Value Adding on the Farm

[parsley]

Many farmers are looking to value-add at farmgate. What to grow? Where to aim for sales?

Thalpenny, I have a question for you about Nafta and exporting . This question is pertinent for all those farmers out there beginning to value add on their farms...and in particular those with small flour mills on their farms.

A producer who mills his own wheat on his own farm can then sell this "non-board" flour direct to his customers throughout Canada. However, when he goes to export that same flour, he is denied a CWB export license.

This appears to be in violation of NAFTA Article 309: "....no Party may adopt or maintain any prohibition or restriction.... on the exportation or sale for export of any good destined for the territory of another Party..." Would you please explain how the CWB's non-board flour restriction can possibly be in compliance with NAFTA?
Parsley

[parsley]

This question is for a CWB expert:

Little Joe is 22 years old and finally finished his ag course. Typical kid wanting to farm. He wants to add value to the barley he and his Dad grow and wants to buy an expensive barley pearler and automated bagger. Big ideas. His Dad, Big Joe, is pretty leery. Setting up on-farm buildings and buying equipment to value-add is a big undertaking. He's talked his Dad into backing him. They will harvest, clean, process and pearl the barley just like his cousin is doing in Ontario. His cousin farms there, and grows barley, and has a market in Europe, and gets a CWB export license with no cost or buyback. Little Joe says he and his Cousin Richard might eventually form a partnership. Little Joe wants to know if he proceeds with the value-adding venture, ........ can he get a CWB export license granted to him, with no cost or buyback, just like his cousin in Ontario?
Parsley

[parsley]

Hans and Seth have a small bakery in Winnipeg that specializes in special breads:
high protein breads,
gluten-free breads
old grain breads

Their business has grown considerably and they have been approached by a chain of hotels that is interested in partnering with them. Their high-protein bread is their best seller. They are making "pre-mixes" to export as well as for the homemaker's breadmaker. The bakers are concerned if they have a contract with the hotelchain, that they could have problems with their Canadian wheat supply.

In 1994, the CWB sent a "NOTICE TO ALL MILLS" and went on to say that the "Grades higher than Nbr.2 CWRS 12.5 protien are restricted" In other words, mills in Canada were simply not allowed to buy high-grade, high-protein wheat. At any price.

Hans and Seth think Canadians should have the opportunity to source high protein wheat from Canadian farmers, even if the grain costs considerably more. It would be good for farmers, too.

Should Hans and Seth expand their business ? Should they begin sourcing US grain instead of Canadian grain?
Parsley

[pgluca]

This is the kind of thing that drives me absolutely nuts. I farm in southern Alberta, and the only relatively reliable thing we can do here is grow high protein high quality cereals, mostly wheat. Being severely restricted in what we can do with it and often subsidizing other protein levels and grades in the
pooling system is something we can ill afford. Finally being paid on small
protein increments is nice, but I would like to be paid on a dry matter basis also and that would not require high tech equipment. And of course some of us would consider milling under less restrictive conditions. But watching the struggle the Organic Growers are going through is to say the least disheartening. Not to mention the efforts to start a pasta plant!!!

[TOM4CWB]

TO the CWB,

How can I convince any banker to invest in a value added business, when the CWB can stop my own grain from entering my own flour mill?

Obviously I would need to export to the western seaboard to put together an efficient plant that is world scale and competitive.

How can I do this when you won't let me own my own grain that I just grew?

You can change rules at any time, then I am dead. 120 years of an intergenerational farm... gone.

Why do you say you are good for me and my family and my community CWB?

[chas]

Hello Freedom Fighters: Forgive me for I have assumed that I knew what dual marketing was. Could you all explain what it is and what the CWB's roll would be in it. I'am waiting for your vision on this new miracle market. Please explain how it will work in the farmers best interest. Respectfully Chas

[TOM4CWB]

Hi Chas,

IS THERE A DUAL MARKET WITH CWB BLESSING closely examines the Ontario Wheat Producer's Marketing Board's Dual market.

In the end, all I want is for the CWB to have to work a little for my business.

Everyone else on the planet is willing to provide the services I need, but the CWB does not feel they are required to.

THe CWB has such a benefit with both farmers and customers, being the long term supplier and buyer, they should have no problem contracting the supplies they needed and selling them without difficulty.

If the CWB is not willing to provide the services needed, then should they be our preferred marketer?

