An "Open and Competitive feed grains Market"

[TOM4CWB]

The CWB says it is not directed by the Canadian Government;

“The Board of Directors guide the direction of the CWB with no govt. involvement.”

Yet when we check the CWB financial statements, the Government of Canada is responsible for Credit Sales of the CWB in 1998-99 of $6,795,552,000!

Since the Canadian Treasury department is on the hook for almost $7 billion dollars, do you expect anyone to believe the just let the CWB Directors do whatever they want?

Are you denying that the Canadian Treasury Department does not approve the business plan of the CWB, as laid out in the CWB Act?

Are you denying that over $70 million in interest revenue on the almost $7 billion by in essence the CWB doing charter banking business on all the bad loans it made for the Canadian Government that no entity in the world could do but the CWB, is a farmer directed business without Canadian Government involvement?

http://www.cwb.ca/publicat/annual/html9899/financial/table9.htm
$ 6,795,552,000Credit GrainSales Program

So I would ask the question again to the CWB,

Is the CWB considering a Fixed Pricing Contract for feed barley, like they did in CWRS wheat this year, say off the Lethbridge futures?

[chas]

Tom4cwb and parsley you are both in 1946. Government intervention made us farmers $7 billion, thats good for us I think. Sounds like Bombardier though. Fixed pricing and future markets are our biggest problem in gaining sustainability. They actually keep our prices low and cause surpluses in higher priced commodities. If you want price lets get farmers together and place a pricing order, with some volume of scale, so we get what our commodity should be worth considering inflation. Now that would be the way to play the futures market. Chas

[parsley]

Chas, you been a feedin and talkin to them chickens too long.

I've been awfully busy.

Parsley

[TOM4CWB]

Chas,

I guess we are different, I wonder if this is because I am younger, at 42, or because my farm has reasonably stable production, maybe?

I do not understand why if someone offered me a profitable price for my grain, why you would say I was evil for accepting this price, or that they were evil in offering the price to start with!

I thought this was the idea behind farming, providing food for a hungry world while providing a profitable return for my farm at the same time!

What have I missed?

[parsley]

Chas, these are your words, "Government intervention made us farmers
$7 billion, thats good for us I think.. Sounds like Bombardier though." Yikes. The Government's CWB marketed our wheat to countries that can't afford it. The countries didn't pay, so the Government picks up the tab with taxpayers' money.

From 1968-1984 Trudeau ran the debt from $17B to $200B
( !980-1984...the annual deficit went from $12B to $36B)
farmers begging, corporations begging...... from stupid governments

1984-1993 Mulroney ran the debt to $465 B
1993-1997 Chretien ran the debt to $600B
1968-2001 Chas and all farmers....all taxpayers.... pay and pay and pay on the debt and deficit.
Running up debts makes you poor. Squandering resources makes you poor. Poor business makes you poor. Your commodity is only worth what people will pay you. Think clearly Chas.
One week talking to those darn chickens and you've forgotten everything

Parsley

[chaffmeister]

This one is for Chas:
You say "Fixed pricing and future markets are our biggest problem in gaining sustainability. They actually keep our prices low and cause surpluses in higher priced commodities."

Question #1:
What do you mean by fixed pricing?
If you mean what I think you mean, I am not sure why you would say that it is a problem in gaining sustainability.

As for futures markets, they lower price risk. Since risk is a cost, futures markets lower cost (not price). Without futures markets, the industry (open market and single desk alike) would require a higher risk premium - buyers pay more, producers get less. (Yes, the CWB uses futures. (and options!))

The futures markets don't push prices lower, they simply reflect the price based on the balance of supply to demand - economics 101.

Here's some food for thought regarding sustainability:
1. Do you really want to support prices in the way you described - "so we get what our commodity should be worth considering inflation"?
Remember the adage "the cure for high prices is high prices; the cure for low prices is low prices". It seems to me that to get total cooperation among farmers to support prices is impossible. Human nature says so. If wheat is worth $8.00/bushel in Canada, then it's worth $8.00/bushel elsewhere too. The only way around that is through government involvement. Higher prices will only mean higher production (somewhere).
And what about feeding the world? Acting to raise prices only means more people can't afford to buy.

