Barley Plebescite Discussion

[FarmRanger]

1. $59 premium for malt?!?! What malt premium? Right now there’s a feed premium. What are we giving up again??
2. The market signals are to not grow malt barley at all. If there are buyers trying to signal me, they need a bigger fire and more wet blankets.
3. ???
4. A decent competitive price, if they can’t offer that, then I do business elsewhere.
5. I wish I knew Charlie. Right now I'm strongly leaning toward growing straight feed varieties, and quit trying to win the malt lottery, as the prizes have all but disappeared.

[craig]

Charlie
Under the current system the malt industry continually seems to be in trouble. There are no value chains involved and producers feel little loyalty towards the maltsers. I would suggest under a different system you might see a more American style system where producers are contracted to grow malt. With adequate price signals then producers might choose to be involved. For many producers like myself there is little incentive to play the current game. There needs to be a premium over feed to produce what is essentially an IP crop.

[kamichel]

How come the 2000 CWB employees have not come out with some prices on malt for new crop? Since prices are at the top and a monopoly vote this month they should have been more on the ball. Oh OK the cwb workers think that if a vote is coming on the monopoly they they cannot compete and why try. See you all back in Canada after the vote. Just another raspberry for the CWB.

[chaffmeister]

An open question for CWB supporters (related to Charlie's question #1):

The $59 million “benefit” the CWB supposedly brings is the difference in weighted average prices by destination. The study showed that sales to Japan were - on average - higher than sales to the US and the rest of the world, and sales to the US were higher than sales to the rest of the world (but lower than those to Japan). The authors assumed that these price differences were due to the CWB using its “market power” to price discriminate and that the price differences would not be evident in a “multiple seller market”. Therefore, the average annual “benefit” of the single desk was calculated to be $59 million over what a “multiple sellers market” would achieve.

Here’s the question:

If you were able to do the same calculations with all the canola sales made by every exporter in a year – producing weighted average prices to Japan, China, Mexico, USA and Canada – do you think the results would show that Japan consistently pays higher prices than China and Mexico? (Just as the U of S study showed on barley.)

Think about it. China – if it buys Canadian canola at all – tends to buy in the fall / early winter, when prices are seasonably low. Mexico will buy any time of the year, but also only when prices are low. Japan, on the other hand, buys year-round, regardless of how high the price goes.

I’ll tell you what I think. I’m certain that the results the U of S found on barley would also apply to canola – it would show Japan pays more than others for canola, year-in, year-out. And, in a “multiple seller environment”. It doesn’t take a single-desk to make this happen. The U of S study does not prove the CWB brings any benefit over a “multiple seller environment”.

Now to your answers:

If you answer, “Yes – the same would apply / could apply to canola”, then think about what the CWB’s single desk benefit really is. If the same can happen in the canola market as found in the barley market (different buyers/destinations providing different returns), then the U of S study proves absolutely nothing. The $59 million is a farce. At the very least, you should dismiss the $59 million as a factor in your decision making, and move onto other issues. (Like CWB system costs paid for by the farmer.)

If you answer, “No, the same would not / could not apply to canola”, think clearly and assure yourself with certain, clear logic why, in the face of the facts as I’ve presented them, that that would not be the case. Prove me wrong – with either facts or sound logic. Please. Find a way to convince others – with facts and/or logic – that it could never happen in a multiple seller environment like the canola market. If you can, even I’ll listen with an open mind. But please, no ideological rhetoric or platitudes – that stuff don’t stick to my shovel. And don’t just dismiss this out-of-hand because you don’t like it – check it out for yourself. Ask people you trust.

But if you can’t find a way to disprove this concept with facts and/or logic, then I sincerely hope you begin to question what this study tells you. At the very least, consider it with an ounce of skepticism. Or better yet, consider the whole message the CWB sends out with the same skepticism.

[chaffmeister]

'Nother question:

In a previous thread the average cost of handling and shipping CWB wheat over and above the cost of handling and shipping canola was said to be about $20 per tonne. (In 04/05 it was actually about $17 over canola; durum was about $27 over canola; barley is somewhere in between - about $20.)

These costs are collected by the Federally appointed grain monitor from every player in the business of handling and shipping grain. Every player - not just some. Every shipment, every transaction. Including CWB movement.

The CWB even provides numbers in more detail than what you can find in its Annual Report. The CWB costs are not estimated or calculated - they come right from the CWB.

Now the questions (on barley only):

Do you think the CWB provides value ON BARLEY over and above the ACTUAL excess costs as reported by the Federal Grain Monitor?

How much does $20 per tonne on barley cost you on your farm? (Don't include barley sold for local feed.) (One guy recently told me it was enough to cut his gross margin in half.)

If your answer to the first question is "Yes", please tell me how and how you are calculating it.

[charliep]

IThe delivery mechanisms today (single desk for export/domestic human) around barley are much different than from wheat.

Feed barley is based on "guaranteed delivery contracts" - the CWB has sales opportunity and they contract from farmers to fill this need.

In the case of malt barley, delivery access is based on a maltster/grain company selection. The decision to accept or reject malt is effectively an open market one (even under the current single desk system). The CWB impacts this process through their pricing policy to maltsters/exporters by influencing whether they can be competitive with other sellers on any given day. Again no involvement with selections and limited involvement on sales. China is a question mark for me on the last point. Limited or no involvement in logostics of moving malt barley seed/malt product to customers.

Curiously enough, I compare to wheat/durum which is based on the grading system. The delivery controls are contracts (A, B and C series)and contract calls from the CWB. The CWB controls delivery access to provide equitable access to delivery/markets.

Rantings of a mad man. Only highlighting to point out that how barley is handled under the current system is substantially different from that of wheat.

[Burbert]

We grow malt each and every year, when it is not selected, it goes for feed. Usually snapped up because of the superior weight, in other words we get special treatment on our little farm. On years when grain is selected we get the BRAGGING RIGHTS, plus and extra nickel or dime. The system is very cumbersome. I doubt however that it is entirely the CWB's fault, grain companies add their bull to the mix. Then the railways usually co-operate in a big way to help out! Ha, ha, ha. Likely we'll keep doing what works on our farm, I guess it is what you would now call a niche market.