Haveapulse

[Zaphod]

I forgot a little piece of advice I got many years ago. Don't bother arguing with an idealogue. I'll sign off now.

[parsley]

Sometimes things don't have benefits. You just do them because they are right.

I am not going to word-haggle.

This is about principle.

You would have presented your same argument to Great Grandma. There was no benefit for you.

Parsley

[classicalliberal]

Getting back to the transfering of funds from the railways to the farm research groups, does anyone know what a revenue cap does? It is the exact same thing as price controls and they create shortages. It has happened many times in history. I never wonder why the local elevators are full because their railcars don't come, because the railways are hauling something else. I hate the railways local monopolies that they have in an area because you can't just get up, move your facility to another railway easily but I don't agree with the revenue cap. There must be a better way to keep the railways from raping us in the ass.

[wade]

Is there a revenue cap on grain only? Wouldn't a cap on everything keep things on a level playing field or should we pay more if we want the best service?

[charliep]

Don't know why but the following cartoon seemed appropriate after reading certain descriptive terminology over corn flakes.

http://www.agweb.com/Blogs/BlogPost.aspx?src=RubesCartoons-TalesfromaTwistedMind&PID=fa037d66-65a0-4c1a-8100-219cc36f368d

[haveapulse]

The pulse crop levy is a very good example of mandatory collection (of .005% from the pulse crops only) has had huge results. 40 bushel red lentils and green peas that are rivalling US quality is proof that funds targeted to a goal can achieve huge results and monetary benefits.

Obviously the majority of respondents disagree with the 69 million becoming a farmer shareholder ( yes, it you would have shares identified by your 2.23$/pmt) investment fund redirected from a pool of capital (that wanna bet stays with the WGRF and you all give them less grief than you have me), but I ask which pool of capital is going to add value to ag commodities?

Does it matter if farmers have shares in value add facilties? Obviously Yorkton is proof that farmers do not need to own shares in facilities to see value add occur. So is there any value to having farmers as shareholders to value add facilties.

Are value add facilities more likely to develope with local participation?
Ie Mustard Capital as a good example.

If not with the fund, to kick start projects then how do we get there?

Should we ask the government for tax credits, after all they do give them to the movie industry and it has worked to build Hollywood north?

Or do we wait and hope for another decade and leave the same agricultural eocnomy to our kids?

We were reminded last night at our project meeting by our advisor of the reality of Shaunavon, Gardiner Dam and Tisdale, all of whom failed to get their project off the ground due to the inability to raise sufficient capital.

In three seperate communities, porsperous communities I might add.
projects had to be cancelled.

Organizors after a huge effort of volunteer time had to admit defeat.

Given the failure of many community projects, the report card on community value add, I admit is dismall to say the least.

However, we do have great success stories as well; WIT, NWT to name two.
But elevators are somewhat easier to manage (thanks in no small part to the CWB!) than value add projects.

So I ask what are your ideas of how to get the value add band wagon on the road?

I redirect the energy of the debate to the queston is value add important to the future? And if so how?

[bluefargo]

Haveapulse

You pose many good questions

You mentioned the difficulty some communities are having raising money for new projects. This does't surprise me given the fact that many of the local investors in those communities were stiffed by the hog barn fiasco of a few years ago.

I think it's helpful to have local investment if possible.

The most important element in a successful project, in my opinion, is a good business plan. ie. the project must be there to make a profit.

To put it another way: a profitable project will result in community developement. A project done just for community developement will likely not result in a profitable enterprise.

[checking]

Have you ever watched a BBC or CBC version of the "Dragon's Den". Those capitalists seldom invest in an idea, or product without asking for a huge percent of the idea or product being pitched at them, and only if they see potential. Ideally they want to have it in the marketplace with signed orders, and proof that profit can be made. Only the lucky few get their money. The vast majourity are given sound advise to please don't waste any more or your time and personal money on theses bad ideas. They know, as you know , that only 1 in 10 businesses survive the first year. The farmer dragons are telling you, at least on this site, they don't like your pitch, or your idea of a mega project. Lower your aim. Take your refund, and value add to your own farm, if you are not succeeding at what you are doing now. Should the railways not prevail, WGRF will receive more of a dressing down than you have, if it keeps this money. I left it with $2000.00 of check off last year. I assure WGRF that will never happen again, if it doesn't do the right thing and turn the $60 million over to its owners.

