CWB supporters please help me out with something

[stubblejumper]

bucket no wonder you don't understand the CWB you don't even understand basic math.

[chaffmeister]

Jag: Instead of selling 60% of your grain at $8, how about selling 80% of your grain at $8 ?

Or 100% at $7.80?

How do you know holding back 40% of the crop is going to push prices up 2 bucks?? Where does this math come from? Theory?

Maybe holding back 40% does nothing at all to prices because of competition. If all you’ve done is allow someone else fill the sale from Argentina, Australia or the US, you haven’t moved anyone along their demand curve, regardless of their price elasticity. (Translation: the price won’t go up.)

Maybe holding grain back actually drops the value of grain at home because you and everyone else will be looking to move grain – like bucket suggested.

Fact is you don’t know what the effect is and neither does anyone at the CWB.

Stop dreaming.

I know my last post was long and complicated so here’s the short version. The CWB can’t do what you give them credit for. They can't manipulate global prices and they can't price discriminate in a way that maximizes farmer returns. It sounds great in theory but absolutely, positively impossible to do in real life.

[bucket]

stubble

Yep checked it with the calculator 60% of 8 bucks is 4.80. That's four dollars and eighty cents. There is nowhere under the cwb that you can sell 100% of your durum and get 6 bucks. So you have to do weighted averages. I understand math very well and I understand cwb math as well.

The only way that you can 100% of your durum crop under the cwb is if (and I suspect you use this practice) you overcontract by the right amount. And since you have good connections with the board I suspect they told you they were going to be at a 60% call on the A series, so for every 100 tonnes of actual production you signed up 166.65 tonnes to cover off the 100 to deliver. No penalty. And your durum will recieve 8 bucks.

Its not rocket science. And my math is correct.

[Fransisco]

Finally, a single desker. Stubble can you please answer vvalk's question?

[bucket]

stubble

An 8 buck PRO promises you nothing. The only value in your grain you have sold to the cwb is the initial and maybe an interim.

You have to look at the real costs the cwb impose on western farmers - free storage, additional bins, lack of 100% cashflow on stored grain etc.

[Jagfarms]

Bucket
I know that 60 percent of 8 is 4.80 but nobody knows what the price difference would be if the cwb would sell 100 percent or 60 percent of our grain. I would have to think the price would be lower if they sold 100 percent vs 60 percent. If the price was high and they can makes sales they would sell 100 percent. I was just using $8 and $6 as an example.

[Jagfarms]

If a farmer has 100000 bu of grain and sells 100 percent at $6 that is $600000.
If they sell 60 percent at $8 that is $480000. The last 40 percent could be sold at $3 that adds up to the same amount. If the last 40 percent is sold in the next crop year for well over $3 we are making more $.

[Fransisco]

Jag, it would depend on which way the market goes. It could just as easily be the opposite of what you just described. The big thing is that you don't know and it's all out of your hands, with the board system you have no say and no choice.

[cropduster]

Jag you`re still stuck as BINDERPILOT !You said "if the price was high they(CWB) would sell it all".So what happened last year?The price was high and they sold it all??I think not!The total prairie carryout was as high as ever.The contingency fund got trashed because the "smart" guys got caught `holding` waiting for it to go higher!!If you read what`s going on in Australia ,they`ve never had it so good with competitive buyers.AWB is trailing in the wake of the sharper buyers,tonnage proves it!We need "CHOICE" here too! NOT different programs from the same old dog!!

[Fransisco]

Jag you said, "I would have to think the price would be lower if they sold 100 percent vs 60 percent."

I think you're also making an assumption here that the board controls enough grain to be able to affect the price. It doesn't.

We have 4% of entire worlds wheat production and 14% of the traded production. Do you really think that holding 1.6% of the worlds production, or 5.6% of what's traded, back is going to have any major impact on what the price is?

[chaffmeister]

Excellent! We’re getting somewhere. Jag agrees that “nobody knows what the price difference would be if the cwb would sell 100 percent or 60 percent of our grain”. I’m guessing that includes the CWB staff.

Where we’re still failing with him (and other CWB supporters) is that he still “would have to think the price would be lower if they sold 100 percent vs 60 percent”.

So Jag – if you can sell 60,000 bu at $8, how do you know that you couldn’t sell 100,000 at $8? Or maybe $7.80? If you don’t know what the price difference would be (if any), how can you even suggest holding grain off the market is a good idea?

60% at X, 40% at Y --- why even talk about it because its all theoretical.

THE CWB CAN’T MAXIMIZE RETURNS THROUGH SILLY MATHEMATICAL GYMNASTICS.

[Jagfarms]

Some farmers want to market their own grain some do not. Some are happy with the cwb some are not. The way it looked in the last cwb director election there is more farmers that are in favor than not. The way it looks like on this forum is most are not in favor of the cwb but this forum is a very small percentage of the western canadian farm population. For my self some years we have 11 different crops on our farm and I am in favor of the cwb marketing our durum for us and I can concentrate on marketing the other commodities. A lot of farmers do not want to be bothered marketing their own commodities and only grow grain that the cwb markets