business with those I seek out , that are right for me. I'm concerned with wealth creation, while CharlieP frets about wealth sharing His idea of a fair price and my idea of a fair price are about as easy to establish as determining what is a beautiful woman.

Jane Jacobs writes the most interesting books and she makes the point that we should shift from the belief in natural uniformity to a belief in natural diversity She says that "Diversity itself is the essence of excellence . Diversity has dogged persistence and mysterious vitality" She also advises "With uniform or centralized control, improvements in human affairs come hard, and eventually come not at all".
My grandmother used to call it "live and let live".
Parsley

[TOM4CWB]

The CWB has been presented to us in three stages.

First the voluntary CWB 1935-1943, was unfortunately killed by the 2nd World War.

Then the second CWB was controlled by the government from 1943-1998, and was obviously not terribly interested in meeting our needs.

Now the new revised improved farmer controlled CWB, 1999-?, is still lacking in promised performance!

Are we satisfied yet? All indications are the CWB is making just about everyone angry!

Well I think it is time for a joke.

One day we met a beautiful lady and she was complaining that she had just been married for the third time, but was very disappointed because none of her marriages had been consummated.

We asked why?

Well she was really in love with her first husband, but just as they were leaving the church, he tripped and fell on the front church steps, smashed his head and died instantly.

She kind of rushed into the second marriage, and unfortunately on the wedding night found out her groom was gay and had no interest in having anything any thing to do with satisfying her needs. She finally left him after it was obvious that he was more interested in his boyfriends than her.

The third Marriage was well planned and really sounded wonderful. Her guy was great, and courted her and really convinced her everything would be perfect if she married him.

But,

On their wedding night, what happened, he just sat on the edge of the bed and told her how good things were going to be!

Talk is cheap.

Why would any Canadian grain farmer be the least bit interested in exporting outside the CWB, if the single desk even remotely performed as they claim it can.

A voluntary union between two partners, who want to be together, can be the only lasting fulfilling relationship that will survive the test of time! This was the original intent of the CWB Act, isn’t it about time we realize a voluntary CWB is the only one that is fair and will work in the long term!

[chas]

Parsley
I knew I would have problems with you. You speak in huge complexies about a simple marketing problem. If you have all the answers to the open market, sell the farm and move to the USA, open a consulting firm and advise farmers there how to avoid the farm crisis by pricing on the open market or is the CWB to blame for their problem too. I done want to meet the big boys in the grain buisness head on I want to side step them on the way to sustainability. I don't want to distroy corportate America but would like to put a leash on them to keep them from continuely picking my pocket and failing to spread the wealth that they are making for all of us. Parsley you are a prime example, in an age steeped in propaganda about the rugged individual, the miracle of the markets, and the promise of deregulation and privatization that you have lost your way and turned your back on the common sense known to our grandfathers-that we must work together against powerful opponents. I think you misintrepreted the meaning of your grandmothers statement of "live and let live." I think the website www.fna.ca explains the direction we should be headed into to gain respectability in the agri-industry. Good luck in the USofA my learnt friend. Chas