Show me the money

[craig]

In an effort to defend their existence the CWB continues to send out press releases claiming out much more they get for producers. The question that needs to be asked is where does all this money go. The prices they pay producers , the PRO's they release are not competitive in the market place so at the end of the day it's hard to assume anything other than they must be selling our grain at bargain prices. The only number that should be important to producers is the price they receive for their grain.

[liberty]

The most recent press release boasted that the CWB saved farmers $22.9 million by tendering around 20% of their grain shipments.

Considering that the CWB is supposed to be tendering closer to 50% of their product, are we to assume that farmers are paying over $20 million more than they should for the other 30% that should be tendered?

The CWB never gets around to mentioning why it can't or won't meet its tendering targets. When you're a legal monopoly, you don't have to be accountable if you don't want to be.

[stubblejumper]

liberty The 50% tendering goal was scaled back because of opposition from the small grain companies and farmers.

[chaffmeister]

Just a reminder - farmers pay more to have CWB wheat elevated and handled than non-CWB grains (canola). Competition between companies in the non-CWB market pressures elevator margins - no such dynamic in CWB grains. Tendering simply injects competition on an small scale, allowing market forces to demonstrate what "could be". Tendering "revenue" isn't revenue at all - this is money that should be in your pockets in the first place.

[TOM4CWB]

Chaffmeister,

Further these funds are not shared with PPO sellers. In fact this is a further cross subsidisation of the pool account by FPC DPC sellers.

[JohnKenneth]

chaffm you're right about board grain elevations being huge compared to non-boards. traders are happy to make $7-8/t on canola and 4-5/t on feedgrains whereas cwrs can earn them $25/t between primary and terminal elevations. but it's not like they get to keep all this all the time. in the process of tendering sometimes some of it goes back to the cwb - i agree unfairly into the pools - but it is also what they use to pay trucking premiums and blending upgrades.

it's another issue for a separate thread but that whole trucking premium/blending upgrade business virtually puts us in a cash market situation for board grains, it's just a lot harder to figure out than a good deal on a canola basis. but the mechanism of cutting the margin to attract deliveries is identical.

in the end i don't think the co's make obscene amounts of money off board grains but i do sure think it's got a lot to do with small grain co. (pat and ph and inland terminals) support for the organization. and i guess it's also unfair not to recognize that an individual's specific negotiating skills and the relative need for the type of wheat they have does allow them to get a better price than their neighbour already today.

[liberty]

John Kenneth,

I'm curious as to where you got your figures for elevation charges etc.

Thanks

[chaffmeister]

Re CWB vs non-CWB costs:
04/05 data from the Federal Grain Monitor shows the following net costs (including rail freight) for CWRS wheat and canola from the NW Sask area (other areas are similar):

CWRS $59.89
Canola $47.50

Net after freight:

CWRS $23.65
Canola $11.26

Using real life data, the CWB costs about $12.39 per tonne more than canola to handle – and this already factors in “CWB transportation savings” (tendering and terminal rebates) and trucking premiums paid by the elevator co.

This does not include terminal costs.

The CWB cost is more than 2X the non-CWB cost.
Guess that’s just the cost of “efficiency”……….

[TOM4CWB]

Chaffmeister,
I Agree A further a lack of transparency is evident when trucking premiums are included.

Something is up when we can have varience of such a large % between handling companies.

This is especially galling when IP contracts going to the CWB are factored in! What a rip off as we can't add any competitive factor to extract our freight back out.

[JohnKenneth]

sorry liberty, it's the anonymity i like about this forum. but i think if you checked with any grain merchant, while margins do vary from company to company and trade to trade, the numbers wouldn't be too far off my estimates.