marketing barley

[sask]

With the CWB gone, what are your ideas for marketing
barley?

[parsley]

Are you wanting to sell?
Malt barley or feed barley?
Quality?
Volumes?

[nakodo]

A reply from one of the participants in the Red Deer meeting last week

A look forward at barley marketing in the post-single desk era.

First was John De Pape - whose new company "Integrated Malt barley management" is poised to take a lead in exporting malt in the post-single desk era. John talked about the potential in the market place saying that "if every Chinese person were to drink one more bottle of beer per year, it would take 1 million tons of barley to meet that demand." He spoke about Australia's pending drought and how Asian markets who are dependent on Australian malt barley will look to other sources if the Australian crop isn't sufficient. Comparatively, Australia and Canada produce about the same amount of grain, but Australia exports a whole lot more. He said there is room for Canada to increase its exports also. He predicted that Canadian and US markets will arbitrage in the post-single desk era.

He outlined some opportunities as: Higher selection rates, farmers would be paid for what is grown i.e. akin to a cash crop, shipping would spread out over the whole year, more transperency in pricing, copntracting directly to the end user, and long term contracting. In short, he said that in the post-single desk era: non-board barley would be like canola! Some outcomes he sees are: increased trade and arbitrage between can and the Us, more niche marketing, and increased private investment in plant breeding & varietal development

John's concern is that any contracts that are negotiated in the post-single desk era must have teeth on both sides of the equation. Teeth for such things as specs, storage, etc. If farmers aren't vigilant and insist that these contracts have teeth, they might end up shorted.

Next was Errol Anderson of Pro Market Communications. He talked about futures prices and the state of the marketplace vis a vis corn in the US. He stated first and foremost that the CWBfs 8% market share of all barley sold is PEANUTS. But he also said that the political will behind green (bio) fuels in the US is UNSTOPPABLE. Given that reality, corn is very volatile, and so too is anything else that can be used as a feedstock. Not only that, but the Chinese are America's bank right now and the Chinese economy is growing as fast as Ft. McMurray - meaning that there might be a crash at any moment. He argued that the USDA report on seeding acres (that predicted the largest corn crop since the end of WWII) showed everyone the ceiling in the barley market. He predicted that barley and canola acres predicted in Canada may have been a little conservative (especially given wet conditions & the resulting late seeding...) Overall, he predicted that barley is a sound investment and that farmers would react accordingly and continue to plant more and more barle

Alberta Ag. spoke about the legal implications of the changes to the Wheat board act. they pointed to the gazette and informed the crowd that until May 21, the government is collecting feedback on the changes to the act and after May 21, they may or may not make some additional changes. After that time, it is set to become law on August 1. Part IV of the act only removes the "single desk" for barley. The legal instruments to allow the board to continue to market grain in the post-single desk system REMAIN. As potential legal issues, he pointed out that YES, the feds can do this, but that YES, it is challengeable. The first challenge to the act (in 1993?) failed, but the judge said "this cannot work AS IT IS, but IF I WERE TO DO IT AGAIN, IfD..." and it looks like the feds have taken that advice. SO, what happens if it goes to court? Well, just as in the R-calf situation in the states- anyone CAN file an injunction, moreover, if there is a sympathetic hearing with a sympathetic judge, the injunction may stick (if only temporarily). However, there would have to be some pretty powerful evidence as the amendments to the regs are fairly watertight from a legal standpoint. Moreover, any federal judge who saw fit to grant the injunction would do so after a government who is currently sitting has deemed the regs satisfactory.

Last was Renn Breikreutz (sp.) a policy guy from Alberta Ag. He spoke of the requirements to physically haul grain across the border. He said that anyone wishing to export barley across the line would need an export number, a phytosanitary ticket from CFIA, valid driver's license etc (just Can. requirements). However, he encouraged he assistance of a custom's broker as the US requirements are lengthier. Load restrictions, bio-terrorism laws, importer permits, bonds, licenses, advanced notice of arrival at the border, etc, etc, etc.

[BennyHin]

...If John De Pape said this... if he said that, blah blah blah.

So he is starting his own company and trying to extract some brokerage from farmers by selling selected barley.

Looks like he realized selling barley is more profitable than growing it. No wonder he hates the CWB.

Good luck in your venture John.

Anyways, back to John D's quote that if..."the chinese each drink one more bottle of beer"..blah blah blah... barley farmers will see increased profits.

What nonsense, how naive is this guy?

For 50 years we've heard quotes such as "If we increased the price of bread and the price of a bottle of beer in Canada by 2 cents, Cdn wheat and barley farmers profits would double. This has become cliche.

How many times has bread and beer increased in price in the last 50 years?


Any economics 101 grad would quickly come to the conclusion that an increase in retail prices or overall demand WILL NOT translate into increased farmer's net returns over the long term.

An increase in retail prices comes as a a result of a monopoly seller forcing his prices up to increase his profits or to pass on his increased costs to consumers (i.e CN an CP rail, examples of two useless, garbage companies, not much better than Enron, Worldcom etc).

In fact as demand increases farmer's net returns decrease as increases in agriculture commodities are quickly capitalized into variable and fixed costs (see the ethanol and corn story).

