Barley Growers: Cargill and CWB are Welfare Bums

[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.

[parsley]

chaff,

Duscuss the principal of the defense of the single desk by Cargill.

It's indefensible.

Parsley

[Fransisco]

I think I'm going to have to side with chaff on the contract is a contract principle, even if it is a stupid contract.

I am no keener than the rest of you on Cargill supporting the single desk or trying to slow down dual marketing or extending the August 1st date, that's a non-starter. But if they have a legitimate agreement it either has to be honoured or some kind of compensation made.

[parsley]

Has the contract been broken?

I see no grain delivered to the Board because the Board will not put the price of barley hgh enough to attract barley all winter.

What if zero farmers last year sold their barley to the Board? What if every bushel was sent to the feedlot because the farmers all contracted with the feedlot? Who dies Cargill sue?

Who made the decision to contract the barley with Cargill? Was it the Government. or was it the CWB or was it the Directors or was it the farmer?


Parsley

[AdamSmith]

Chaff,

To your question, yes I'd be pissed, but I would have bought with the full knowledge that they had the product to deliver.

Cargill knew damn well that the cwb could not gaurantee even one bushel of 2007 Malt Barley. It would be tough even if they kept the single desk, without it, they there was no way in hell the cwb could honour a contract to deliver malt barley.

They can sue the CWB BOD's for all I care, but to suggest a years moritorium on the open market, No way.