Manitoba CWB Plebiscite results

[peaqueen]

Data from Chaffmeister:
Re: building a business case.

Latest data from The Federal Grain Monitor:

Average system costs for CWRS: $61.81/tonne
Average system costs for canola: $41.51/tonne

I entered this round of debate on the future of the CWB thinking farmers deserved to vote on this issue.

I have changed my mind.

Clearly when just over 50% of farmers vote for directors of the CWB, and just over 60% vote in the Manitoba plebescite the concern about "Their" business is insufficient.

I have also come to affirm that:
Although property rights are not part of our Charter of Rights & Freedoms, other than the statement made with the Regina Manifesto and the confiscaton of property rights by the CWB they are an assumed right of Canadians.

I believe my property is my right.
This is not an issue to be determined by majority rule.

[chuckChuck]

peaqueen and others. If property rights and freedom are the main issue then how do you explain Harper and Strahl's support for supply management marketing boards in dairy and poultry? These systems are even more restrictive, controlling supply, imports, and price and producing some of the highest most stable farm incomes in Canada.

[chaffmeister]

chuckChuck - you answered your own question.

"...producing some of the highest most stable farm incomes"

Can you say the same thing about the CWB?

[chuckChuck]

chaffmeister. Richard Gray's study says $59,000,000. per year in extra income from the CWB marketing of barley mostly from malting barley because we have an inneffective "dual" market for feed. Read the study. If you don't like the conclusion, then slam it all you want, but don't think that your analysis is going to be equivalent to the work, training and experience of three highly respected ag. economists who publish their work in peer riviewed journals.

[agstar77]

Chaff, what part of those costs are ocean freights? What portion is shipping to export terminal? You have compare exported grain to exported canola. Since when did profits override rights? If your argument is that marketing boards are profitable therefore they are okay you have a totally different argument as opposed to freedom to market.

[peaqueen]

Market action, Chucker is street action and a street sense.

In a competitive market, with buyers bidding for product, what happens to price. This is an equasion not accounted for in any CWB marketing study.

What happens when no one will sell a grain due to low prices as would have happened this year when malt barley prices are rivaled by feed barley.

Where in the study does it calculate the opportunity created by a short market.

[katoe]

Lots of feed barley was sold into the domestic market this fall at prices a lot lower than malt will bring

[chaffmeister]

chuckChuck:

Gray and his buddies looked at all sales and took weighted averages – by destination. Because they found that some destinations paid more, they figured it was because of price discrimination. What they don't seem to know is that if you did the same thing on canola, you’d get the same results.

Canola prices tend to be low in the fall and higher in the spring. Japan and the domestic crushers buy throughout the year. China and Mexico, however, are much more price elastic and tend to buy in the fall – when prices are lower. So, using Gray’s approach, calculating weighted average prices by destination – guess what? You’d get the same results; big “premiums” in Japan.

Also they figured the CWB can price discriminate because of market power. But they also say that the global barley market is quite competitive. How does the CWB get a higher price than Australia in Japan – a competitive market? Are Gray and his buddies familiar with the “Australia premium” for barley in the Japanese market? Are they aware of the real price data that shows that Australia gets better prices in Japan than Canada does – year in and year out? Did they factor that into their model? (I’ll answer that one. No.)

These guys talk about how the trade operates on an optional origin basis. This means that exporters sell barley with the option that they (the seller) get to choose which origin they ship from. How can these guys justify their argument that the CWB gets “premiums” when they even acknowledge that buyers often buy without knowing from which country it’s going to come?

Do they really think that buyers will pay as much as $61.82 per tonne premium over other sources? Do they really think that little of these buyers? If they were aware of how the business of feeding or processing grain works, before they published this they would’ve said, “Jeez. This doesn’t make sense at all.”

Are they familiar with “CWB terms” (very generous ocean freight loading terms that almost guarantees dispatch earnings)? This represents a cost that the CWB never talks about and the grain monitor would never catch.

Bottom line - your “highly respected ag. economists” may know how to craft detailed theoretical supply/demand charts and sophisticated models, but they have no idea of how grain is traded. If they did, they wouldn’t have been drawn to the conclusions they did.

You can be certain that my analysis will not “be equivalent to the work, training and experience of three highly respected ag. economists” because, based on their analysis, I understand the subject matter much better than they do. And I don’t have blinders on.


Agstar77:

The cost comparisons provided by the Federal Grain Monitor do NOT include ocean freight on CWB grains – they are based on instore values (provided by the CWB). And in case you’re wondering, the canola is also based on an instore value – apple to apples (or, if you like, CWB apples to non-CWB apples).

This is as good a direct comparison as you’ll ever get. It uses real data on all shipments – CWB and non-CWB. Gray and his buddies should have used this to assess costs instead of having blind faith in the KFT (1996) study. Because it served their purposes, they never questioned it (and KFT was wrong) and so they came to the wrong conclusions.

You also say: “Since when did profits override rights? If your argument is that marketing boards are profitable therefore they are okay you have a totally different argument as opposed to freedom to market.”

The sound of those farmers “with some of the highest most stable farm incomes in Canada” clamoring to get out from under their marketing boards isn’t exactly deafening. Can you say that about the CWB?

And yes, I have a different argument than “freedom to market”. From a business model perspective, and from a social policy perspective, the CWB is costing us all – farmers and all other taxpayers - a lot of money and therefore is a perfect candidate for some serious reform.

[TOM4CWB]

CHuckCHuck,

Give us a little credit for having a few live Brain cells left that have not mutated;

I was talking with one of my freinds that risk manages grain for various industry participants... and he was asked at a recent CWB "information collection" meeting in January... in the "Single Desk" heartland...

He asked the question with respect to the barley study you are pretending to defend...

THis High CWB management positioned person said:

"You aren't buying this...are you." with a smile on his face...

Anyone who has marketed any grain would NOT accept 90% of the theory the CWB uses to justify the "single desk" as it is no longer valid.

1. We have instant communication... avaliable anywhere (that matters economically) on the planet.

2. We have many choices of who to buy from, and who to sell to; in the grain growing business. The domestic market proves competition increases value of grains... not CWB "single desk" theory as given in the study.

3. Selling our grain when it is below the cost of production SHOULD be prevented. CWB Pool policy doesn't even meet this objective. Growers must decide when all grain should be sold... not CWB Management.

Clearly in a competitive market place; when it needs grain... it must bid up the price to get that grain... in most situations where progressive marketers control the grain stocks.

If "Poolers" don't have the confidence to do the work of selling their grain... at a reasonable price... they need to hire a responsible marketer to do that job for them. Obviously it would pay them many times over... not just in wheat and barley... but everything they grow!

If the CWB believes they are responsible marketers... PROVE IT.
DOn't make me a slave to a system that sucks and blows at the same time... while often giving me bad service of which I can do nothing about... most of all being given the right to;

"JUST SAY NO."

ChuckChuck... respect me and my family... and then we will be able to heal our land and prosper!

[charliep]

chuckChuck

Just curious on your observation on the efficiency in the domestic feed market. What studies can you site/personal observations would result in this comment? The domestic feed market was never considered in the study you reference.

What practical real world data/graphs can you present that would support the theoretical benefit shown by the study? When you consider the CWB exports an average of about 2 mln tonnes of barley, the benefit shown is about $30/tonne which would bring malt barley down to the price of feed. Do really believe that farmers would grown malt barley (or barley period) if the best price was a feed price? What makes Canadian farmers different than US farmers who achieve malt barley spreads in an open market setting?

Finally, why are current CWB barley PRO forecasts so poor relative to world prices? If the answer is the shorted the market early, when, how much and to who?