CWB asked to cash buy wheat at Camrose!

[TOM4CWB]

Well guys, I really slipped up in Camrose!

My freind who drove me to Camrose asked a real simple question, Why can't the CWB cash buy wheat during the crop year?

I was so tied up thinking about forward pricing, CWB basis "sort of" contracts and the new Producer Pricing Options, that I completely missed the question and the point of the question.

I will say it again, why can't the CWB cash buy wheat and barley during the crop year?

There is absolutely nothing in the CWB stopping this, and nothing in the CWB Act saying that Cash Buying would be bad for pooling, it was intended to be another option for selling to the CWB when C-4 was past in 1998!

Cash buying CPS and Feed barley would change things overnite for the CWB, because then we could do instant comparisons and watch what they do making them accountable to do a good job!

What would be so bad about that?

[chas]

TOM4CWB: Its so dam simple even I can understand it, I think. Must be something wrong with it though nearly everyone could figure out how that worked. There's got to be a complicated theory why it wouldn't work.
Lets make it clear though that a produce could still go the pooling system if he so chooses. My god that's a simple solution if they price you off the world market. Chas

[Braveheart]

During the Western Grain Marketing Panel hearings former commissioner Ken Beswick proposed cash buying of feed barley and was chastized and alienated for what appeared at the time to be a sound idea.

Cash buying of CWB grain is possible legislatively since the passage of Bill C-4. It is also highly unlikely given the current crop of pooling nursed directors. But, some major questions arise as to why one would really want it.

Cash buying would have been a way for Richard Gray to truly benchmark the single desk vs the open market. Otherwise he is benchmarking pooling (thru the single desk).

But the question that always arises when one considers cash buying and the CWB is, "why would you try to re-invent the open market, and only offer a fraction of the tools the open market provides"?

Would a commodity futures market offer price discovery and risk management? What would the basis be and would the farmer always be at basis risk? Would farmer owned value added ventures be any better positioned? Would the CWB deduct money from farmers to form a contingency fund to backstop their trading mistakes? They will happen. Would CWB cash trading add further adminstrative costs to the CWB already burdensome costs? Would cash prices be different in different parts of the prairies taking away from the equitable treatment of producers the CWB always says it stands for?

To me there are more questions than answers when the CWB tries to re-create the open market.

Braveheart

[bbrindle]

Braveheart,
The Western Grain Marketing Panel actually recommended that "feed barley should be placed under an open market system, not precluding the CWB for both the domestic and export markets as soon as possible". In other words, an open market system (so the domestic and export markets would arbitrage) but the CWB could perhaps spot or cash buy too. How does that sound?

By the way, the Panel also considered this an urgent recommendation. That was in June 1996, almost 5 years ago.

[AdamSmith]

The Western Grain Marketing Panel report was released July 1 1996. After hearing the recomendations to 1. place feed barley under an open market system and 2.Unlicenced wheats should be exempt from the CWB system. I walked out into a barley field and with my arms raised to the heavens I shouted "Free at last, thank God Almighty, I'm free at last.

That was five years ago and I couldn't have been more wrong in my life. A lot of water has flowed under the bridge since 1996. Farmers attitudes towards the CWB have dramitically swung against them. In 1996 I could have been counted as one of those who while wanting choice still wanted the CWB to be preserved for those who wanted to use it. Today after seeing all that water flow under the bridge I couln't care less if the CWB survived or not.

I think if you were to have a 2001 version of the WGMP I think you would find alot more support for an open market system for wheat and barley and the CWB being stripped entirely of it's regulatory functions.

Today farmers will say let it compete without any special powers, if it survives and thrives, great. If it crashes and burns, that's fine too!

In 1996 even the WCWGA would say the survival of the CWB (as a voluntary marketer)is essential, I don't think they would put up to much of a fuss if we woke up tomorrow and the CWB didn't exist.

So Tom4 having the CWB cash buy barley or wheat might have been what the doctor ordered in 1996 but not in 2001. The CWB had the opportunity to be proactive in 1996 but they retrenched instead. The 2001 farmer wants freedom from the CWB and pricing alternatives from the CWB just won't cut it.

AdamSmith

[charliep]

Tom4cwb - As a point of clarification, are you suggesting the ability to lock in a delivery commitment at the time of contracting (eg. contract 100 t CPS wheat under Dec. MGE converted futures price combined with the commitment this wheat will be taken some time in Oct. or Nov.) or a full cash market where the CWB would have a daily cash bid based on the fixed price contract for close by delivery?

[TOM4CWB]

CWB Cash pricing;

One of the CWB claims is that it takes no margin and has no cost, other than operational costs, and doesn't need a profit to do business.

With the advent of the Producer Pricing Options now this is no longer true.

The CWB must now operate a contingency fund, and this pool of cash is risk money to cover mistakes!

How much money is going into the Contingency Fund ?

The CWB refuses to tell us!

Why should this be commercially sensitive information?

If this is Commercially sensitive information, then that means that the CWB is using the Contingency fund to distort the Wheat Market?

How does the CWB avoid the contingency fund, if it is to provide pricing flexibility?

Shortened Pooling periods are the first step.

This can even be a pool period of one day!

What a simple idea!

1.Decide to sell wheat.
2.Sell wheat;
3.Find out when wheat can be delivered;
4.Get paid 100% upon delivery!

Tom Halpenny and Art Macklin say it can’t be done.

Funny, every time I sell any other kind of non-board grain, they can figure out how to mange this simple system!

Instead the CWBER’S go into a long diatribe about special times of the year to sell, and cash selling wrecking the pools. Excuses Excuses.

