Latest CWB study by PwC

[chaffmeister]

The CWB asked PricewaterhouseCoopers to do a study on the economic impact of the CWB - but not the impact on farmers, rather the impact on the economy in general.

I've begun to scan it - I'll tell you later if I think it's worth you time or not - and I have a quick question for all you farmers out there.

PwC makes the following statement:

Due to the stability of the CWB and its payment programs some farmers have benefited from greater credit worthiness for their operations. In many cases, banks, credit unions and other financial institutions have been more willing to lend to farmers when the farmers produce Board grains.

My question:
Has anyone seen or heard of this?

[just_wondering]

I am on the credit committee of my local 22 million dollar credit union not a large one but we have a very strong equity ratio. And in the limited time that I have served I have never heard of this. or seen any example of this almost everything is determined by credit score and security there are policy exeptions for other things ie:good history, earnings potential for collage grads, trying to lure deposits from big banks, ect.
I would say that this statement is false because no bank wants to see your cash flow being 18 months behind deliverys which also may take a year.


Due to the stability of the CWB and its payment programs some farmers have benefited from greater credit worthiness for their operations. In many cases, banks, credit unions and other financial institutions have been more willing to lend to farmers when the farmers produce Board grains.

[craig]

This is another study ( barley study)that was done previously and only now is being released. This begs the question how many other studies have been commissioned by the CWB that we haven't heard about. The next question is how do these studies benefit farmers.The value that farmer's should get from the CWB is money in their pocket from grain they sell. The board does sure seem generous with farmers funds to make everyone feel good about their situation. There is a loud and clear message that needs to be said. Quit telling us what a good job your doing and show us with something besides the current poor returns in the wheat and barley pools.

[craig]

I can't understand why PWC would say that about lenders.Most of the time I have been in a bank to borrow money it was because of the wheat board.Not being able to deliver and not knowing when you will in the future,aswell as not being paid entirely and not knowing how much you will get doesn't seem like the type of scenarios banks want to be a part of.

[TOM4CWB]

Chaffmeister,

I have heard this from a number of people that are not actually farming, but are looking for excuses to keep the CWB. Interesting they state growers can't be assured of payment because the international buyers of wheat won't pay up, and growers will lose big money if the CWB isn't there to collect for farmers.

I dismissed this fearmongering an number of times in the last week, by reminding people the EDC has export insurance on the wheat we sell through the CWB now (my understanding is it was made manditory for the CWB).

I know that pulses and other crop marketers can buy this EDC insurance as well.

Other vendors are being developed by the industry and the CGC... to insure that growers are covered.

If the CGC were made optional, then there would be much more to talk about than "marketing choice" using licensed and bonded dealers that cover this risk... IN THE FIRST place!

A true saying:
Better to face your fear... than to live in bondage!

[chaffmeister]

I'm left wondering: Why did the CWB commission this study on the impact of the CWB on the economy of Winnipeg, each of the provinces and the country (but not the farming community) back in early 2005? (The study was apparently completed in June 2005.)

This information doesn't help the CWB market grain any better. Nor does it help in determining what the farmer is really looking for in terms of marketing services. So this study was not meant to help "improve" the CWB. I think it was meant to "defend" the CWB. But why did the CWB think it needed defending on this "front" back in early 2005?

From personal experience, I'm very cynical when it comes to the CWB. Who thinks like me and thinks the CWB commissioned this work AFTER the gag order but told PwC that the contract terms included that PwC say they did the work last year - before the gag order?

[bobn]

NEWS RELEASE

David L. Anderson
Member of Parliament
Cypress Hills-Grasslands
Parliamentary Secretary (For the Canadian Wheat Board)
To the Minister of Agriculture and Agri-Food

Conservative Party of Canada


$1,000 bonus to CWB employees demonstratesthat sellers benefit in a
competitive environment

For Immediate Release


In a recent open letter to rural newspapers, Ken Ritter, Canadian Wheat
Board Chair, defended the CWB's decision to approve a $1,000 Christmas
bonus
to all its employees.

Ritter stated that, "[The $1000 bonus to CWB employees] was paid for one
fundamental reason: to retain a highly motivated and trained staff in a
tight labour market where employees regularly have other options. In
Western Canada, retention bonuses are a fact of life. They are paid in all
sectors of the economy, ranging from fast food to oil and gas to
agriculture... therefore, we must compete in the labour market realities of
both the City of Winnipeg and Western Canada."


David Anderson, Parliamentary Secretary to the Minister of Agriculture and
Agri-food for the CWB noted that Ritter's comments demonstrate that the
government is on the right track in removing the Board's monopoly.


"I do not agree with the Wheat Board issuing $1000 bonuses to its
employees," Anderson said. "But Ken Ritter's defense of the bonus aptly
illustrates the importance of giving prairie producers marketing
choice. It
is a perfect example of how in a competitive environment, the seller
benefits."


Anderson noted that Wheat Board employees are selling their services to the
CWB. Because they have the freedom to take their business elsewhere, the
CWB felt there was a need to increase the price they were paying for those
services.


