An "Open and Competitive feed grains Market"

[TOM4CWB]

The CWB says,

“There is an open and competitive feed grains market in western Canada.

Farmers have been able to sell feed grains to whom they choose in that market since the early 70's.

Therefore, feed mills can buy from who they choose.

The CWB doesn't actively participate in this market.”

ARE these statements are MYTHS?

Should we examine what really happens in Western Canada?

Yesterday the buy-back on Canada Feed wheat was $153/t and the payment from the CWB is projected to be $134/t and falling.

The buy-back on #1 Canada Western Barley was $165/t and the payment from the CWB is projected to be $143/t.

If I want to compete with Canadian Feed Mills into the US feed market, I must take about a $20/t loss on every tonne I export to the US, either barley or wheat.

Now we know the facts, can the CWB really claim they do not interfere in the market?

When I try to participate in an “open and competitive feed grains market” they fine me, seize and impound my truck, and threaten to put me in jail if I resist!

Therefore I submit an “open and competitive feed grains market” cannot exist when the CWB operates the Export License Program in the arbitrary and discriminatory manner in which it does today.

Furthermore, this $20.00/t extraction allows the CWB to brainwash “designated area” grain producers into believing that all our other higher valued wheat and barley products are worth less than their true value!

"Perception is Reality"

Of course our end-use customers will agree with the CWB! They want our high quality grain for less! If you can drive a Rolls Royce for the price of a Lada, why not?

Presto, we receive less for our products than US counterparts!

What ever happened to the “single desk monopoly” extracting premium profitable prices for Western Canadian grain growers?

[charliep]

I will leave the political/policy but I think it is important to comment from the market side. The $165/t (remembering this is an instore Vancouver price) is an accurate reflection of the current Portland/Vancouver export market (achievable sales price if the CWB had access to contracted supplies). The $143 /t (also Vancouver) is the PRO which is a pooled price made up of existing sales, sales that could be made at current prices and potential sales over the next 6 months if farmers signed up barley on later contracts (eg. D series). Sales that have been made earlier on were likely at lower levels (just the same as a farm manager who pre-priced barley this last spring accepted a lower price than that offered in Nov./Dec.). The CWB policy is that buy back prices should reflect the sales price that their sales dept. can achieve in other markets. This is the reason for the difference in the two prices.

I like to convert a Vancouver price to an AB./SK. price for interest. Assuming an AB. basis of $45/t (rail - $25, elevation,cleaning, CGC - $15/t, pooling costs/carry costs - $5),other $0 to $5/t), this would give a Red Deer area farmer a look at $115 to $120/t if they had direct access. SK. would be about $10 to $15/t less (more freight cost). This is about $5 to $10/t better than the current market in these communities.

The issue for the CWB barley is there is too much lag between sales opportunities at good prices, PRO's/price signals, contract signup and when the barley hits the system to be loaded in a ship.

What are the alternatives for feed barley exports/off shore pricing opportunities? Open market? Allow the CWB to offer daily cash prices in competition with the non board market? A feed barley contracting program similar to the one you were offered in Sept.? Allow the CWB to tender feed barley export supplies from grain companies when there is a price advantage to the feed barley price pool and share the benefit among the farm managers who participate in the contracing programs?

[TOM4CWB]

Charlie,

Thanks for trying to tackle this nightmare!

The Western Grain Marketing Panel asked that the government of Canada fix this problem, as it is proven that the CWB has no ability to monopolize the feed grain market anywhere in the world!

One would have thought this would have been the first market the CWB should have fixed, yet it appears they refuse to allow a cash market to be created, for the very reasons stated above.

The CWB could allow delivery of the Lethbridge Barley Futures FOB Vancouver B.C.(with appropriate basis attached) and then International barley customers would be allowed to arbitrage this futures market to world prices.

The CWB refuses to allow this, Why?

[TOM4CWB]

Charlie,

I think I should add that we worked very hard in August of 2000 to get the CWB to end the feed barley on November 30th, to avoid what you described above.

I am not trying to be mean spirited, it is just so plain that barley producers are not getting any releif and it is really hurting us.

