Alberta Ag employees - Spending tax payers money wisely

[BennyHin]

Charlie: What do you know about this:
[URL="http://www.savemycwb.ca/rats/gov_ab_email.php"]Alberta government workers in action [/URL]

If the link doesn't work, cut and paste:

http://www.savemycwb.ca/rats/gov_ab_email.php

Ins't it ironic that this hate filled email is coming from a civil servant of the Alberta government. If this person is so right wing, so pro-unfettered capital markets, why in the world is this person working for the government...typical red-neck hypocrite.

[charliep]

As indicated by my minister, the posting was one individual expressing their opinion and not government policy. The issue has been dealt with internally. I won't deal with it any further for the same reason a CWB employee wouldn't deal with their internal management issues. I at least post under my name so I can be held accountable for everything I say.

[BennyHin]

Charlie: I was not accusing you of writing this email, I know your above this level, if my posting came across otherwise, I apologize.

I was just wondering if you had internal information as to whether this was dealt with afterall, this is quite a mean spirited hatefull thing to say to 12 - 14 year kids.

I was wanting to poin out that the AB agricultural employees involved should be more pre-occupied with their assisgned job postions rather than getting involved with farm-level politics. Perhaps these employees have too much time on their hands and need more work. (Isnt sorry to see how one or two people can sour the the image of an entire government department?


I hope AB Agriculture takes the appropriate measures against this (these) individuals, so that the rest of the department staff aren't also accused of such actions, and work ethic.

[charliep]

I can't comment on the specifics of the action because I don't know and even I did, I wouldn't say.

The were internal communications about the issue and they highlighted the following government of Alberta employee commitments which are agreed to every year in our performance contracts.

http://www.pao.gov.ab.ca/apsvisionandvalues/

Province of Saskatchewan and Manitoba would have similar codes. The CWB spent a good deal of time in their annual referring to their employee commitment and will have a similar policy.

[sask]

while what the alberta ag employee did was wrong,
does no one else think it is wrong for the savemy cwb
folks to call everyone who disagrees with them rats?

[cropduster]

Hey there BH.....ever had Maureen Fitzhenry at the CWB hang up on you??Probably not ...at least while one or the other is in liplock...And we get to pay for Ms.Fitzhenry`s smart mouth too!!!!

[TOM4CWB]

Cropduster,

While the regretable statements of this person are worthy of an apology...

What about Chairman Ritter?

In Chairman Ritters "You can get more done with a gun and a smile" it includes violence, threat, and mental abuse all rolled into one.

No apology from CHairman Ritter... just a smug thinly veiled laughs by his accomplices Macklin and Oberg who were witnesses to his threat delivered in an official CWB capacity at the Wildrose Banquet Jan. 2005 statement.

Wildrose membership fees will not be in my budget until there is a public apology by Chairman Ritter and Wildrose... to all who were there.

I expect Ritter was also paid by the CWB to abuse me and my friends who are the object of his scorn.

[charliep]

BennyHin - You can maybe help me with one of my questions. Why is the CWB still using initial payment spreads on fixed price contracts for wheat? When initial payments are only announced sporadically during the crop year, the spreads on fixed price contracts can get extremely out of line with the market (as occurred in the current crop year). It can make a big difference to your price whether you deliver before or after an adjustment.

Why isn't the CWB using market based spreads similar to the process for the daily price contract. At the very least (a CWB employee idea) they should be applying the spreads based on the contract calls at the time adjustment payments are announced. Example, if a 40 % call were in place when an adjustment payment is announced, you would have the old initial payment spread applied to 40 % of your contracted volume whether you delivered or not and the new spreads applied to the last 60 %.

I suspect you will tell me to contact the CWB but at the end of the day it is a farmer issue. This is a glaring and obvious flaw in the current program that should be fixed by its sixth year of operation.

[parsley]

Now apply the confusion-concept to doing an organic buyback!


follow this puzzle...

world price, sorta, but in the market you're selling into, sorta, but at a conventional price, sorta, minus a conventional initial price for that snapshot in time, depending upon who you are, and if you re-negotiate several times = bedlam

Parsley

[BennyHin]

Although this is deflecting from the original topic, I'll bite:


Charlie: I dont know why they continue to use just initial payment spreads. As you stated, they can become outdated quickly as price spreads between grades, proteins and classes change daily basis daily cash markets.

But pooled sales are just that, pooled. They reflect fact and they reflect forcasted sales, not just today's price.

From what I understand, these pricing options are still based on the entire pool returns at the end of the pool cycle, and are specific to grade and protein spreads.

So if you deliver # 1 red spring against a contract in December, the intial payment is the most current mecahnism available to pay you what the expected pool return is at this point in time.