2. What about looking at farm structure? For years, farms needed to get bigger and bigger to remain sustainable. Don't know if that makes sense anymore - how big is too big? And with prices where they are now, "quantity" of production may not be the best answer anyway - perhaps the answer is "quality".

I see a future where farmers own and operate farms in different parts of the country, or even the world. Get ten or more guys together to form a farm corporation, their initial investment is their farm. As a group, they form a board of directors and divide management duties - someone responsible for finance (he's the CFO), one responsible for purchasing (VP of purchasing), another responsible for marketing (VP of marketing), etc. As a group, they negotiate on all inputs, and on sales. They enter into alliances with companies they want to "partner" with.

I'm not talking about just grain farmers either. In the group there could be a specialty bean farm, a cranberry farm that also produces and markets juice, a pmu unit, and so on. And the group would also consider investments in valued added - related or not.

3. Should farmers raise equity instead of taking on debt to raise capital?

4. When I mentioned quality above, I wasn't referring to the quality of the wheat you're growing. I was talking about what it is that you are marketing. Being involved in the conversion of your commodity into a more valuable product is where true sustainability comes from, through more stable returns. Look at Maple Leaf Foods a couple of years ago when the guys in hogs were operating in the red - Maple Leaf had their best year ever. Record profits. What's wrong with this picture!?

There's a guy in North Dakota who grew and marketed flax. Now he markets an "energy bar" made with his flax and other ingredients. He has about 20 people working for him - he manufactures, packages, and markets around the world. Oh yeah, he still produces the flax. But now he doesn't care what the price of flax is anymore because he doesn't sell it anymore.

This is mong enough - I'll stop now.
cm

[parsley]

halpenny, your statement, "The Board of Directors guide the direction of the CWB with no govt. involvement" is unclear. For example....

The CWB and Eastern Grain must surely want to sell in the same market at one time or another. The CWB tells farmers that the CWB doesn't issue export licenses to anyone that competes in CWB markets.

If the CWB Directors denied CWB export licenses to the Eastern Grains because it competes with CWB marketeting, would the Government stand by and allow it?
Parsley

interesting comments chaffmeister. I'd enjoy having a coffee with you just to pick your brain.

[TOM4CWB]

Hi guys,

The CWB has still not answered my question!

So I would ask the question again to the CWB,

Is the CWB considering a Fixed Pricing Contract for feed barley, like they did in CWRS wheat this year, say off the Lethbridge futures?

[parsley]

halpenny, you said , in this thread a little futher up,

"I don't see how 1946 documents and statements relavent when the Act has changed."

Well just so you understand the new CWB Act a little better, these are Howard Migie's words. As Director General, Adaptation and Grain Policy Directorate, for Agriculture Canada, he stated it quite simply:

"b. A second provision states that the directors, officers and employees shall comply with....any directions given...pursuant to this Act[3.93 (2)]"

Migie also states:

"(2) The directors would be obliged to implement the directions even if they felt it was, for example, not in the financial interest of Prairie wheat and barley producers."

Couldn't be any clearer to me.

halpenny, the basics are the same....ultimately Government controlled...same as 1946.
Parsley

[TOM4CWB]

After a quick look at the CWB feed barley program, and the Fixed price discounts upon discounts on feed wheat, I cannot beleive anyone would call what is being sold to us, "an open and competitive feed grains market."

The federal Government has the feed freight assistance program for outside the "designated area" and for stability of domestic feed grain prices in the rest of Canada I can see why the CWB does what they do.

This only again proves that the CWB directors are pawns in a much bigger game, one that many directors do not beleive they are even playing in!

This game is to have cheap feed grains in Canada, and stocks that will never run out, no matter what happens!

This is not good for a grain grower in the "designated area" of Western Canada, is it?