Grain to Vancouver whose to blame

[craig]

Here we go again. The CWB is flooding the media waves with concerns re demurrage on ships waiting in Vancouver and Prince Rupert. Supposed purpose. (A) we are looking out for the poor little farmer. (B) we now have another excuse if pool returns are poor.(C) we need to point out it's someone elses fault. For someone who has been unable to deliver any CWRS to the elevator(I'm not alone) the question becomes where does the blame lay. The CWB by putting a large sales program together over a small time period is setting themselves up for logistical problems. The rail union also knows when opportunity presents itself. This problem seems occurs if not every year, then every two years. The CWB plays a large part in the logistics of moving grain to port. Quit claiming it's totally someone elses fault.

[catchmeifyoucan]

I agree criag did they not know there where union contacts that had expired.Which usually lead to a strike.Lets order 30 ships we'll show those farmers how powerful we are.Then we'll write a letter to the minister of the wheat board and ask for his help.Can you believe it?

[wmoebis]

Where is the backlog at? Is it that the ships aren't being loaded because there is no grain in port? Is it that the rail isn't delivering? Is it that the elevators don't have the right grain in stoage? Or what?

The only thing that is constant is that we farmers pay for something that is out of our control. There should be safety nets in place so that who ever is at fault picks up all cost including demurage charges and costs of the whole system.

Maybe then the unions and management will think about getting their contracts in place before they are in a stike position and are forced to do marathon barganing. Someone has to be made accountable in the system other than us farmers.

[FarmRanger]

Accountability with no authority...great combination

[craig]

Just read a market letter piece that also suggests that the blame for the current backlog of ships waiting to load in Vancouver is mostly due to the CWB heavy booking program over a short time frame. It goes on to say that transportation problems are inherent to cold temperatures on the prairies. It also says that this heavy demand on railcars by the board is creating logistical problems for other grains. Comment that container shipments are in an even worse state than bulk shipments.Chalk another one up that when we do something right we tell everyone for the next 10 years. When we screw up it's someone elses fault.

[BennyHin]

Craig: This post provoked my interest. I checked the CGC export data, looks like board grain exports were below average for January at Vancouver and Rupert combined. So it doesnt look like their program wasnt overbooked, even considering if you add up the number of ships that were waiting at the end of the month.

I did notice that the Canola export numbers were massive, well over 1/2 million tonnes.

From talking to my elevator manager, he told me they were loading canola cars over board grain orders for the last few weeks, as their company had lots of orders to fill for Vancouver. Looks like it is a fight over rail cars that is causing this.

Too bad Morris Dorish did provide his readers with a little more indepth analysis to the west coast freight issues. Wasnt Morris complaining a while back that the CWB wasnt selling enough grain (i.e. 80% acceptance of A-series board contracts)?

I think eventually, the only way this will be settled is if we go to a full bid system on railcars, just as in the USA. It will probably end up costing us more, as limited freight is rationed, through a bidding process.

Now if we could all avoid these freight costs and sell our grain like Parsley, F.O.B. farm (apparently Parsley doesnt pay for freight), we have nothing to fear.

[peaqueen]

The Vancouver corridor is only able to a handle so much traffic. Lack of a coordinated system plan is to blame.

Rather than trying to assess blame, farmers should be demanding an urgent transportation review (which has a component of ongoing review and adjustment) with a fixed target date of response (not another study with no action or consequences) targeted to find and implement solutions. We are all loosing under the current scenario and process.

The real blame lies with the system that governs this agenda. And if we want this fixed it would be time to demand focus on this issue and the fact it is not likely to impove without managed change.

As for container sales which is what we do, our sales pattern is more a calculation of freight availability than global product demand or farmer supply. This is reality, and this has become a huge limitation to our market.

We need a reveiw, and farmers need to demand one which is a more effective application of energy than blame.