Granted, this is not always favorable, as the spreads could be way out to lunch should there be excessive delays in changes to the initial payments.

However in years where the August initial payments are incorrectly set, you can capture spreads that arent currently available in cash markets. For example, in 2005-06, I produced some 3CWRS wheat. knowing that the cwb's spread between 1 and 3 red spring was way too narrow I delivered all my 3 red spring early in the fall and was paid this narrow spread. By December, the 3 red spring spread was re-set to the current cash spreads, widening it out by $10-$15 per tonne.

This crop year, the CWB set the protein premiums (in August) too high. So again i took advantage of the spreads and delivered my 15.0% wheat first, capturing this extra premium. I knew the protein premiums would narrow, as Minneapolis protein spreads were vary thin, a result of excess protein in USA HRS and HRW wheat.

As to why the CWB still uses initial payment spreads on the fixed contracts, I think it comes down to risk management: here is an example:

lets say the CWB has sold 10 million tonnes of a 13 million tonne pool, and we are now at May, with only 2 months left to go in the crop year. lets say the protein premium the cwb has captured so far in these pooled sales for 14.5% protein wheat in these pooled sales was only $10/tonne as reflected in world values all year long. Suddenly the protein premiums in May shoot up to $25 per tonne for 14.5% wheat. Had all these farmers with Fixed contracts delivered their entir contracts in May June July, they would be owed the $25 premium for 14.5%, but the cwb sold most of it already at $10.00 per tonne.

Who pays the $15/tonne loss? Should all the farmers who enrolled in the pool last August forgo the benefits of these later higher protein premium sales, therby eroding their final pool value?

Charlie: you should know that protein premiums, grade spreads, and basis' are difficult to hedge 10 - 12 months out.

That is why the CWB also has the Daily Contract, this one allows us to spec on daily protein and grade spreads. So it is up to me to sit on my wheat until May (in the example above) to capture the extra protein premium.

But I agree with you that more pricing tools are always welcomed. Why dont you provide some examples for additional cwb programs. I know you have the experience in the markets, its time to get creative.

[charliep]

I agree the initial payment can work for a farmer and against. The issue is the farmer is not in control of deliveries because of contract acceptance, contract calls and elevator capacity/logistics issues.

The other issues are how much risk is passed back to the farmer to protect the overall pools. Farmers should be able to lock in spreads to protect their risk/price based on the market conditions.

How would the CWB manage their risk? I have the CWB match farmer contracts up against sales. A domestic miller uses daily spreads - not averages during the year - when they buy from the CWB. They likely (haven't been in the CWB for a while) can forward book spreads. I would match off sales spreads to farmer spreads to manage CWB risk.

I note your example of an extreme change in spreads. What would be wrong with this? I note similar changes have happened in a very unplanned manner with changes in initial payments. There is more likely to be a gradual change (not overnight) in a market based process where the current initial payment based spreads occurs all at once based on simply luck of the draw. Managing spread risk should be a CWB responsibility - not additional price uncertainty passed onto the farmer.

An open market will force the CWB to much innovative in they handle spreads. In this case, they will have to manage their spread risk by matching against sales.

[TOM4CWB]

Charlie,

It is the very lack of market transparency, unwillingness to daily indicate market signals, that is most disappointing in CWB management.

The pool again sucks up the distortion, and those with "special" priviledges take the cream off the top... as with any communist collective system.

Shortages in the midst of plenty of supplies... as happens with malt barley... are a hallmark of a communist system... which the CWB passes with flying colours.

CWB idealogy on democracy clearly fits the "democracy" that communists have used... The rights of individuals who create prosperity must be sacrificed for the greater good of the collective.

[charliep]

No response on the comments on spreads so will return to the original posting by highlighting the Alberta government position. I will note the ministers comments on the last "Choice Matters" newsletter.

** Barley Plebiscite Results **

62% of respondents from across the prairies voted for marketing change for barley

Minister Groeneveld's Message on the Barley Plebiscite Results

The results of the federal barley plebiscite are in and they should come as no surprise to anyone who has worked with Alberta's grain and barley producers over the last decade. Alberta's producers have once again voted in favour of innovation. They have voted in favour of competition. They have voted in favour of choice.

With the results in, it's time for the Government of Canada, the Canadian Wheat Board and industry to work together to strengthen the barley marketing system. The Government of Alberta will support the work that needs to be done to make this happen.

We are a province known for our hard work and independence; a province whose reputation was built setting trends and getting ahead of the competition. It is time now for us to apply this spirit to an open barley market. Our options are no longer restrained. It is time to plant our seeds in a field of opportunity.

http://www.choicematters.gov.ab.ca/