A Paradigm Shift is Required

[AdamSmith]

Sorry for hogging this forum, but there is so much going on and being said that isn't being commented on, I can't help myself.

I will refer you to the following comment from the CWB's response to the task force.

...replace it with some minor entity that is intended to take on transnationals...

Agstar77, don't you get it? The CWBII is not intended to "take on the multinationals" it is intended to "work with the industry"!

This sledge hammer approach is why were here today. This misguided belief that that it is the CWB's sole purpose to "fight and take on the multinationals".


The vision of the Task force was to create a new CWB that will work constructivly and positivly with the industry for the greater health and prosperity of the grain sector.


....It says the task force is proposing the CWB lose its single desk and "attempt to enter, with absurdly little in the way of assets, a concentrated, consolidated, mature grain handling and marketing industry with notoriously high barriers to entry, dominated by transnationals." The response also charges the task force with being silent on how the new CWB would design a business plan to succeed, "other than to lay that task at the feet of the current CWB." As well, farmer control and ownership of a new version of the CWB, as outlined by the task force, is "unrealistic and naive," the board said.

"It is poor and irresponsible policy to strip an internationally recognized, farmer-controlled organization of its market power, propose to replace it with some minor entity that is intended to take on transnationals, but with severe structural and capital disadvantages, and then tell farmers it is their own fault when it fails," board stated it in its response.

[wilagro]

The issues that the CWB brings up are in my opinion legit.

I agree with them. They are being absolutely responsible in pointing out as what the advisory committee is up to...which is THE TOTAL DESTRUCTION OF THE CWB as we know it. Replacing it with a mythical marketing agency "plucked out of the air" is total baloney.

[liberty]

I would like to turn your attention to the following article which was published in the Winnipeg Free Press on Thursday, November 2nd in their "Wheat and Chaff" series:

The Wheat Board Needs a Backbone

If nothing else, recent comments by the Canadian Wheat Board regarding the possible loss of single-desk status display a stunning lack of self-confidence about its own abilities and knowledge base. Given that the CWB only possesses a domestic monopoly, consisting of captive suppliers and a handful of captive buyers, but otherwise sells the bulk of its product into a highly competitive, price sensitive international market, it is difficult to understand what would be so devastating about injecting an element of competition for the business of wheat and barley farmers into this mix. Despite this, the CWB continues to insist that without the single desk it will, for all intents and purposes, cease to exist. In keeping with these sentiments, single desk advocates have predictably dismissed the current Wheat Board Task Force recommendations.

But a look at today’s business climate may not justify such a gloomy assessment. If the CWB wanted to compete successfully with the Cargills and ADM’s of the world in a dual market, three key strategies would have to be embraced: forward planning, effective risk calculation, and the extraction of value by offering value. While the Wheat Board sees its lack of physical infrastructure such as elevators and port facilities as a fatal handicap, it should recall that one of the great lessons of the information age has been that ownership of physical infrastructure is decidedly less important than it once was.

Many businesses carry on successfully without physical ownership of part or most of their infrastructure, employing contracting out and leasing to ensure that their products get to market. Ford and Chrysler, for instance, regularly contract out parts production to other firms. Rather than finding themselves gouged by sub-contractors, these arrangements offer flexibility and significant cost-savings. Countless firms lease mission-critical products as computers and vehicles, yet no one would suggest that National Leasing has a stranglehold on its clients because they don’t physically own these goods. Is it really out-of-this-world thinking to suggest that the CWB adopt a can-do approach as opposed to the present can't-do attitude?

Instead of bemoaning its lack of physical capital, the Wheat Board should seek to maximize its true advantages: the assets of knowledge, experience and reputation. Granted, a CWB in a dual market would have to diligently plan ahead and become more adept at risk calculation. But this is hardly an alien task, for the Board does this on a daily basis right now. Despite the legal requirement to sell wheat and barley through the single desk, the CWB must still estimate what kind of crop is available months into the future while committing to sales in the present, all the while accounting for unknowns such as the weather and the state of commodity markets. To ask that the Board deal with a few more variables seems unlikely to cause the sky to come crashing down.

When it comes to extracting value from the grain handling infrastructure, the CWB must approach the problem by first offering value to its suppliers (farmers). For instance, it might agressively promote pooling as a risk-reduction strategy, or, for less risk-averse farmers, offer cash prices and futures contracts without the present confusing blend of restrictions and caveats. None of these options require direct ownership of physical capital; they only require that the CWB make the benefits of its knowledge capital appealing enough that farmers will voluntarily want to work with it. Given that thousands of other businesses do just this every day, this hardly seems outside the realm of the possible.

In return, the CWB can legitimately ask farmers to commit to delivery targets and quantities over time, effectively insulating its market from competitors. This strategy eliminates the problem of rivals “cherry-picking” your best clients. Armed with this client base, the final step would be to leverage this power to extract maximum value from infrastructure players. Would the large grain companies simply refuse to cooperate out of spite? That’s about as likely as Magna International refusing to make auto parts for GM because Frank Stronach took a sudden dislike to SUV’s. There are simply too many opportunities for profit to pass up such a lucrative stake in the grain business.

To suggest that the CWB’s core assets would be swept away with minimal effort by potential competitors is a curious ploy; it’s both puzzling and frustrating to see a business promote itself by undermining its own strengths. With a dual market, however, such a pessimistic mindset would have no choice but to change, and with it, improve the outlook for prairie farmers immeasurably.

[Incognito]

You are partly correct Willee

...but it was the CWB Advisory Committee that started this industry down this path long ago...

Try HARDER eveyone said, go to MACKLIN when you are done and don't forget to celebrate ROSHER Hashanah. Don't forget to watch NICHOLSON in "A Few Good Men" and as a sequel the HANSON brothers in "Slapshot".

They are the true authours of discontent and you were then as you are today oblivious to it.

[chaffmeister]

"It is poor and irresponsible policy to strip an internationally recognized, farmer-controlled organization of its market power..."

Tell me - anyone - what has the CWB done with this magnificent market power it has? Why do some bemoan the loss of the single desk when they can't even describe its virtues in real terms (not platitudes!!)

Like Rod Tidwell from Gerry McGuire says "SHOW ME THE MONEY!"

Liberty - I agree with the article. I had already said it here but nearly as eloquently - its time the CWB started to see itself for what it is - a negotiating arm for 1,000s of farmers; it is a buyer of elevation and terminal services and a seller of grain. And it represents farmers. It needs to JV or LTA with the multinationals and what are now AEs - not try to beat them up.

It's no wonder they don't want to do the business plan....they don't understand what their role should be or could be.

[chaffmeister]

sorry - should have said:
I had already said it here but NOT nearly as eloquently....