Farmer Forum Mtgs.

[silverback]

Anybody actually attended the cwb lunch tours?

Thoughts so far?

I don't imagine "upper" management would attend such small town events?

[charliep]

My report. Others are in a thread further down.

I attended the March 19 CWB district meeting. Jeff Nielsen, direct region 2 and Jerry Willner, FBR chaired the meeting with Bob Cuthbert, senior manager barley sales and Jim McLandress, Corporate Lawyer in attendance. About 40 to 50 people came the meeting with a good split of views and a lively discussion at points. Suspect 1/3 supported single desk, 1/3 open market and the remainder somewhere in the middle.

Agenda was a Director update and a market outlook with questions. No real review of CWB PPO programs as had been the case in past director meetings.

The director report highlighted the 10 anniversary of the changes to CWB structure and the achievements since then. Jeff highlighted the role of the non elected directors and their importance. He also highlighted the good work that Ian White (CEO) is doing.

Some discussion on US spot versus Canadian pooled prices. A note that the opportunity cost of capital was different for everyone in the room. Both lead to a heated discussion.

Information on the contingency fund was presented but no real detailed questions. A little more discussion around the discretionary trading with an explanation of what this process is meant to accomplish provided.

As a point of clarification for me, they defined the term MD&A in the annual report. Management Decisions and analysis.

Market outlook presented. Smaller world wheat crop forecast 2009 but still second biggest in history/slight build up in carryover. Highlighted the new crop PRO ($6 ish/bu CWRS in Alberta, $5 ish CPS/CWRW/SWS). Domestic market will again will the place to sell feed barley. Lots of high quality western Canadian potential malt barley in 2008/09. Cash plus in 2008/09 about 375,000 tonnes uptake. Average payout 93 %. Strong start to cash plus in 2009/2010. BARI (Budweisswer guys) the most active user to date with initial prices early on close to $5/bu for 2 row/$4.50/bu 6 row. Current initial prices down about 50 cents/bu. Note I use initial prices - don't know what to call given a likely 25 cent/bu top up. Highlighted the discussion with industry over the act of god clause - something farmers need to be aware in the contracts and have a discussion with their malt barley buyer. Noted the impact on the market of purchase of Anheuser Busch by InBev - different cooperate model.

Discussion about contract and contract calls noting the 80 % acceptance on the A series and 40 % acceptance on the B. Younger farmers highlighted the impact of this on their ability to cash flow their grain sales. Discussion around the current grading system which is based on visual grading factors. Comments on the fact some feed wheat may have milling quality characteristics but be down graded because of appearance at the low domestic feed price. Local farmers from Europe talked about the systems back home which is based price more on milling characteristics. A question about where the revenue from PPO contracts that farmers were not able to fill because of quality/production shortfall go in the case of prices going higher (pool or contingency fund) and why payment was not made to the farmer when prices go lower than their contracted price (why the farmer asking used futures versus CWB PPO programs).

A good meeting although few really probing questions. The political side was what got people stirred up.

[charliep]

Oops. March 9 - not 19.

[charliep]

I apologize but in things like recreational hockey where the young guys with high testosterone are the ones who are chippy and push outside of rules. Older more seasoned players sit back and play the game to the best fo their ability.

Strange at CWB meeting it is us old guys (I'm there so can't criticize) are the ones who engage in the political arguments and it is the young farmers who ask the probing questions about things that impact their business. Maybe be an unfair comment but it may also provide evidence about where things are going in the future.

[Jeff Nielsen]

Good overview of the meeting thanks Charlie.
As it did seem to move more political and emotions were high, I do regret for allowing myself to fall to that level and participate. What has happened in the past is the past. My goal as a director is to encourage the CWB to look at all avenues of change and marketing options. Perhaps some won't like that, yet things have to happen and we all know that.
Moving forward with sound business decisions and producer driven objectives will continue to see the CWB remain a strong marketing option for all producers.
The meeting I had in Bassano on Tuesday was more interested in what the CWB is doing, the annual report and the future. Although there were some strong monopoly supporters in the room, no grandstanding took place.
In one on one discussions after the meeting, the conclusion is that we need a strong BoD to work towards the changes that are ahead of us and put aside the political retoric.
I thank all those who attended.
Jeff

[bucket]

Jeff

So lets start talking about the future and your impact on the board.

There is currently a new program available for 400 farmers in the red river valley. Lets share the pain and move their grain. How does this program impact the overall western canadian grain movement for the next three weeks?

Are these not the same producers that got those fusarium premiums?

Does this mean we are going to plug the system with fusarium grain instead of blending as required?

Red river farmers obviously caught someone with their pants down and can request anything they want from the board.

How do you intend to bring fairness back to all producers?

Here is the math.

Producer in Red river valley.

80 bus per acre X $4 feed wheat = $320 per acre. (fusarium infected grain).
Call to the cwb,poof, the grain is a #2.
Now the 80 bus crop is worth 480/acre.
Net gain of 160 bucks per acre.

Producer in mid point sask.

30 bpa X $6 = $180 /acre.
Cwb sells grain to Iran for less than current PRO means sask farmers return is going down while the rrv farmer is still gaining $2 per bushel.

Basically the red river valley farmer could see the PRO go down to feed wheat prices and still be at a premium price while the sask farmer got nothing but lower returns.

And in case you missed it, the value of the gain on the rrv farmer crop almost equals the gross return of the sask farmer. It means a poorer farmer is subsidizing the richer farmer.

Plus now he gets premium delivery.

The Red river valley farmer initial price should be that of current feed values and then if the cwb manages a premium then redistribute (if it makes sense to) to the RRV farmer. Otherwise you have distorted the value of my #1 & 2 grain.

[Jeff Nielsen]

Bucket
going to keep my comments general here, this is best brought up to management. Have you been to your Director meeting? if it is past, then still speak to him, we do have a board meeting in two weeks. It is a worthy to note the way you spell it out, and is needed for the CWB to give more information on this program.
I will read up on what I have, as to the issue of grades, and fusarium in that area.
Jeff

[bucket]

Jeff

I thought I just brought it up to management/board of directors.

There is no sense in passing the buck on this. Every program that the cwb comes up with has to be scrutinized because the result don't show up for 8 months.

For example there was no sense in phoning the cwb/directors(mcreary/hill) last august and asking them which side of the market the cwb was on. They told me there was no problem. Turns out they were out some 300 million and at the same time the board of directors were approving the discretionary trading activity losses.

It should not matter which director I talk to or management people - the point is the concern has to be addressed and the appropriate costing done on these programs.

I gave you a simple costing of the fusarium program and have told goff and the 800 pee-ons the same costing. I hear the same thing "when you put it that way it makes alot of sense" and yet the programs are still in place and nothing changes.

It is just that simple the red river boys are getting a sweet deal from the cwb. And it has to stop or there has to be a midge/ergot/frost program as well as special deliveries because , uh, well a moose ran thru my yard so I need to move my grain.

[Ron]

Bucket, ever wonder how many farmkids from the Red River Valley got jobs working for the CWB? Just looking out for their own.