[kamichel]

So if one of the rail companies CN has 2.1 billion profit then certainly some of that money could be used to create better service. Too much effort being put on making shareholders money and not enough on upkeep and meeting changing conditions.
I was told at the Bunge station here CN line that the cars were 6 weeks late the whole crop year. One time the whole line of cars were put on one track instead of splitting them up because the engineer figured it was time to go home. Then took another 3 days before another engineer had the time to stop a train and move the cars so that they could be loaded.

[Fransisco]

Boy, its sure a good thing we didn't listen to Judge Estey's recomendations on this ongoing mess. If we had he now wouldn't have the chance to say I told you so.

[Vader]

It was interesting that peaqueen says

"As for container sales which is what we do, our sales pattern is more a calculation of freight availability than global product demand or farmer supply. This is reality, and this has become a huge limitation to our market."

Freight availability factors heavily into CWB sales. The system must run at capacity in order for Canada to fulfill its export committments and realize on farmers expectations.

Contrary to the situation peaqueen refers to the CWB must factor in global demand by country, by class, by grade, by ocean freight availability, and by price and couple this with on farm inventories, contract committments, weather, road condition, and probably a few more I have forgotten.

Many out there will say that the open market system responds and handles this just fine. Well does it? At what cost? To whose benefit?

I think that an organization such as the CWB with a "big picture" view of the industry from farmgate to customer is much more able to make the right decisions and put money in the farmers pocket than the capitalistic model which is designed to benefit the likes of Agriwh@$# and other friends of the Harper government.

[Fransisco]

E-Vader says "Contrary to the situation peaqueen refers to the CWB must factor in global demand by country, by class, by grade, by ocean freight availability, and by price and couple this with on farm inventories, contract commitments, weather, road condition, and probably a few more I have forgotten."

Nice of you to make the case for us. For a central planner to be successful in this he needs perfect knowledge of every aspect, all of the time, then make perfect decisions and have them implemented perfectly. You can't even remember what all the components of step 1 are, let alone what is happening with each one.

E-Vader says "Many out there will say that the open market system responds and handles this just fine. Well does it? At what cost? To whose benefit?"

The answer is yes it would and yes it does, the cost is less because the incentives are in the right place as are the penalties. Those who get the job done are rewarded those who don't get penalized. Over the long haul everyone benefits. The only job of the government is to make sure the contracts are honoured. When they do this the rest takes care of itself.

You don't need someone or a group with perfect knowledge(something that never exists in the real world anyways) because every step along the way knows and looks after its own little piece of the puzzle. You don't even have to know what all of the piece's are. Economists call this spontaneous order.

E-Vader says "I think that an organization such as the CWB with a "big picture" view of the industry from farmgate to customer is much more able to make the right decisions and put money in the farmers pocket"

You think, you think, you think. But you have no proof. Why do you have no proof, because you have no evidence. Why do you have no evidence? Because as many people have pointed out on previous post the evidence runs contrary to your conclusions.

And your big picture view is actually a very small one, centered on three little letters <b>C W B</b> and what benefits it.

Speaking of evidence and the question of costs. Why is it according to the governments annual grain transportation and handling monitor that the total export basis of board grains controlled by the central planners on 423 main street is anywhere from $17-30.00 onne or 30-43% more than the more free market oriented canola?

[Vader]

I understand your doubts. It is like the failing of the communist USSR. It is impossible to control every aspect of the economy.

I don't think that the CWB is guilty of trying to control every aspect of the economy. We are simply looking at one small component.

I think some would argue that one reason the USSR control scheme failed is that they did not have adequate resources to manage all the equations. We do have significantly more information and information handling power today than they did back then. Modern computer systems have many millions of times more power than the soviets did.

The CWB system is not perfect but then neither is the "free market". The free market does not operate distortion free. It has many inconsistencies, garbled information systems, contrary beliefs and objectives. Each segment is operating for its own benefit and not with the objective of maximizing efficiency, only to maximize the profits of the individuals in the supply chain. Competition which should operate to protect the individuals is insufficient, incomplete, distorted and manipulated. Competition will not protect individuals in a capitalist environment. It may work to some extent but it is not fair. It is completely blind to the individual needs.

