Ag Clearing House

[chaffmeister]

Burbert & wilagro:
Get a grip.

The clearing house does not replace the CWB nor would it be "overseen" by the WBGA. The WBGA simply saw a gap in the value chain that this could fill - and then acted on it.

The CWB itself is looking (positively) at the clearing house concept to see if it can be of benefit in its contracting programs.

Also - the Canadian Grain Commission is seriously reviewing it as a possible replacement / adjunct to CGC bonding.

If this replaced CGC bonding, and maybe replaced security requirements on futures deliveries at WCE, and maybe was used by the CWB as well on its contracts, then this would certainly prove to be a good thing. And a low cost one as well.

In addition, the clearing house could be used to back cash advances on deferred delivery contracts - beyond what the Federal APP program allows/provides.

Just ask anyone who was owed money by Naber Seeds just how well CGC bonding worked for them....

[charliep]

Just a gentle reminder that the CWB marketings only represents about 20 % feed barley production. They have no involvement in the domestic feed market.

Perhaps what you are suggesting is the CWB should handle all domestic feed barley including farm fed. Farmers who feed their own or sell to their neighbors should deliver to an elevator, get paid an initial payment, do a buyback at the CWB price of the day, sell into the domestic market and finally wait for adjustment/final payments. I am quite sure this process will put more money in farmers pockets.

Curiously enough, the CWB would likely be one of the first to use the Ag clearing house in backstopping their producer pricing options.

[charliep]

Mistake.

Not 20 % feed barley production. 20 % total barley production. As a residual market, the CWB has 0 % impact on the domestic feed barley market.

If you like the transaction protection of the CWB, contract and deliver to them. Chaffmeister also highlighted (with the caveats described) that delivering to a grain company offers similar protection (CGC bonding). Both these routes have costs too but is a way of reducing risk.

[parsley]

wilagro,

Continue to use the CWB. You wanted it. You've got it. Deliver that malting barley to them next week. You love it. Use it!

I am interested in the clearing house. Banks use clearing houses. Visa uses a clearing house.

You want the CWB. We know.

Parsley

[just_wondering]

As I understand the fee that they would be looking at would be around 50 cents/tonne. Not unreasonable at all to ensure delivery on both sides of a contract. as far as dealing with grain Co's it like Regan said "trust but verify".
It would be in the best interests for both sides of the clearing house to see success as it guarantees supply for the processor and delivery and payment for the producer a win/win situation

By the way we do need to reinvent the wheel the old one never worked in the first place

Good work of the barley growers to try and do something, and not just opine for the old days.

[TOM4CWB]

Wilagro,

I am very interested in your... ""take over" what the CWB was doing"... statement on wheat or barley security!

I delivered 1&2 CWRS wheat, which is illegal to sell to anyone but the CWB, and was told my wheat was not covered by the CWB if the elevator, who is an Agent of the CWB... went bust.

Go figure.

You really don't know what security you have... until it is gone and youv'e no jingle... and the tingle up your spine tells you... there is nothing to show for it!

It's a little late then!

But so is selling feeed to the CWB and ending up with half what it was worth!... same kind of feelinG!!!!!

[nakodo]

sorry a thought came to my mind. lets approach the cattle feeders and offer a base price this month and "renegotate" when we know the size of the feed pool....in six to 12 months