Well it look like Sask Pool is convinced change is coming

[Incognito]

Further to building bins on the farm:

If the spread is always wide at harvest, how many years does it take to have those bins on the farm paid for and only using them once?

Grain companies will not build storage anticipating a 4X turn. Economics will drive that.

If you want freedom to market your own grain, you must also decide whether it is profitable to build bins on your farm or not. Can you make storage pay and economics should drive that.

I don’t know if it was you on a previous thread that said 7 cents in and 7 cents out ...1/3 of what it costs here. If you want grain co's to get to that level it aint gonna happen building storage that sits there for harvest pressure.

And please don't think i am siding with grain co's, or the CWB...but you too need a paradigm shift, Sir.

On farm storage should have nothing to do with efficiency, just economics. Ditto - grain co's.

Expecting someone else to outlay capital with no chance of a return on investment is why this industry is ****ed up today.

The line in the sand has to be drawn.

Grain companies drool at harvest if you did not plan your cash flow and storage on your farm.

If you want to beat the grain company, think like them - act like them and play the basis game on your terms.

What i am hearing from you is "I can't". I religously read your posts and you are much more intelligent than that.

Instead of thinking I am only going to use that bin once - think how much will they pay me for building that bin? 20 cents - 30 cents a bushel a year? Has your bank ever said no to additional on-farm storage? Doubt it.

FYI that Cargill plant ships no raw product; and is not on water and dumps 400-500 semis a day. Best day - 711 semis.

Not picking on you - or maybe your evil socialist twin wrote the previous post on your behalf...and if you think i am off base - fire away....

PS - the industry is overbuilt...that should do it.

[rbrunel]

I like your comments. I am not sure if you were calling socialist or not... anyways. I have 20% EXTRA storage on my farm. playing there basis game can make me alot more then 20cents. two years and most bins are paid for. I just was thinking back to all those saying that cash flow is a reason why the CWB's monopoly should be eliminated. If they thought that they would realistically ship all of there wheat/barley/canola at harvest time to generate cash flow. The american sys has a quicker and larger harvest capacity then ours. I spent 4 years at wheat harvest down there and 1 out of 10 would store wheat on farm. I dont think things have changed that much. I do struggle however with the thought of a huge increase in processing though it sounds good. I wonder if china/japan, two large and ever growing markets would want to buy process goods here when they need all the dockage/wastes from processing to feed there feed markets. and keep the billions of people working. I hope I am wrong. WOuldn't it be nice to take a couple hundred million of them and move them here to increase our own domestic demand. That may spur on more processing then exports. just a thought.

[AdamSmith]

Jeez, Sorry for disappointing and having a different opinion on this matter. I guess I’m just not that impressed how the throughput system is throughputting, although I do think it will improve once we make the change.

I’ve always believed the concept of orderly marketing (trying to equalize the flow of grain throughout the year) was a bit misguided. Yet our system has been built around that concept. Yes, the domestic processing side needs a steady and equal flow of product but is the export demand that regimented or are there times of high demand and times of low demand. I don’t think it is that regimented and having grain in commercial position may have some benefits but I could be wrong about that too or at least my socialist alter ego is wrong.

All I’m asking is do you build a system to capture the premiums of high demand times or not? You say we’re there already. Great. I was just asking. But maybe I won’t ask anymore questions. And since when is it a socialist idea to build commercial grain storage especially if you’re losing customers to you’re competitors because you’re facilities are always plugged at harvest or during those periods of high demand.

By the way, I’m not saying I can’t, what I am saying is when I hear stories from custom combiners who have been harvesting 150 bu/ac barley in Colorado, and not one kernel went into on-farm grain storage but straight to Coors Brewing co. I get more than a little frustrated with the Canadian system. I would love to be able to send the trucks out of the field during harvest and when they come back they not only have an empty truck but a cheque as well. It seldom happens though and what I’m hearing from you is that it’s a socialist pipe dream to desire that.

[agstar77]

Roughrider fans don't drink enough beer for a brewery like Coors in Sask.

[chaffmeister]

That's because the don't drink Coors - they drink real beer.

[chaffmeister]

Adding storage capacity to the system is not the solution; allowing the system to respond to market signals will ensure the correct balance of resources in the right place. Getting rid of the CWB’s inane concept of orderly marketing (orderly logistics) is the first step.