I hear so often that the CWB is working to its own end. If the CWB had retained earnings or shareholders I could buy this argument, but when everything is returned to the producers this argument rings hollow.

The admin costs of the CWB are represented almost entirely by its labor costs and that runs at less than 10 cents per bushel. That is about 3.60 per tonne of wheat. That is less than 3% of the value of #1 HRS wheat today. There is no way that ADM, Cargill or SWP is going to do what the CWB is doing for that margin.

Just look at what crush margins were a few months ago. $100.00 per tonne.

There is the "free" market for you. Competition is "GOOD". It maximizes efficiency. Sure if efficiency means lining your corporate pockets.

Let's look at TUA's. How much does Monsanto's patent protection cost you per tonne of canola produced? Who is making more money? You or Monsanto? TUA - $15.00 per acre - Two applications of "Roundup" (not generic) $6.00 per acre. RR seed - $5.00 per pound x 5 pounds = $25.00 per acre. A 50 bushel per acre canola crop = 1.13 tonnes. Let's be very generous and say that only half of the chemical and seed costs are profit and 2/3 of the TUA cost (veryvery generous). That's more than $22.00 per tonne. That's about 6% of the value of the canola. Is this driven by competition? When do Monsanto's patents run out. Not 2012 like the Canadian Canola Council thought. No. Now it goes on till 2022. Guess who is going to own the next patented technology? When 22.00 per tonne of canola is raked off the top who will fund the private investment research? Not Ag Canada. No the governments job is to protect this closed loop scheme and put more money in the pockets of the friends of the Harper government.

Have you caught my recurring theme of late. The Harper government. The Harper government. Remember. We're the government and we're here to help you.

What is the Harper government doing to help agriculture. It isn't. The Harper government plan is to divide and conquer.

[northfarmer]

Vader, you logic is nonsensical.....

you really need to take some time off the interenet and take some economics and finance courses......sure on open market economic model is not perfect, but in the end the effficency of it makes your planned model, even with all the informantion available as you now suggest, pale in comparison.....no one, unless they can see the future, can plan for it........

and then to compare this to TUA, what has that got to do with rail efficency...

.....but since you brought it up the price of the TUA and related chemistry relates to the competitive economic model it operates in.....with the current low cost glyphosates on the market you can do 2 passes at half litre and pay the TUA for under $20 an acre, this is half the cost of weed control per acre than pre 1995 when pursuit, liberty and then RR system hit the canola market......if the cost of clearfield or liberty systems were to challenge the economics of RR canola only then would you see a shift in the price structure of RR....the fact of the matter is RR canola is the least cost canola production system of the four avaialable in the market today...there are new platforms in developement today by Dupont, Bayer and others including stacked traits from Monsanto that will keep this part of the market competitive in the years to come.......

but back to rail.....I am with Peaqueen and others that suggest we must demand and call for review and changes with action to the systems that govern rail to imptove and make the system more transparent and responsive....if we need to ration resources to make them more efficent, and go to open bid to get the business done on time and with predicablity than lets do it......rail rev caps and the CWB pointing fingures are not the solution...IMHO

[Incognito]

Vader
The factors you list for determining sales are not unique to the CWB. The only difference is that with the open market price is the single largest variable in determining sales. Lucky for the CWB they do not have to factor in: price it can buy at. The obvious ability to ignore price when making sales is made obvious by the price of the malt barley pool.

[parsley]

peaquueen,

When the potash mine in Esterhazy were having unsolvable, re-occuring transportation headaches, they took matters into their own hands.

They arranged for a "pickup site' across the border, liased with the railroad line at that site, and from there, the trains delivered to destinations or ports.

It worked well.

Parsley