So now what?

[rockpile]

Okay, the deed is done - barley goes open market. With an excess of malt seeded over feed, what will sustain a premium in an unfettered open bidding market? If the CWB made long term sales agreements, how will they be fulfilled in an open market environment? If these committments fail, what will happen to the reputation of western Canadian farmers? What is the financial incentive for market development in a non-board environment? Lowest price, perhaps. Given that I quit farming 3 years ago, I'll give you some free advice that might make you some coin. Plant a few acres of feed barley, try to get it off before Sept 1st, and then go nuts with put options. I used this strategy in 93 with the 'Continental Barley Market' and made a 'piss-pot' full of money. Anyway, CWB or no CWB, you guys still haven't learned the simple fundemental fact that through co-operation and working together, you achieve market power. Good luck with your barley. Now, give some thought to becoming a price maker instead of just being a price taker.
Rockpile

[furrowtickler]

If you quit farming 3 years ago keep your opinions to your self please. The current barely values through the redwb are a disgrace BTW a local pulse prossesor has now the oppertunity to sell malt to the far east in conatiners for $ much higher than current communistwb values! Again ...change is good donkey.

[wd9]

Rockpile, what it takes to be a successful industry, is the industry working together. Not the farmers screwing the exporters and the customers or vice versa like you said you did. You did nothing for the health of the industry, only created mistrust.

The entire system working together to provide value to the customer, responsive to their needs, is what works. Investment will occur to make the product better and provide more value. Barley and wheat have not done this, and their dismal peformance in new products shows the complete lack of vision, cooperation, and trust.

Canola and pulse are great examples because they have caught on to what makes an industry successful, not ripping each other off like the cereals industry tries to do.

Sorry Alberta Barely Commission, Winter Wheat, Rye and Trit Comm, but you guys got a lot of work ahead of you to change some minds on what good business is! You need money, and as soon as wheat is off the CWB, provincial HRS wheat commisions and a national wheat or cereals council can be formed. Then and only then will things turn around?

Anyone care to argue that point? I'd love to debate you on it! Let's have a real discussion on what it takes to make this industry successful.

[TOM4CWB]

WD9,

TRUST, Cooperation, and value.

Larry Martin and the George Morris Centre make this point:

There is as much "value" left behind and not captured by anyone at all... in many of our "foodscapes" as what benefits we participants now.

If we look at the food industry like we would a watershed and follow the cycle from sky to the ocean... from the food creations mind to the consumers mouth... there is so much we can do to create better products for everyone involved.

In the "designated area" of Canada... by creating and fostering highly concentrated "monopolies"... often the needs of our participants who genuinely create to consume our food... are trumped and ignored.

WHY?

Because rules, regulations, and structures created because of these "public good" rules and regulations, do not have behind them the most basic of all democratic principals...

PROPERTY RIGHTS.

We have ended up with our mish mash of "Public Good" rules and laws... that justify (eg., CWB/CN/CP's) Goodale/Ritters positions... and the money flows in the channels these regulations create.

Not a big surprise at all... if the larger view and conceptual understanding is carefully studied.

But... as Agstar77, Vader, Rockpile, and even CP will point out:

The common persons' property rights are there for "Them"... for the better of the "public good" to take... not to be prospered by individuals... but for the betterment of the collective!

WD9... it almost is tempting to get this from what you say... but I don't believe this is where you came from!

The Canola/Pulse industry management in Alberta is a prime example of recognition of individual property rights being respected... from the ground up using a voluntary collection system for funding these systems of governance!

UPA regulations in Quebec have some interesting standards that respect the individuals property rights in a different manner... using supply management.

66% of growers must approve management structure... then they make it manditory for everyone.

So now what?

Goodale created the CWB regulations that required a vote of barley growers... using RULES that are to be determined and left to the wisdom and judgement of the CWB Minister.

What are ROckpiles rights?

What are WD9s rights?

Morally the NEED the right to make their own decision... a right that would not even be questioned in a truly free and democratic society.

Make a good argument... but keep your "gun" at home Rockpile... and don't threaten or shoot my dog if you don't "like" my opinion!

[chaffmeister]

Excuse me, wd9 (and TOM4CWB). Don’t want to get in the way of your debate, but I just have a few answers for Rocky.


<i>With an excess of malt seeded over feed, what will sustain a premium in an unfettered open bidding market?</i>
In a close “unfettered open bidding market” (U.S.) malt has always kept a premium over feed. Best to ask yourself why that is.

<i>If the CWB made long term sales agreements, how will they be fulfilled in an open market environment?</i>
Ask yourself how grain companies everywhere in the world do it. There are courses you can take to understand this better. (I’m sorry – that sounded mean. It really wasn’t meant to. There really are courses you can take.)