"If CWB employees were mandated by law to work for the Wheat Board in the
same way that farmers are forced to deliver their wheat to the Board, they
would not have seen one penny in Christmas bonuses," Anderson said. "The
fact that CWB employees have a choice in who they sell their services to is
apparently the reason why they were paid the bonuses."


"In the same way, prairie farmers will benefit from selling their wheat
in a
competitive environment. A multiplicity of buyers will mean that farmers
will sell to the highest bidder, not the lowest. This pushes the price up,
not down."


"I find it ironic that Ken Ritter insists on denying farmers the same
privileges and opportunities he now advocates for his staff," Anderson
said.

[HFL]

Excellent point Mr. Anderson.

[lakenheath]

I wonder how much that cost the CWB. In-depth studies done by large firms like PWC do not come cheap.

What return does the mony spent on this study provide farmers? To me it is zero. An absolute waste of my money.

[parsley]

The Leader-Post (Regina)
Paul Samyn
CWB pumps $1.6B yearly into economy



OTTAWA -- The Canadian Wheat Board has added economic considerations to the political debate surrounding its future with a report showing the Winnipeg-based agency is worth $1.6 billion annually to the Canadian economy.

The PricewaterhouseCoopers study provides a bottom-line analysis of the value of the world's largest seller of wheat and barley at a time when the Harper government is pushing forward with plans to end its marketing monopoly.

"The CWB is a significant player when it comes to helping farmers face the challenges in their industry which are critical to their ongoing success," concludes the report that cost the board $125,000.

"The CWB's efforts support the agriculture industry in Canada by acting as a recognizable and influential organization for farmers. The CWB also has a major economic impact on Canada through significant purchasing activities and by the generation of a premium for farmers on wheat, durum and barley sales. The results of this study show that the CWB is a major economic force, with Western Canada as a major economic beneficiary. Several other provinces such as Ontario and Quebec also derive economic benefits from the CWB's activities."

However, a spokesman for Agriculture Minister Chuck Strahl was not impressed with the study posted on the wheat board's Web site Wednesday.


"We have asked them to stop engaging in politics," said Conrad Bellehumeur, Strahl's director of communications.

"It is obvious that the board continues to involve themselves in politics and the release of this report is a primary example of that."

Bellehumeur said he doesn't see the relevance of the report as the Harper government isn't planning to scrap the wheat board.

"It is the position of the government to have a strong but voluntary wheat board."

The PricewaterhouseCoopers study -- which began in 2005, long before the Harper government came to power -- doesn't weigh in on the debate over what impact a move to open marketing would have on the board or farmers.


However, it makes clear there are a number of benefits attached to its existing status as the single-desk seller of wheat and barley grown by Prairie farmers.

"The CWB has the ability to be a concerted and convincing voice for farmers in a range of fields as diverse as global trade, marketing of wheat, barley and durum, public policy, agriculture, and science," the report says.

"From creating an internationally recognized brand, to playing a significant role in preventing the premature introduction of genetically modified wheat, the CWB has been instrumental in promoting and advancing farmers' interests. This ability to influence has also been important in dealing with transportation reform and international trade policy. The CWB's benefits are felt beyond the act of marketing wheat, durum and barley on behalf of Western Canadian farmers. The actions of the CWB are also felt on international trade, by grain companies, other industries, grain research organizations, major port communities, rural communities and farm families."

- - -

THE VALUE OF THE CWB

- The gross output on Canada attributable to total initial expenditure and premiums generated of $751.7 million is estimated at $1.6 billion.

- GPI or value-added impacts to Canada resulting from $751.7 million in initial expenditures and premiums generated accounted for more than $851.6 million.

- In addition to the 460 positions at the CWB, a further 14,239 full-time, full-year jobs are also created in Canada.

- In addition to wages paid to CWB employees, total labour income generated in Canada is estimated to be $519.3 million.

- Approximately $360.1 million in taxes paid to all levels of government is generated by CWB's initial expenditures and premiums generated.

-- Source: PricewaterhouseCoopers



So where is your money from the CWB, lakenheath?

[chaffmeister]

In the study PwC suggests that “....the fiscal 2004 direct costs of $369.7 million multiplied 2.17 times through the economy into over $803.2 million in total activity.

Direct costs are things the CWB pays for to handle and market your grain – freight (above what you pay), terminal handling, storage, inventory financing, and so forth.

What they don’t say is that all this economic activity would occur WITHOUT THE CWB.

They also add as “economic benefit” of “tax generation” from the $369.7 million in direct costs – a total of about $183.0 million. Again – would occur WITHOUT THE CWB.

Also – they add the “economic value of the “premiums” to farmers. PwC indicates the premiums earned are $312.6 million and the economic “impact” is $632.2 million.

They indicate that “These premiums were derived from Performance Evaluation of the CWB, The CWB and Barley Marketing, Price Pooling and Single-Desk Selling Report and Benchmarks to Measure CWB’s Performance as detailed in Appendix A.”

Appendix A is not available on the CWB website – and they aren’t answering requests for it.

