Letter From Richard Gray on Malt Barley

[TOM4CWB]

Charlie,

Mr. GRAY must wear a BLACK hat. He is just looking out for the peasant comrades... who obviously don't have a clue.. never have marketed grain in their lives before... and must be stopped or these "designated area" peasants will collapse the world economy!

[chuckChuck]

From all the posts above I haven't seen a shread of evidence that Gray is wrong. Gray clearly makes the point that malting premiums are a result of managing the supply, something a single desk can do. Individual producers cannot effectively manage supply.

Francisco and others: Gray's work is backed up by years of experience and education. In his study he used years of actual contract sales information from the CWB. He modeled the open market to compare prices because there is no open market to directly compare a single desk with.

You can get your information from The Western Barley Growers Assoc., The Wheat Growers Assoc. and any number of politically motivated sources or the coffee shop for that matter. But the opinions expressed are not equal to the work and analysis of Richard Gray et al.

Alternatively if you prefer the political opinions and freedom arguments fine. But I and many other farmers prefer to make decisons based on credible economic and business analysis.

[kamichel]

I am surprised no one said anything about the 40 dollar per ton premium on the malt if the CWB did not exist. I would like to know where that stat comes from because that would put malt at my location much below feed prices. I don't think there is a location in western Canada where malt has held an average 40 dollar premium over feed prices in the past 5 years.

I think he also leaves out the fact that malt companies must contract for the entire years supply. Not just take what is availlable at the time. They want the best , the best demands the premium.
I am sure the guy has fairies flying around him and people jumping joyfully.

[chuckChuck]

CP. What were the contract prices in the US because if Francisco's charts are correct US malt was around $130 CAD in May while our current PROS are around $150 CAD.

[charliep]

chuckChuck

We're not to convince each other in the barley plebescite. So the Schmitz, Schmitz and Gray study is the only piece of evidence the single desk supporters has to put before undecided voters in the plebiscite? Everyone can read and judge for themselves.

[charliep]

Graphs are a spot price - not a forward price. Have scene a delivered Coors contract for US $7/CWT or about Cdn $177/tonne to Calgary (US product brought north on a toll malt basis. You indicated you have access to last summers US new crop malt barley bids - I encourage you to share.

As others have indicated, the issue is not as much fact the CWB forward as they did without having the farmer pricing/delivery side locked. In the US, farmer would have filled their lower prices and would not be selling additional supplies at current higher prices. In Canada, the issue is to get enough barley to fill the exisiting CWB contracts from this summer and from there participate/sell into the current higher valued market.

[charliep]

Must be to shut off the computer/watch curling. Should have said.

As others have indicated, the issue is not as much fact the CWB forward PRICED as they did SO without having the farmer pricing/delivery side locked IN. In the US, farmer would have filled their lower prices CONTRACTSW and would NOW be selling additional supplies at current higher prices. In Canada, the issue is to get enough MALT barley to fill the exisiting CWB contracts from this LAST summer and from there participate/sell into the current higher valued market.

Sorry for the mistakes.

[BennyHin]

Fransico: is there a greater economic benefit to lower barley prices in Western Canada because it will re-stimulate the pig industry that is currently under pressure from higher feeding costs? Not to mention that it will no longer be free for you to continue to pollute the environment?

What is your position on this side of the arguement? I remember an editorial in the Country Guide about a year ago written by your hero Jay Whetter claiming that higher feed prices were the worse thing for the agriculture industry, as the true value was in hogs, chickens, cattle, and milk?

[Fransisco]

When and where exactly did I say Jay Wetter was my hero?

[Fransisco]

Chuckchuck, the charts are not opinions, they are not hypothetical mathematical models and they are not political constructs. They are the actual real world prices.

And the boards own numbers show that they have 8% of the worlds marketshare of barley. Do you honestly believe you can control the world price with an 8% share?

Heck, they can't even do it in Durum where they got pretty much a 50% share.

Yes Gray used actual contract sales information from the CWB. So what? He plunked them into a hypothetical model which spit out a hypothetical conclusion.

And guess what? If you took the actual sales data from any other crop and put it into that model you'd get the same results. Which means the model proved nothing, it was a useless exercise.

And how is it Chuck that someone who seems to be so concerned about everyone else's motives finds an ivory tower prof who has been on the CWB payroll for close to forever credible?

Can't you even make judgements by your own standards?

[Fransisco]

Benny, if the price is so low that no one will grow it then what's the point?

Everyone in the equation has to make money. From the plant breeder to the seed supplier, the grower, the various processors all the way up the chain until some person puts it in their mouth.

Personally, all other things being equal, I would rather feed my animals Canadian barley than American corn.

It's not all about price, at the end of the day its about margins. And there are a lot of costs in the current status quo system with regards to board grains that don't have to be there. Check the federal grains monitor and you'll find $17-30/tonne of them when compared to canola.

Remember competition will lower costs but it is supply and demand that ultimately determines price.

[Fransisco]

If margins are better, more barley gets grown, and there is more feed available for livestock as well as malting and anything else people care to do with barley.

It's called a win win scenario. I'm sure you've never heard of it.