<i>If these committments fail, what will happen to the reputation of western Canadian farmers?</i>
You mean like when the CWB’s commitments to the maltsters failed in 02/03? And are possibly failing again as we speak?
But to answer your question, the answer is nothing. The CWB (and all that support it) may look pretty stupid though, if these commitments fail. (Because we know there are many ways to ensure commitments are satisfied.)

<i>What is the financial incentive for market development in a non-board environment?</i>
How about developed markets. (Give your head a shake on this one. Independent marketers are working to develop markets all the time – in all crops - including wheat and barley. Do yourself a favour and don’t listen to the CWB rhetoric that companies don’t develop markets because others might benefit. Pure BS. Grain markets are developed through relationships – when you develop a relationship, you develop a market. And guess what – because you’ve got the relationship, you get favour from the buyer. There’s your incentive.)

<i>Anyway, CWB or no CWB, you guys still haven't learned the simple fundemental fact that through co-operation and working together, you achieve market power.</i>
You know, I agree. The concept of the CWB is pretty sound. Working as one should give you market power. But don’t fool yourself - it hasn’t worked. It's an illusion that the CWB has market power in barley – an illusion that the CWB is desperate to maintain.

[TOM4CWB]

Rocpile,

I specifically would comment on the last part of your statement:

"CWB or no CWB, you guys still haven't learned the simple fundemental fact that through co-operation and working together, you achieve market power."

VERY INTERESTING;

EXCUSE me if I bring up:

"co-operation and working together" that uses force and the threat of jail time to build the realtionship?

How can realistic, synergistic, and balanced relationship be developed with the "GUN and a Smile" method of Integrety disciplining our food value chain?

Grain growers are captive,

CWB Agents and processors hold the gun. SO... who Rockpile exactly extracts the value?

Proof...

Any individual domestic processor (forced by law to be a CWB Agent) can arbitage down the cost of their grain by importing it instead of using domestically grown CWB grain.

If these CWB Agents were forced to buy back their grain on imports from the CWB... and share it all with other CWB Agents... how could they arbitrage the domestic grain market down? It wouldn't be possible... and THEN the CWB buying monopoly would make more sense for "designated area" grain growers!

Instead:

No grower is allowed to arbitage the market up... without practically giving most of that value back to the CWB and its Agents. In turn this system & pool dilution prevents market arbitage.

This is an economic gun extracting life blood out of western Canadian grain growers... you must admit Rockpile!

[charliep]

rockpile

I always get the question about how much malt barley is produced and how low prices will go. I have to note that malt and feed barley are not the same thing. The decision becomes a lot easier to make if your open market scenario comes true. The decision between barley and other crops (canola, pulses, wheat, etc.) is also a lot easier.

I posed the following question to a CWB employee and never got an answer. Maybe you would like to help me out based on your experience.

Just curious how much 2007/08 crop has been forward sold to the domestic maltsters? Always curious about the difference in philosophy on risk management between producer contracts ($21.80/tonne discount for malt barley fixed price contracts with logic hard if not impossible to manage price risk relative to the pooling system) and signing forward contracts with maltsters (can forward price to domestic maltsters with the knowledge that farmers grow 6 to 7 MMT of malt barley varieties out of which the CWB only needs 2 MMT so who cares if the you short the market without having the supplies to back up the contracts - farmers are going to deliver to the CWB/malsters regardless of price). Perhaps a change that has to occur is the CWB should not be allowed to forward contract without having farmer physiscal delivery contracts in place to cover these sales.

I suspect (you may argue against) that nothing will change in an open market except you will get paid a price at delivery versus an initial payment. The CWB does not select barley. The CWB has limited involvement in export sales (perhaps some Chinese business). The CWB has no involvement with malt product sales (domestic or export). Help me understand what else will change.

[Pulseman]

I beleive the malsters now can act and re-act quikly to market changes. I was told today that new crop malt, 2 row is bid at $4.50, feed locally new crop $4.00, so if this is true a fast and easy $0.50, a value that was before not clear, because of the 20 different senariose with the CWBuggers.

Look at the past: Nov. 06, I had 600 MT 2R, accepted by three malters. I asked them directly for $185/MT cash to me, my door and I was told, that they can not gurantee that, so, I sold 300 MT in Nov. for $174/MT and 300 MT I sold last week for $185/MT cash, no deductions.

But the maltsers lost 600 MT that they would have liked to buy,bad could not work with me direct.

Sorry boys, see yah next year.