Finally:
Any of you value added advocates out there such as Parsley take note:
Farmers who want to capture the value added dollar would be better off to sell/rent their farm and concentrate on wholesale or retail end of the business beyond the farm gate. Very few farmers have the skills or the time to both farm and sell retail.

And if you turn out to be a successful retailer, you are wasting your time growing grain.

After all, most of the time you are spening lots of time and labour producing raw commodities with little or no profit on a year to year basis.

And before Parsley goes on a rant, please tell us how many organic farmers such as your self are too many? What level of organic production will compromise the viability of your business?

[chaffmeister]

Feed barley marketing - unchanged. The only difference will be that at times, the local elevator company might ship it to Vancouver for export instead of to Picture Butte. You might also see more opportunities to haul some truckloads across the US border.

and remember - starting with the Oct contract, the WCE barley futures are based around Saskatoon (not Lethbridge anymore). That means a shift in both futures and basis - futures down and basis up.

Malt barley marketing - once we get through the current transition - waiting for the comment period to end (May 21st), waiting to see if the CWB actually does step away from the barley market - we'll see more companies come out with malt barley bids. So far, Rahr Malting and Paterson Grain are the only ones with new crop bids (that I know of); Cargill has been signing up production contracts for various varieties, but no price attached. Once the market hits its stride, we'll see practically every company out there with bids - as the market matures, I suspect we'll even see premiums paid on deferred delivery contracts - in other words, you'll get paid to store. Also, the malt premium won't go away - it will start off big enough to attract contracted acres and remain big enough on a spot basis over spot feed markets to keep the malt houses fluid.

And it also seems the outlook for this upcoming crop year is pretty good. Expect to see some pretty good prices but remember - the cure for high prices is high prices. Watch Australian and European weather like a hawk. They will be the keys to the 07/08 crop year for malt barley.

[cottonpicken]

Barley price is going up with or without the cwb.



IMO

[parsley]

Tell you what BennyHinn, cotton and I will discuss it over a beer.

When you feel your ears burning, I', either on a rant, or we've ordered another beer.

cotton, shout me at:
threepthitch@hotmail.com

[parsley]

nakodo

The Feds have taken barley out of Part IV, which is the licensing part of the Act. Chatenay and Strankman got thrown in jail because they didn't flash a Wheat Board license at Custom officials.

August 1, you don't need a CWB license for barley, any more than you need a CWB license for soybeans.

That being said, barley remains in the Part III marketing part of the CWB Act.

This means that the CWB can still buy the grain BennyHinn offers to them, pool it, and send him all thoses lucrative interim and final payments.


The CWB NOT licensing barley, yet continuing to buy barley is what the regulation's ammendment will do.

Parsley

[chaffmeister]

Here’s a little quiz – see who can get the answer before BennyHin. What’s the difference between these two comments:


John talked about the potential in the market place saying that "if every Chinese person were to drink one more bottle of beer per year, it would take 1 million tons of barley to meet that demand."

AND

Anyways, back to John D's quote that if..."the chinese each drink one more bottle of beer"..blah blah blah... barley farmers will see increased profits.

The fact that BennyHin doesn't see the difference explains a lot about the nature of the rabid-CWB-supporter.

[charliep]

Interesting enough the Chinese malt barley numbers are supported by the CWB own long term grain price forecasts (see pages 17 and 18).

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

Also would be seek comments on the current crop year. The CWB does have monopoly power in the world this year given both Europe and Australia had barley production problems. To the end of March, Canada has exported 268,000 tonnes of barley to China (all malt barley) versus 457,000 tonnes in March 2006. Perhaps a good indication of why the current CWB can't compete in an open market. See page 12 in the CGC monthly exports.

http://www.grainscanada.gc.ca/pubs/exportmonth/2007/exports07-03-e.pdf

Perhaps a challenge for me will be to get a better understanding of how the malt barley market functions and the quality needs/pricing points for different customers like China.

[Burbert]

charliep, Sounds like, you and a group of Alberta, politicos, should take a fact finding trip to China, and find out what is really going on, relative to the malt barley market. GREAT OPP for the almighty
AB Commiss to get on board and straighten things out, once and for all. Take some barley muffin and cookie mix with you and get them to eat that stuff. Win, win situation no doubt about it. Nothing better than gov't fact finding missions, money well spent!!!! At the same time you could instruct them, in how to grow & market their own quality malt barley. Course they'll have to set up a Chineese Barley Commiss, at the same time. Only way to go, lets lead by example, after all, we have a PLAN, don't we?

[nakodo]

actually the province of Alberta is shutting down their malt research program so we will not have to worry about malt in the future.

[TOM4CWB]

Charlie,

It is obvious that the CWB Monopoly in 06-07 Malt barley did not work. The CWB sells barley at prices far below fair market value, then expects growers to fill substandard contract prices they did not agree to in the first place.

To have the CWB sell 07-08 barley in the same substandard manner... and expect growers who actually must use this system... to be satisfied... is an unreasonable and offensive attitude.

IMHO CWB Monopoly supporters have a death wish for the CWB... if they see nothing wrong with the actions of present CWB managers.

[charliep]

Burbent

I take it you are okay with the CWB spending your money to do market development work? How would you measure the CWB performance in this area?

[mb_rancher]

As for malting barley there is a malting company that has opened a closed AU elevator not too far from us and they are buying up lots of malt barley for a damn good price.