Barley Growers: Cargill and CWB are Welfare Bums

[AdamSmith]

Charlie said, "The important thing to me is how we transition out of the single desk for malt barley and into an open market."

Charlie I assume you also want this transition to be successful in achieving the stated goal. Here is my plan, I'm sure 90% of the people will not like the plan but history shows it is the most successful way of adapting quickly.

It's called "Six months of Chaos"

The stupid and the lazy will be weeded out and the smart and resourceful will survive.

That is what the open market is about, we don't need to wet nurse these crying babies for one second more, if they haven't figured out how to function in the open market by now, they have no future in the barley business anyway.

Cargill reminds me of a four year old still breast feeding. Out running and playing with the big kids until he gets a little hungry then runs back to mommy, lifts her shirt up for a little lunch, then runs back and plays with the big kids again. Yuck!

[parsley]

CARGILL NOW HAS 2 CHOICES as today's Press Release from the WBGA shows:

FIRST CHOICE FOR CARGILL:

"The proposed amendments to the Regulations would continue to extend Part III (marketing) to barley. This would allow the CWB to continue to operate barley pools for those farmers who want to continue to sell their barley through the CWB. The Government would continue to guarantee the CWB's borrowings and initial payments.


SECOND CHOICE FOR CARGILL:

Part IV (licensing) would no longer be extended to barley under the proposed amendments to the Regulations. This would remove barley and barley products produced in Canada from the CWB's single desk powers, which would enable barley producers to sell their barley directly to any domestic or foreign buyer, including to the CWB."



“We have seen uptake of the proposed changes already by leading Canadian grain companies such as Agricore United, Saskatchewan Wheat Pool, Pioneer Grain and Louis Dreyfus. Their marketing personnel are already working on customers for the new crop year. Add to that, barley pricing contracts being developed by the Winnipeg Commodity Exchange, producers can see and access markets beyond the current domestic market" comments Tom Hewson, WBGA Vice President."


"Some of Canada's leading malting companies also have welcomed the proposed changes. They already have direct producer deliveries, now finally they can contract directly with barley farmers."

"This will ensure the top quality and quantity barley they need and the price transparency and price security farmers require. "These changes have been coming for a long time, our industries have been aware of it as well."

WBGA was part of the Market Signals in the Barley Sector (industry, farm group, provincial and federal government round table) paper released last fall. In that paper industries and farmers realized more direct cooperation between the two would lead to a stronger more viable Canadian Malt industry and more return to the farm gate" concludes Nielsen.



The members of the WBGA commend Minister Strahl and our government for moving forward into choice marketing for barley. Western Canadian farmers have long awaited the changes and the added value and growth it will promote."


Maybe Cargill needs some new management.

Parsley

[chaffmeister]

Parsley, Adam Smith et al: let’s not get truculent here.

What Cargill is doing is exactly what it should under the circumstances. It’s trying to protect its bottom line. It has made some sales to brewers at malt prices set by the CWB – and it has covered those sales from the CWB. And now the CWB is making noises that it won’t stand behind the contracts because of a little problem – it might have to compete for the grain and, oh yeah, the prices are ridiculously low. (If the CWB had high priced sales on the books, do you really think it would have threatened to walk away from them?)

The real culprit here is the CWB. Making noises that it won’t honour those contracts, the CWB is sending a signal to the likes of Cargill as well as the government and all you pro-choice farmers.

Parsley – I suspect that Cargill is looking at this situation – entering a commercial contract in good faith only to find the deal has been changed on them – in the same way you look at the Buy-Back with the CWB on organic sales. Upon entry it looks ok, but when the dust has settled, it costs you thousands more than you first thought. Neither way is any way to run a business.

Adam Smith – if you had bought fertilizer at $600/tonne but the supplier threatened to pull out of the deal before it was delivered because the market was now $1000 – how would you react?

In previous threads many ideas and concerns about contracting in the barley market were presented. Everyone seemed to be in agreement that you have to pin down as many details as you possibly can – try to consider any eventuality – avoid surprises (read the small print). All good ideas. And Cargill would agree with them all. In this situation, they are simply saying to the CWB, “we have a deal – stick to it”. If it was the other way around, Cargill certainly would without question.

[parsley]

Cargill has known for a long time that choice was coming.