[classicalliberal]

Agricultural policy in Canada is relatively socialist. We actually lose marks in the economic freedom indexes because of our various quotas, coercive marketing boards, tariffs, etc, but grain shipments to ports are the only thing that I am aware of that is still price regulated. It is likely political suicide if they try to change it.

[bucket]

I think the project at Gardiner dam would have went except they did not want to tap into investors using flow thru shares. The entire junior oil and gas sector was built on that. Why they just wanted my money so that I could deliver my grain to them instead of using my money and I get a return with shares or dividends - is beyond me. I said if you want my money - I want a tax break and a return - they didn't get my money.

Had it been set up differently - I would have invested.

They should of partnered with the craik feedlot that had some money and then the whole thing would have made alot of sense.

[gustgd]

bucket

Where could someone get some more info on flow through shares I was at a meeting last week and a fellow was mentioning them.

Are flow through shares available to Ag sector projects?

If not why not?

Is there lobbying on a provincial or federal level that needs to happen

[mcfarms]

Flow through shares using the resource model

An article from profit


There aren't many legitimate tax shelters for high-income entrepreneurs, let alone many that offer the potential for lucrative returns. But that's the promise of flow-through shares. Issued by Canadian companies in the energy or mining sectors to raise funds for exploration, flow-throughs give investors juicy tax breaks and the opportunity for capital appreciation based on new discoveries and rising commodity prices. "And when one of them gets a hit," says John Archer, an investment adviser with RBC Dominion Securities in Montreal, "it can really be an investment home run."

Here's how they work. Resource companies typically have huge upfront exploration costs and little or no revenue. That means they don't need the tax deductions they would incur as income-generating companies. To finance that exploration, they'll issue shares and allow the tax deductions to "flow through" to investors.

So, what kind of tax savings can you expect? Flow-through shares offer federal and provincial tax deductions of 100% of the investment. An investor with a marginal tax rate of 46% who purchases $10,000 in flow-through shares will garner a tax benefit of $4,600, cutting the real cost of the investments to $5,400. When the shares are sold, the 50% inclusion rate on capital gains will mean a tax hit of 23%.

Investors who purchase "super" flow-through shares (shares in qualifying junior mining companies engaged in grassroots mineral exploration) may be eligible for an additional 15% tax credit.

Still, flow-through shares are not for everyone. "The resource sector is cyclical by nature, and exploration is risky," says Archer. "You need to have the income, the assets and the fortitude to withstand a little portfolio volatility." If the exploration firm comes up empty-handed and the stock tanks, even that hefty tax deduction might not cover your losses. You're best positioned to take advantage of flow-throughs if you're in the top marginal tax bracket or have received a lump sum that will boost your taxable income in any given year, and have used up your RRSP contribution room.

Flow-through shares are typically issued in the fall to attract investors who are actively looking for last-minute tax deductions, or early in the year when people realize they've missed tax savings. While shares can be purchased from resource companies, they're more commonly purchased as units in a limited partnership, which operates much like a mutual fund. (Several Canadian firms operate flow-through funds, including Front Street Capital and Middlefield Resource Funds, both of Toronto.) The latter option makes the shares more accessible, as well as reducing the risk through diversification.

When choosing a fund, consider the portfolio's mix. Some may contain mostly junior resource companies with spotty track records, while others focus more on major publicly traded companies, says Ross Young, principal with Calgary-based Secure Capital Management, which specializes in alternative investments. Seek out managers who have a history of getting good returns, too.

Resource companies often issue flow-through shares at a premium compared with their common shares. "They take into account that there will be a tax benefit to the buyer," says Young. "So, if their regular stock trades at $1, they [might] issue the flow-through shares at $1.25." But if the premium is too high, it's harder to realize returns. Experts agree that when the premium reaches 30%, there's no benefit to investors.

If you buy a flow-through fund, examine its fee structure. Some funds charge a sales commission (typically, about 6%) of the original investment, plus upfront or ongoing management fees and/or a performance bonus. Other partnerships charge a small annual management fee (say, 1%) or none at all, and then take between 10% and 50% of the profits in excess of a certain return on investment.

Young warns, however, that flow-throughs have no initial liquidity. To reap the benefits of the tax deduction, you must hold the shares for 18 to 24 months, after which you may sell them. (In the case of an LP, the units are typically rolled into a resource-based mutual fund.) "I wouldn't recommend that flow-through shares make up any more than 15% of a portfolio," adds Young. "Not unless you're heavily involved in the resource industry and you only want to invest in an industry you know."