CWB Premium Myth

[just_wondering]

yes you are right!
-all farmers (businesses) are not equal.
I will agree on that congrats

[Fransisco]

Why Willy I thought this was all about getting the best price and now you're getting all philosophical on us here.

You're letting your ideology show. Egalitarianism I do believe.

Okay lets hear it, why should everyone receive the same price? By what right? Why is it moral and ethical to take money from someone who is closer to a market and give it to someone who is farther away from that same market?

[Barleyman]

Willy- in the 1980's we were dried out, 5-10 on canola 12-15 on wheat. Further north the crops were heavy, no one shared with us then, nor should they. The crop zones south to north all have their advantages. Higher protein closer toa different market. Futher north it is generally 2-3 degrees cooler meaning much higher wheat and canola yields. Farming is changing for the better if we just let it happen and quit putting the brakes on with fear mongering. Oats are grown up north, for export and for profit, even in the peace river region. All on the open market, why not barley? Do we have to communize every thing?

[Barleyman]

I always chuckle when rabid pro boarders say things like;
"Just see how long the spot price will last, or, just see how quick they'll close the border, or, yeah but you live 20 miles from the border."

It is the system that is wrecked people! I see the spot price hangs around for a while down south. Why would it not here? The point is that the grain won't need to be physically shipped south when the CWB gets lost, it will mean we have our own system just like theirs, where a farmer can have a clue as to the value of their grain, and take advantage on any unsold product. It isn't that we'll ship our grain south, it is that we won't have to because the system will be as theirs is. Open, free, and bankable...

[chaffmeister]

<i>Anyone who believes that "spot price" is the price that we should get is dreaming. The spot price is used to get some supply but does not guarantee this price for ALL producers.</i>

Wilagro – The spot price is THE price. Everything is based on it – deferred prices, futures contract prices, bids, offers, everything.

But not with the CWB.

And to say that it is used to get <i>some</i> supply simply shows you don’t understand. Everyone gets the spot price or some derivative of it.

But not with the CWB.

And yes, the spot price will change based on nearby demand and the amount of supply hitting the market at that time. In addition, the market provides signals to either sell spot or sell and store (spot price plus carrying charges). Either way, you get the spot price plus maybe something to store.

But not with the CWB.

[padron]

Burbert, I'm not clear if you are disputing the statement that 20% of farmers produce 80% of the grain in western Canada but statistically that is very close to being true. Stats Canada report of the 87,388 farms in western Canada 16,897 (19.3%) produce 71.7% of the total revenues ($708 mil of $987 mil).

In fact grain companies are very concerned about the financial well being of farmers. If you aren't successful then neither will they be. The more money you make the more likely you are to avail yourself of their services. Profit margins for grain handling companies are pathetic versus the margins of corporations in any other industry. Try as they might to educate farmers on marketing techniques, contracting alternatives and input recommendations only an enlightened few have advanced into the 20% sector. Interestingly enough that 20% also represents individual farms whose annual revenues exceed $250,000.

[Lifer]

So the "premium" that the CWB offers is equality to all. The confidence that my neighbor is on the same sinking boat as I am. Thanks thats great. I think if no one wants to help fix the boat I'll get on a different boat.

A spot price is a conservative estimate of where the market is at. So this study is actually generous in some regards to the CWB.

[padron]

Thank you for that astute and intellectual response. It says all that needs to be said - about you.

[agstar77]

Believing in Rolf Penner and the tank, is pretty much like believing in the Titanic being unsinkable. Both beliefs require ignorance of reality and a belief in the Fairy Godmother. One price at one elevator for one day used to market the entire wheat crop. This would be funny if it was'nt so pathetic.

[chaffmeister]

No, what is truly pathetic is

one price for one <b>year</b> used to market the entire wheat crop.

[Fransisco]

Gee agstar, you just can't get the point. It's the huge difference in price that is being talked about not the price itself. It is that buck( and then some if you look at the pro) a bushel being left on the table that's the point.

You wish it were a fairy tale but the difference is very real, undeniable in fact. And if memory serves me correctly you are one of the people responsible for it.

[Lifer]

Padron maybe you can help me along a bit. Is not a spot price more negotiable then the fixed price contract? Calling it a conservative estimate may be a bit off. When selling canola the spot price is always negotiable so I assume it is the same for wheat in the states.

I don't get how my statement said all that could be said about me. Your statement may be more telling about you.

At what point do you do something different? I don't like the "premium" the CWB offers. So I reduce the acres of CWB grain on our farm because I can.