The Board knew for a long time what was going to happen, and probably signed contracts that they should not have signed.

Cargill should be aware that the CWB itself signed the Contracts,(without any grain contracts from farmers) NOT cropduster and NOT AdamSmith who both own farmer-held grain not offered to the Board, and not in Trade and Commerce, but still contained in Agriculture.

Cargill has a contract breach with whom at this point?

Not with farmers, not with the Goverment, maybe with the CWB, but is their a breech yet?

Trying to blackmail on the front pages of the newspapers will do exactly what they probably what they will not like....a backlash from farmers.

And chaffmeister, these two...SWP and Cargill have publically allied themselves with the Board, and AGAINST choice farmers....so they'd better be prepared to sleep with them.

This is how it reads:

CARGILL vs CHOICE FARMERS
SWP vs CHOICE FARMERS

Parsley

[TOM4CWB]

Chaff;

You said:

"Adam Smith – if you had bought fertilizer at $600/tonne but the supplier threatened to pull out of the deal before it was delivered because the market was now $1000 – how would you react?"

1.)Lets to a wee bit of analisis here... The conditions leading up to the contractor selling the $600/t contract... were $1000/t.

2.) 15 years of legal and moral outrage over the contractor confiscating the producers product being sold by the $600/t contract... to the point where some went to jail to object to the taking of the product below market value:

3.)Clear problems in upper management where the CEO is insulting and sueing CFO (the CDN GOV.).. to the point that everyone knews the CEO was toast... and financial budgets not approved by the CFO

4.)The consitution and Powers to confiscate the property of the producers for the Contractor was/is clearly up for review... and everyone who cares to know is aware if $600/t contracts are given out in a $1000/t market... they could not be expected to be valid.

Chaffmeister,


5.)That To sign these $600/t contracts with me as a customer... that I have known for some 10 years (the Chairman of the board basically was aware producers were "unhappy" & wanted marketing choice outside the contractor)& that this contract would likely cause the financial colapse of your organisation...

I would have to be INSANE to believe these were valid commercial contracts @ $600/t of repute and good will.

I would not expect to have this contract filled.

[TOM4CWB]

Change is going to happen and the sooner the better for all involved, short term pain for long term gain. As Charlie has mentioned several times the Market Signals in the Barley Sector, the report shows what is needed to create a better enviornment for all. The only ones that were contradictory to that report were the CWB. All other participants agreed in principle to the changes needed, one of these players is the malting industry.
For those who wish to revisit this report it is on Ag Canada's web site or I believe still on the WBGA site.
As for Cargill, I doubt that thier barley marketers in Winnipeg are not refusing sale calls from overseas customers. I'm sure all our grain companies (whom are agents of the CWB, and make 90 % of all barley sales) are actively looking at providing thier customers the malt barley they require. AU has stated such, personally haven't called any of the line companies to see what kind of deal I could get. I've decided to work with RAHR, fortunately Prairie is too far away to boycott, but that might be a consideration for some.
As stats Canada today released, 10.8 million acres of barley going in. We know at least 75% of that is malting. We know that only 1.8 - 2 million tonnes. Hmmm is there going to be a shortage of malt? is the lottery going to end? will the maltsters after losing there wet nurse going to have to pay a fair price for the malt? Perhaps, with new markets opening up, both domestically and export change is here.
It's the dream of the CWB that we wait a year, perhaps a new government will be in place and all the bricks in the CWB Wall of lost opportunities will be put back in place.
Erik

[TOM4CWB]

edit to my rant,
we know that only 1.8-2 million tonnes is selected for malt.
I know you all know that just got finger happy typing and forgot to get it right the first time!!
Erik

[chaffmeister]

erik
Figure on 3 mmt or more malt barley selected this year....

[chaffmeister]

Tom - take another look at the fertilizer story / analogy. Forget about the CWB for a minute - just think fertilizer and basic Commerce 101.
How would you respond? Remember - we're not talking about the CWB here.

[nakodo]

hmmm multinationals supporting the CWB and their pricing locked in below market.....

NFU explaining we need the CWB to protect us from the multinationals......

something is fishy in Denmark and it is opportunistic multinationals unwilling to face competition in their buying decisions ie actually having to bid for barley OVER!!!!! the feed price.