Farmers in the US northern plains deliver more off the combine because the trade makes it worth their while. They have a huge amount of storage, a hangover from US farm policy which generated huge government-owned grain stocks; a policy that ended in the 70’s but left a huge amount of elevator space. Rather than give farmers incentive to build storage and have these huge elevators sit empty, they make sure that using their commercial storage is a better deal; and they do it through price.

In Western Canada we have a dysfunctional system built around the great and ancient CWB. The CWB’s passive approach to farm deliveries where price plays no role, disallows elevators to be used on the basis of market value (demand). The CWB abuses the elevator system by taking in more than it needs to ensure they have the grain in the “showcase” – because they don’t like to sell it unless they can see it. And this means wheat gets in the way of canola. (Or if you’re the CWB, canola gets in the way of wheat. Remember the days of delivery quotas on canola, granted or denied by the CWB?)

Our system is over-built – it just seems to be under-built because it’s being misused and abused. (Comparing us to a Cargill corn plant turning 60 times is unfair; these elevators could crank a lot more grain through if it was all one grain, one grade.)

The US is different in that farmers respond to price. In Canada, wheat is not a cash crop; so we sell and deliver crops like canola to pay the bills. The irony is that we sell canola to pay for wheat bills. As a group, farmers sell more canola in the fall than the end-users need or want. So the price (basis) drops. The grain companies aren’t “drooling at harvest” because the price is so cheap; the price drops to a price where the market will clear. What price do we need to go to Mexico? To China? The big winners are the crushers; ever notice how much extra storage they have built over the years? We get real weak basis levels in the fall and then through the year, the basis climbs as the market shifts from over-supply to under-supply. The crushers see this and load up in the fall.

I don’t know if we need more storage – commercial or on-farm. But I do know that farmers need to understand market dynamics better so that they hold off deliveries when the market is telling them to and deliver when the market is telling them to. I’m not talking about selling – I’m talking about delivering. Sell whenever the price makes sense – deliver when the market tells you to. Unfortunately, cash flow needs take over for some.

And grain companies need to be able to manage their space according to market needs – and do this with price. And they need to be able to do it on all grains – wheat and barley included.

Not sure how this all relates to the SWP – AU thing. The system is over-built; the CWB may be out; and the two least efficient companies may try to become one. Could it be that without the CWB, SWP sees a grim future as a minor player with no big brother to keep it in the game?

I still see a CWB dynamic here – with backing from China and/or ConAgra (as suggested), SWP buys AU to become a mega-grain handler then gets into bed with CWB II.

CWB II as originator/pooling agent, SWP/AU as handler, ConAgra and/or China end-user – classic vertical integration. It’s the only way the current CWB management could see itself survive as a “new marketing entity”.

[agstar77]

Chaf, in a previous post you had indicated the follies of SWP in the past. In particular Don Loewen. I had not known that Bruce Johnson had been VP and Loewn's right hand man . Now he has been appointed to the CWB board of directors . Do you think he is smarter now?

[TOM4CWB]

Agstar77;

I had an interesting perpective from the G&O summit on this issue explained to me.

SWP was a strong innovator... made all the "wrong" choices... for the "right" reasons... and the strategy failed.

Investing in value added assets that steal the life blood of your core business...

handling grain... for export...

was a suicidal move.

CURT gave very good examples.

IMHO When we jump in... to go swimming in a lake... make sure you start into a shallow part near shore.... and that you can swim really well before you venture out into the middle of the lake.

Storms will come... and a plan will be needed... if survival is the goal!

[chaffmeister]

agstar - I don't know Bruce Johnson personally. Is he smarter? Are you being sarcastic? He certainly has more experience behind him since his SWP days - that can't be a bad thing.

Tom - as for SWP doing all the wrong things for the right reasons - I think that is being too kind. They got cash rich from going public, got arrogant, spent money like drunken sailors (sometimes against advise from advisors and consultants), then couldn't seem to understand when it all came tumbling down.

[TOM4CWB]

Chaff;

We can agree to disagree on this one!

I see many of the value chain initiatives SWP helped develop... as profit drivers and prosperity creaters in many parts of the western Canadian Rural Economy.

Money is meant to be spent. That is how prosperity is created.

In industry... a 95% failure rate is not uncommon.

SWP planted many seeds of opportunity... and it surprises me today how many have matured and are providing value and prosperity to our farm!