[chas]

Tom4cwb I know you want more competition for your pricing. I want a more stable realistic price like $2/bushel more for each commodity. I don't want the big swings we get in the market price from rumor or reality. I don't think we got the best marketing system there could be, its just nobody can agree on how to make it better. The Commodities market is for all of us to use, buyers, sellars and speculators. Farmers as sellars have to be more creative with larger marketing groups to obtain better prices in tough times.

[TOM4CWB]

Chas,

Take a look at what the CWB just did for me!

I have seed stock of all levels from select down, and the CWB has decided to kill CWES.

I listed earlier that CWES buy-backs were $211.00/t when #1CWRS 13.5 was under $205.00/t. Obviously one would think if CWES is worth more the CWRS, the CWB should pay us more!

But, instead now I am told it is worth $28.00/t less!

How do I plan for this type of reck?

[parsley]

Well pgluca, right now, the farmer with really poor land, yielding poorer quality and less bushels, and in the pool, gets to be subsidized by you. But it doesn't end there. Higher land taxes for you will reflect the high protien grain that you are able produce. So pgluca must both share and pay more.
Glad you examine the way it works.
Parsley

[parsley]

Wood Hill Marketing Club, with 38 members, have a really good market for their special non-registered variety of barley. It is graded feed.

The small mill that they ship it to in the USA is being bought out by a large corporation, who are prepared to expand the operation considerably. Because the CWB requires the Club's members to get an export license, the CWB has complete access to the destination and the name of the company that the couple supply. The producers feel that the CWB may star to "eye up" this market and start denying them export licenses.

The growers feel that there is a conflict of interest and that the CWB cannot be both a regulator and a marketer. In Australia, the regulatory arm and the marketing arm of the Australian Wheat Authority were detatched for this very reason. Can the growers refuse to provide the name of the company that will buy their product?
Parsley

[basil]

Parsley - All very good Questions. I am very interested in the Wheat Boards answer to these and others. Keep on pushing for answers!

[TOM4CWB]

Parsley,

This was exactly my beef in 1996 when the CWB denied my export license.

I filled out all the paperwork, but the CWB was not satisfied that they knew exactly who was going to be the end user in the US. They will die before they give up that info!

Ken Ritter really got stung because farmers in district 4 know of cases where the CWB sent in salesmen after a producer applied for an export license, and the CWB significantly undercut the farmer trying to do the direct sale.

This fact left Ken Ritter speachless!

Ken Ritter knows there is a big problem, as does the CWB.

What does the CWB propose to do about this conflict?

Denying it exists isn't good enough any more is it?

[parsley]

Maybe thalpenny can answer this one.
J and C are organic farmers in Saskatchewan. They contracted with a flour mill in the East to buy their wheat in '94. To be delivered upon demand.

When they went to do the buyback, surprisingly, the CWB refused to give them an interprovincial license.... at any cost. Period. No license granted. A day later, the CWB "changed their mind" and issued the license.

J and C voiced their concerns to the CWB about J and C's legal obligations for fulfilling a written contract in the future. Particularly if the CWB denies licenses ..out of the blue. The CWB legal department replied that that the CWB can issue or deny licenses as they please and they do not have to give a reason.

Forward contracting is an invaluable tool for farmers. How do producers legally make contracts with their customers if they cannot fulfill them because of the CWB? Does this stance by the CWB help or hinder value-adding?
Parsley

[parsley]

A large group of farmers in central Manitoba are interested in contacting a Middle Eastern country that has shown an interest in identity-preserved wheat with certain characteristics. It's a country a lot of producers are uneasy with. But they have cash up-front for grain. Lots of cash.

One of the negotiaters of the deal, Henry, has family working there and consequently, has met some high profile contacts. He sees potential to make money.

Henry has worried over Howard Migie's supplementary material to Migie's March 6, 1997 presentation to the Standing Committee of Agriculture. Migie was the Director General.

In it, Migie says, "..in connection with an embargo on exports to the former Soviet Union. And this is a situation where it may not be in the interest of Prairie farmers but there was some overriding Government interest at stake"

It seems to Henry there are far too many "government interests" downloaded on the Prairie producer. He doesnt like the guys to put a deal together and then have the Canadian Government's CWB step in and shut it down with an embargo or red tape.

Would the producers be better to have the cargo destination leave from a different country ?

Parsley