There’s other stuff indicating great economic benefit. But it all comes down to (1) economic activity that would occur WITHOUT THE CWB, and (2) premiums that REAL evidence indicates are not there.

To present this in this way – suggesting the CWB is responsible for this economic activity OCCURING – is absolutely and totally misleading. PwC should be ashamed and embarrassed.

[chaffmeister]

My mistake - just found the Appendix.

[chaffmeister]

Ok, now I'm getting ticked....

Study says there are the following:

APPENDIX A – LIST OF INTERVIEWEES
APPENDIX B – GLOSSARY
APPENDIX C – DETAILED ECONOMIC RESULTS
The appendix that you can download simply restates the "results" in tabular form (I assume it's Appendix C).

Yet the study says (in a footnote):
These premiums were derived from Performance Evaluation of the CWB, The CWB and Barley Marketing, Price Pooling and Single-Desk Selling Report and Benchmarks to Measure CWB’s Performance as detailed in Appendix A.

Somehow I don't think a list of interviewees will tell us much about how the premiums were derived.

[AdamSmith]

In the Jan 07 Readers Digest pg 29

Article titled

Healthy Skepticism

Don't believe every sentence that starts with "Studies Show..."

It's about medical studies but quite aptly applies here as well.

Also found the article on the web at todaysparent.com

Here it is:

Uncommon Sense

Healthy Skepticism
Don’t believe every sentence that starts with “studies show...”


By John Hoffman

Are you ever confused and exasperated by conflicting information in scientific studies? Undoubtedly, you’ve read about the health risks of childhood obesity. You might also have heard about a recent study that shows overweight people live longer. What’s a parent to think?

I’ve spent much of my career checking out, deconstructing and, at times, debunking poorly researched or reported scientific findings. But, sorry folks, I haven’t been able to fix the problem: The culture of confusion seems bound to continue. Therefore, as a public service, I’d like to offer Hoffman’s Handy Rules for reading about research in the news media.

One study, on its own, is rarely the final word. Most research is one piece of a big pie — the research literature, expert observations, clinical practice and, of course, human experience. A study usually makes the news because it’s the latest, but being the latest doesn’t necessarily (or even usually) mean it trumps all previous knowledge.

Some health information is presented without relevant context — and mainly to cover someone’s butt. In May, Today’s Parent reported that Health Canada was considering stronger warning labels on Elidel and Protopic, two drugs used to treat eczema, because of worries about cancer outlined in an advisory from the US Federal Drug Administraion. That was factual. However, it turns out that both the Canadian Dermatology Association and its American counterpart disagree with this warning. That’s because the only evidence is that megadoses cause cancer in mice, plus some “case reports in a small number of patients.” Yes, there was some cancer in kids taking these drugs, but it was actually lower than what you would find in the general population.


Page 2: Useful or just shocking?


Often studies are reported because they’re surprising, not because they’re useful. Last spring some media reported on research suggesting that daycare may lower risk of childhood leukemia. Huh? In fact, that study was really about the role that early infections might play in the development of childhood leukemia. Researchers happened to find that kids in their sample who attended daycare twice a week in the — get this — first few months of life were half as likely to develop leukemia. Even if the finding proves important ultimately, no one is going to suggest putting more infants in daycare as a cancer prevention strategy.

A lot of research is done or reported with tunnel vision. People whose primary orientation is prevention of skin cancer will present research that suggests you should keep your kids out of the sun. Those who are worried about vitamin D deficiency might tell you that kids need some unprotected exposure to sunlight. They’re both right, in their own area, but it would be nice if advice givers looked at the big picture once in a while.

There are exceptions to virtually all research truths. Breastfeeding is, on average, more healthy for more babies. But it’s not hard to find a formula-fed baby somewhere who is healthier than a breastfed baby somewhere.

This doesn’t mean that research is useless — nor that scientists are stupid, nor that the media shouldn’t report research. However, research results are only meaningful if they’re put together with what else is known, as well as our personal circumstances. If, for example, your child is taking Paxil (for depression) or Adderal (for ADHD) and you read alarming stories about risks associated with these drugs, take it as information, not advice. Find out more. What exactly is the risk? And to whom? How much is the drug helping your child? Is there an alternative? Any drug comes with a potential risk and potential benefit; stopping the drug has a potential risk and benefit as well. (Yes, some research has shown a connection between certain antidepressants and suicidal thoughts, but untreated teen depression can lead to suicidal thoughts too.) You always have to weigh one against the other.

So next time you read a news story that challenges one of your sacred truths, don’t panic. Read carefully, read between the lines and get more information.

[craig]

The only thing new in this report is an economic model to try and see how many ways we can multiply economic value. No doubt there is a huge market out there of people trying to justify their position or strengthen their case. Some interesting quotes from the study. my favorite
"the CWB has become a major anchor of Canadian farm and economic Policy."

" Companies are more likely to market grain as commodities with limited incentive to market branded products"

"All returns less marketing costs are returned to producers"

" The single desk provides higher and more stable returns to farmers each crop year"

" CWB PPO's provide risk management at lower costs than brokerage firms"