Undistributed earning/transfered to contingency fund

[charliep]

Apologize for too much input but I find the annual report something like reading a Harry Potter novel and trying to figure out the mystery.

On page 46, 49, 52, 55, 57, I look at the second last row and see the following title. Transfered to contingency fund/undistibuted earnings. Does undistributed earnings mean that when the contingency if finally the participants who delivered into the 2007/08 pooling year will be repaid or does it mean the CWB as corporate entity will capture this money. If you look at the CWB balance sheet (p. 74), it is also shown as undistributed earnings.

[charliep]

By the way, the $25.5 mln dollars is not on the balance. That money has been transferred/no longer exists.

[charliep]

Error alert

Does undistributed earnings mean that when the contingency IS finally REPAID the participants who delivered into the 2007/08 pooling year will be repaid

[charliep]

Sorry for the ranting but you have the choice not to read. The reason I know is because of a screw on another posting. Mistakes and dead ends sometimes take a person to interesting places.

I find the distribution of PPO pain interesting and perhaps why farmers should push to have their debt repaid on money that has been left behind to fund the contingency fund losses.

Wheat ex durum - $2.57/tonne (page 46).

Durum - $1.01/tonne.

Malt barley - 33 cents/tonne.

Pool A feed barley - $51.91/tonne.

Pool B feed barley - $7.04/tonne

The arguement was that the over payment by railways should be given back to the farmers who delivered crops. Why not the revenue from these undistributed earnings.

To the original point, it would seem to be that barley is paying an unfair share of the costs of the contingency top up. This would seem to reflect an arguement that there transfer of money between pools which if I am right is forbidden.

[charliep]

Now I'm mad.

Anyone who delivered to the feed pool (bless cause you are a true blue CWB supporter) contributed $2.5 mln to the contingency fund on about 200,000 tonnes (250,000 where delivered under of the PPO programs). You paid about $12.50/tonne in the black hole.

Annyone who particupated in a feed barley PPO resulted in a net profit of $895,000 - this portion of the PPO risk management was on the plus side.

To add insult to injury, the CWB made $20 mln cash trading against both its own pooling account and the domestic market which again was transfered to offset losses on the PPO wheat futures risk management account.

Is there something I am getting wrong here?

[charliep]

One other comment. If you used an EPO, you did not pay into the contingency funds losses (only individuals who delivered into the pooling system).

Your generosity should be noted from page 63 in that you contributed $3.1 mln to offset the losses on the FPC and DPC. You have made this contribution every year. To add insult to injury, you contributed $9 mln versus a net hedging activity of $4.2 with $1.2 mln taken up by interest and administration. The CWB return on investment is very high on this program and again being used to offset losses elsewhere.

[dfarms11]

I would just like to thank you Charlie for checking up on the CWB for all of us!

[cropduster]

Great charlie,now you`re starting to realize why the WBGA guys are torked.....and then to see Hill`s attempt at realignment...............

[haveapulse]

Regrettably Charlie many of us understand your mad. We are like caged animals really, no choice, no key, we are fed by the CWB and have no recourse. The board does but they have to date chosen not to act.

So, I ask which should make us more mad:
the transfer of accounts, the loss of money or the way it has been reported to us? Or the fact huge bonuses were given, and the board of directors signed off on this.
Or the fact that no one on the board has called for a total review?
Or the fact that no one on the board is willing to issue export licenses as the only way to really sell open market grain? Or the fact that it has been ever so since 1945, and this is just another story to add to the litany of opportunity lost?

Pray tell?

[charliep]

Actually just trying to follow the money as reported in the 2007/08
annual report. Lots of information and will be more in the future as
companies in general (not just CWB) are forced to report their
derivative activities more fully.

Also, allows us to test CWB board of director comments. For example,
some B of D are indicating the $25.5 mln dollar transfer of pool
revenue will be repaid (perhaps minus the $7.5 mln surplus removed
from the 2004/05 crop year contingency fund). A question is why this
value is not included in the balance sheet and income statement
similar to the $29 mln and accounted for accordingly. If they money is
not accounted for, where is it and what process would bring it out - a
simple decision by the B of D to pull out the money in another 3 to 5
years? What is the policy? Is it consistent and documented?

[parsley]

Okay, let's run our imaginations with complete abandon this morning:

Could 'the cash/cache' be on loan, for example, to a political party with no money and lots of debt, just for awhile so's farmers don't notice, or how about this one.....maybe backing an AE's financial fiasco for a spell?

Or what about this one...a rogue employee like the one in the bank in England, playing with derivitives?

My my, my mind is fertile this morning. Pars

[chaffmeister]

Let's go back to Charlie's rant about barley. In particular, the $20 million made in cash trading.

Of the 1.2 mmt of barley sold in the CWB’s “cash trading mechanism” about 850,000 tonnes were what the trade did without the CWB.

The CWB snagged $4.00/t from the trade to allow them to execute once the open market was closed.

That’s about $3.4 million out of the $20 million the CWB made on barley in that account.

That leaves about $16 million on the 342,645 tonnes the CWB sold.

It's easy math - the CWB made about $48/tonne on their 342,645 tonnes of cash trades.

And this went straight into the Contingency Fund to take the sting out of the losses from incompetence in hedging.

All you anti-multinational haters - in a voluntary market, there's no way any one firm could take that much out of the market just trading.

How's it feel getting "taken" by your Royal Canadian Wheat Board?

[Burbert]

You's guys, including gov't agent Charlie, should refer the matter to your accountants. They could tell ya, whats goin on. Better yet refer to yer brokers, cause after all, theys the guys that want to rid us a the board. I'm sure they'll giv yas an impartial answer to you worried farmers! Ben taken advantage of lately, has the open market failed ya, never fear, once you's is truly free, you'll either all be rich or broke!!!

[TOM4CWB]

Burbert,

For the CWB 07-08 Annual Report to back up statements that the 'single desk' gains us a premium...

when Cenex (US Northern cooperative) makes a billion dollars... with 60% of its grain handle for exports (in direct competition with the CWB)... while providing growers premiums much more than the CWB could attain... (by CWB's own admission... and shutting down of DPC program) while US growers are using a much more costly US grain handling system...

The CWB CLAIMS defy all logic. The CWB DISCOUNT prices our grain. That is the only conclusion a reasonable person would find. C. D. Howe Institute study backs this up.

I don't want you to encourage the CWB to speculate on futures exchanges... using hedges... to lose my families money.


Please explain where my logic is faulty... Burbert.

Do you truly believe we would all complain if the CWB had made a Billion dollars on hedges... and lowered the cost of doing PPO contracts by the extra $60/t they charged us... while at the same time providing much higher returns for those using the pools in 2007/08?

If this had been the situation instead of losses... it would have been the first time in history... the CWB performed up to its claims.

[chaffmeister]

Tom - you make a good point.

Should the CWB speculate?

Since you can do that yourself, I think the answer is pretty clear.

The CWB almost got it right when it decided to set a Pricing Pace for wheat - it should provide average futures pricing over the crop year for those that want it and those that don't should be free to price at their own discretion.

And forget about the PPOs - what I'm suggesting could be done within the pool accounts.