Has anyone heard if any Fixed Price Contracts will be allowed for feed barley?

[TOM4CWB]

Charlie,

I think I should add that we worked very hard in August of 2000 to get the CWB to end the feed barley pooling account for 2000-01 on November 30th 2000, to avoid what you described above. Could we not reduce the basis on 100 car unit trains down to $33/t for the Edmonton north east area, and do better in north west Sask, and get the basis narrower?

I am not trying to be mean spirited, it is just so plain that barley producers are not getting any releif and it is really hurting us.

Has anyone heard if any Fixed Price Contracts will be allowed for feed barley?

[parsley]

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

And now farmers are in charge of the CWB which begs the question, aside from your entrenched position towards individual freedom, which I appreciate, what additional marketing services would you like to see from the CWB?

[TOM4CWB]

Tom,

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]

Exact quotes

December 11, 1946: "Confidential Document
MEMORANDUM TO THE WHEAT COMMITTEE OF THE CABINET
FROM THE CANADIAN WHEAT BOARD
Re: Questions of Policy for Consideration and Decision"


"At present, the Board sells wheat for domestic consumption at $1.25 per bushel and the Government pays a drawback of 47 5/8 cents per bushel to mills on the wheat used for human consumption. The effect of this policy is to enable the mills to sell flour and related products basis wheat valued at 77 3/8 cents per bushel..........."
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"Another result of this policy is a similarily low price for bran, shorts and midlings. Under established ceilings, these sell for something less than half of the price ruling in United States markets, and they are very desirable and cheap foodstuffs compared with other available feeds."
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"If our mills could sell their millfeeds at United States prices, they would be able to pay about 20 cents per bushel more for wheat."
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"To a high degree,.......oats and barley are feed grains."They have, therefore, provided the base for the wartime feeding programme covering meat, dairy and poultry products. No one interested in a full Canadian agriculture can fail to see their essentiality in this programme, but for the western producer of these grains, it must be emphasized that under present policies, they fair badly on sales prices compared with realizable export products"
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"At present the Board acts as a monopoly handler of flaxseed................." "Continuation of export control would appear highly advisable, because of the part linseed oil plays in reconstruction"
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If food is cheap............
Parsley

[parsley]

Tom 4CWB, it was your your original comment in this thread, "Should we really examine what happens in Western Canada?', that got me thinking!

Sorry I'm so late getting back to your comments, thalpenny. You state that the Farmer Directors are in charge of the CWB. Oh oh.

The Act says Directors DON'T have the final say:

18.(1) The Governor in Council may, by order, direct the Corporation with respect the manner in which any of its operations, powers and duties under this Act shall be conducted, exercised or performed.

The CWB Act is very clear in saying the Government has the last word.


My point of the 1946 Act, thalpenny, was to show that the Government not only has used the Act in the past for their own means, but they can do so today. For example, in making farmers sell their $7.25/bu flax for only $2.25/bu to pay for 1946 "reconstruction costs" was a sacrifice all taxpayers should have born! Why should farmers have been targeted?
Hope this helps you a little.

In the same light, for years farmers have been told that that the CWB has a mandate to 'get the best price'........oh oh. In a 1997 Manitoba court case, a group of farmers tried to sue the CWB because they that felt the CWB had not gotten the best price for them. .

The CWB argued in court, against the farmers with the following argument............"that the Board is only responsible to Parliament and ultimately to Parliament and there is no legal duty to the plaintiffs...".!!! And won. The Act said so.

Always want to look at the legislation. Whether you are planning to value add on your farm, or partner with someone, be aware that the government can reverse what the Board of Directors want.
Parsley

[parsley]

The Board of Directors guide the direction of the CWB with no govt. involvement. There are parameters in legislation, for example the process is defined of how grains could be added or deleted from the CWB's mandate.

The Board of Directors have put forward the mission statement for the organization that directs the CWB to market quality products and service in order to maximize returns to western Canadian grain producers.

Is this in legislation? No, but it is the mission of the organization as directed by its Board of Directors to accomplish that.

Tom

[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