Talk to the Canola crushers, and ask them about historic marketing patterns, and how the Chinese in 2001 have blown these old patterns all to pieces!

The only thing that stays the same today is change, and this seems to be the CWB’s biggest downfall, they do not want to change, or understand change, it seems!

If there were certain times of higher prices, it would sure be tough to tell from recent selling patterns!

Tom Halpenny and the CWB forgot about the big October rally that the CWB conveniently failed to sell into, because they believed the wheat market was going higher!

This has conveniently cost CPS producers millions and really hurt Alberta feed wheat prices!

A CWB Speculator is still a Speculator, and if a person dislikes speculators, then the CWB should be one of their dislikes!

The CWB Cash sells every business day of the year, there is obviously therefore the ability to cash price daily!

When will we be allowed to see the world market price through the CWB every day, and be able to sell any day that we feel is appropriate?

You know, like canola, and peas, and lentils, and domestic feed barley!

[charliep]

The reason I asked the above that the current PPO contracts recieve the same delivery treatment as someone who chooses the normal pooling alternative. What I heard yesterday at Camrose is that farm managers would like the ability to obtain a delivery commitment (and from there a cash flow commitment based on a delivered grain/getting paid) at the same time they make a pricing decision under the PPO. How important is equitable access to elevator/transportion system? What is equitable access?

[Braveheart]

Brenda Brindle, what the WGMP actually recommended was much further than Beswick had promoted. They were no doubt influenced by some excellent work done by KenAgra Management Services.

I liked the WGMP suggestion and although it was an urgent suggestion at the time, I think its' importance has only grown. In 1996 there was a dynamic feeding industry in the northwest corner of the continent. We find that now, in 2001, there is also a dynamic, feed deficit area in Manitoba with the explosion in hog rearing. The price transparency and arbitrage that the recommendation would have brought to feed barley would have improved the consistency of supply and price and risk prospects.

But alas, the gov't chose to let KenAgra's mindset A and mindset B continue to duke it out in the political ring.

Braveheart

[TOM4CWB]

Charlie,

Many farmers in east central Alberta are really hurting over how the CWB has handled CPS over the past 2 years.

When a farmer needs $200/ac as was clearly identified yesterday, being able to make cash flow work is critical.

It is fine for us to praise the spring advance intrest free program, but what has it done for us?

In the fall it doesn't help cash flow if we cannot deliver grain and actually get some money in return, instead many farmers can deliver just enough to repay their advance, but can't get any more cash flow!

The CWB intentionally put off CPS sales and this is squeezing many to the point of desperation, and then they must sell their CPS at 10-20% below human consumption values just to survive.

We all hear that the CWB was supposed to stop this type of blackmail, instead they have trapped us.

This was compounded when the CWB refused to deliver CPS to Iraq at prices that would have netted $3.35 at Camrose in October.

We have seen Portland feed barley prices at $165.00/t for many many months, which should net an Edmonton feed barley producer going into a large 100car spot about $2.50/bu. The price in Edmonton has not even come close to this level domestically.

In Canola, the quotas have been all removed, and I haven't even heard a peep from the NFU complaining about delivery problems!

What makes you so sure when a farmer can sell any time to the non-board market anyway, that there would be a big problem, especially if the cash price regulated the flow of the grain to the CWB export market anyway?

As long as farmer's who wanted to pool could do so, why shouldn't have we allowed the 1 million tonnes of CPS to be sold in October, at a cash price of $3.35?

The CWB didn't want the sale, why?

Were the CWB ordered to keep feed wheat CPS inside Canada, so domestic livestock could not run out of feed this summer?

After what we saw in 1996, anything is possible, isn't it?

[parsley]

Trouble with cash advance guys?

The following is quotes from the Standing Committee of Agriculture. Notice that Michael Halyk is your CWB elected Director-Bureaucra. ( David Anderson is an Alliance MP):

QUOTE
Mr. David Anderson: I find it interesting that some of our small towns have
been able to put in processing plants and specialty crops. They're providing
lots of income, lots of jobs in our communities and wheat is absolutely dead
as far as anybody being able to develop anything with it.
You can defend it all you want but the political part of it comes as much
from your side as it does from anywhere else.
My second question is, you wrote in here in the beginning, that the CDB has
been criticized in the past for operating like a government bureaucracy. We
have people going into the fields in the next week, around my area, and I
think we've seen another example of bureaucracy here over the last couple of
weeks with the cash advance program. I had people phone me yesterday, the
forms are not even out. You come to a deadline when you're supposed to be
able to apply, the forms are not out, they called in about it, they can't
e-mail or fax them, that can't happen they were told.
So you're sitting there with a program that has been very well advertised as
kind of the star program that the government's got and it can't be
administered properly enough that people can get their money before they
start to seed their crops.
Mr. Micheal Halyk: I assure you, sir, you're asking a good question. I think
that question's probably best asked of the federal government. The cash
advance program is the federal government's program. We're the
administrators of that program.
I, too, checked at the local elevators yesterday to see if the forms were
there because April 2, or we were advertising on our web site, was the date
for the kick off. The forms weren't all there, upon checking further, the
follow up was that there were problems within the federal government in
getting the exact wording on those forms so that they could be printed and
sent out to us.
I apologize, sir, but we're only the carriers of the word administrators and
the question is best sent over to the federal government.
Mr. David Anderson: I know what the problem with the wording was. It was
between the two and the five, they didn't know if it was $20,000 or $50,000,
that's what we were told the difference was. They couldn't get the forms out
in two weeks, or you couldn't get them out in two weeks, because they didn't
know if they should put a two or a five down and that's unacceptable.
Mr. Micheal Halyk: That's not us, sir, we only are the administrators of
that program. END OF QUOTE