[rockpile]

Thank-you gentlemen and ladies for your well thought out responses. First,furrow tick, you don't have all the facts - I quit farming (perhaps health reasons) but I still own the land and rent it out. In some respects, I am even more at risk to bad decision making than I used to be. Have some compassion. WD, I only used the market tools I learned from taking courses from the Charlie guys. What offends you is that I had the correct insight at the time to maximize my returns, based on the knowledge I gained from the 'pros'. Oh yeah, take courses and learn, but be careful if you get caught winning, because, in the farming community, many, many people depend on evaluating and self-satisfying their own success by the failure of others. Seldom will you see a farmer celebrate the success or innovation of a neighbor. Don't react to this, think about it for awhile. Tom, I apoligize, I have nothing against your dog, but I think in some ways, Goodale challenged western Canadian farmers to pick up the reigns and take full control of the CWB, and if it had been done right, we would have had financial backing from the Feds through loan guarantees, trade advantages, like the U.S. Dept of Commerce, but because we like bumper stickers and slogans, we truly blew it. We've lost the co-op grain companies and now our marketing agent, which we could have had total control over. As for complusion, yeah, sometimes you have to grab the wingnuts by the hair and drag them out of the cave and show 'them what 'electricity' looks like. Volunteer is good, as long as everyone volunteers. But, in the business I am in today, if people want to play stupid, you take them to court and beat the 's...'out of them. Final comment to Charlie, the CWB did over the last few years put out some rather remarkable pricing options. So if everyone is so smart, why such dismal participation? With non-board grains, honestly what percent of producers deliver straight cash basis? Finally, if you can't work with the CWB ruining your life, how will you tolerate ADM telling you how to live your life? Bottom line from reading everyone's comments - the question was 'now what?' From the vitrolic responses, I can conclude that not much thought was ever put into this question. Let's see if time proves me right. I know I sound so arrogant that I should sign off 'Conrad Black', but I remain nothing more than a...
Rockpile

[craig]

Rockpile
You answered your own question. If the pricing options from the CWB were as remarkable as you said they were there would have been much more participation. It is implied that the pricing options were to mimic open market options for farmers. The reality is there is no transparency, producers take on more risk because there are no checks and balances in the system and finally have not provided farmers with the opportunity to capture returns from high futures markets. If the CWB had done a truly remarkable job in providing market options we would not be going through the debate we are in today.

[TOM4CWB]

Rockpile,

What Craig has pointed out... plus, when we started in 2000 the CWB was more flexible.

[charliep]

To pick up on what wd9 said, what are the barley industries targets for the future. I note Canadian Canola Council (an industry organization) has set the target of 15 MMT by 2015 (both production capability and markets). The Canola blew there last target out of the water (7 MMT by 2007). The reality will be 10 MMT in the coming year - 2007 (markets available right now with hopefully a canola crop to meet this challenge).

The CWB grain Grain Trade Forecast highlighted some opportunities with a caveat now 5 years old. Can be found at:

http://www.cwb.ca/public/en/library/publications/popups/pdf/long-term_forcast-2011-12.pdf

It is interesting to compare their forecast to 2006 reality. Page 6 - barley production was forecast to be 14.5 MMT versus a reality of 10.3 MMT. Given current barley economics/market opportunities, is it realistic Canada will produce 15.4 MMT of barley in 2011. Canola was forecast to be 7.2 MMT versus the real number this last year of 9.1 MMT. Page 17 - The CWB forecast western Canada would be doing 1.7 MMT of malt barley exports (not including product) when the reality is that malt barley exports are likely to have difficulty achieving the 5 year average (1997-2001). Under the current circumstances, what is the chance Canada will be exporting 2 MMT of malt barley by 2011?

All this is to highlight the performance of the CWB in the malt market has not been stellar from a competitiveness standpoint. Any barley opportunities have been created by the open market domestic feed industry.

I agree there is a need for vision in the barley. What is this vission? What is needed to move the barley industry ahead and make it a more viable competitive industry. We need to get beyond the CWB debate and start focusing on the opportunities.

[parsley]

Two items to begin with:

1.Contract information is a good start.

Writing customized contracts charliep.

The lawyer in the family writes them...huge deals and little ones..

Farmers need to tarhget and specialize

2. Mindset change. Appreciation of our buyers and recognizing them as partners and not enemies, IS THE MOST ESSENTIAL STEP!

Parsley

[charliep]

The ideas for my posting come from page 4 of the March 29 western producer. Why isn't this type of discussion occuring in the barley industry? Are we doing some of the things Parsley is talking about?

[parsley]

There will be some very positive happenings from the barley industry in the very near future, you can bet.

I find barley growers very proactive, and are well salted with organizational skills.


Parsley