May 28C WB debunks myth that it extracts premium

[TOM4CWB]

Ian,

The fact will be that if we do grow 40bu/ac next year, reality is that it is all avaliable for sale.

And if it is not for sale, it will be some day. Maybe?

A story is useful here

Up in the Peace River District, a farmer was found dead beside his full canola bins.

He had killed himself, why?

I understand he had 10 10,000 bu bins, and had just phoned the elevator and sold the 100,000bu.

He went out to see which bin to start hauling out, guess what?

The first bin he went to was spoiled, bad day.

He went to the next one, it was no good either, really bad day.

By the time he got to the tenth rotten bin he just went to the shop, unlocked the shotgun, and shot himself.

I don't want to be part of this scene, do you?

[ianben]

Hi Tom
No Tom it is only for sale if we WANT to sell it.
Is your farm for sale?
Perhaps at a price?
Your PRICE!!!!!
If we dont look after our crop after we harvest it we will not survive no matter what system we market under.
Good grain was found in the pyramids.

I wish Charlie Lee or Brenda could give us some figures in bu/acre on the difference between $5canola and $7canola.

I think you would be surprised how low this figure is!

Regards Ian

[TOM4CWB]

Ian,

It is sad that one person's disaster is another person's good fortune, in grain farming I guess it will always be this way!!!

It really comes back to, what is a "fair" value for any grain that we grow?

If my farm can make a profit, then selling at a profitable price is fair, isn't it?

If I can grow this grain with less cost than you, then is it OK if I sell at a lower price than you can grow it for?

Isn't this the esence of what we are trying to work out here?

What is "fair" then for the consumer of this grain?

Isn't this all a matter of opinion???

[ianben]

Hi Tom
What I am trying to get at, not too well I know, is that 99% of what we grow even when have good harvests is needed.
No single country/producer could supply the market.
So why do we compete so hard to sell this extra 1%
Look at other industries they moniter each others costs and prices.
They realize there is nothing to gain by selling below cost.
You look at agriculture round the world on the internet,like me I am sure.

Where are farmers thriving during the last two years???

We all have very similar costs/tonne I
think especially when delivered to the customer.

I know it is unpleasent to gain from someone elses mis-fortune but we all know it will be our turn soon. No-one who farms gets it right al the time.

Would not these mis-fortunes be easier to bear if we had a little insurance in the bin from gods bounty in the past.
Perhaps we could then dispence will drought aid and other forms of hand-out we farmers think we DESERVE.

I you still believe farmers have a god given right to sell all we produce and are truly a special case then I see no hope for the future of farming as we know it.

Regards Ian

[TOM4CWB]

Ian,

Then we come back to the moral dilema, if all people are not feed today, then who gets to starve?

If we would take responsibility as a world for the hungry, then would there be any surplus at all?

If I am an optimist, the 4" of rain in the last week may not help this crop, but it gives us reserve for next year!

If I am a pesimist, I can just complain about all the low areas in our feilds that just got drowned out and how much more work it will be to harvest what is in our feilds!

Life is a state of mind, if we agree that we have it pretty good compared to 99% of the rest of the people on this planet, should this not be enough?

[ianben]

Hi Tom
Perhaps I did a better job that time.
Low prices make poor people poorer as I have tried to explain before.
They must export more to earn the same dollars.

Would there ever be a surplus with sable prices??

Buyers as they get bigger and global, I see you are getting a new mega trader on your patch,they are driving prices lower by implying they can buy cheaper elsewhere in the world.
Unless we farmers form some kind of global marketing research body.

How are we going to know different?

I repeat I believed you could grow canola at $5/bu.
You yourself told me you need $7and $8 would be better.
These are price levels I am happy with too.
I see no gain only pain for everybody if price falls to $5.
So why do we let it happen?

Have you found anybody in the world who farms like us who is happy at $5/bu.

Those Brazilian guys where only expanding to survive low prices.

Look outside our industry see how others market.
A burger is the same price near enough no matter which chain you buy from.
A car is the same price like for like no matter what badge is on the front.
All our imputs are competitively priced
never more than a $or2 between them.
WHY???
They monitor each others prices and compete in other ways.

You cannot buy a cheap burger coz they made one bun too many.

I believe that is a similar comparison
We let prices fall till everyone hurts because we might end up with one stale bun.
I see no sanity or morality in that.

Regards Ian

[TOM4CWB]

Ian,

Now that we can sell at approximately $8/bu, why would you complain?

A willing buyer will pay a fair price, isn't this what we want?

Now if we were prudent, wouldn't we sell next years crop too?

I see the CWB the greatest marketer on the planet cannot extract a premium like the canola system has done in Canada in the past 2 months!!!

If the CWB has all this market power, then why can they not be competitive in the export market?

The Japaneese are in here buying like furry, driving our prices higher!

So why is the CWB not able to reflect the simple market power of the bid system through the Canola futures contract in Winnipeg?

Why is the CWB not able to contract with its premium markets, and offer higher prices to those farmers who would take the risk and forward contract?

If the CWB doesn't get good fall sales on the books, like the Canola guys already have booked in, then how do we expect to be concidered reliable suppliers?

I sold a good part of my Canola crop in March, and now the logistics are all ready in place to move it this fall.

Just how much new crop wheat sales are on the books, like CPS and lower grade wheat!

The CWB must know we are going to need to get cash flow to pay bills, where is the indication that they have done the sales we need, to make our farms work?

If the CWB is working for me, then are these not the marketing facts that must be addressed?

The Canola has taken care of all of these issues Ian, show me how the "Monopoly" helps my farm in any way, and it is supposed to do all the control of inventory that should level out our prices!

Why do we always get the lowest average price, and seem not to be able to access the higher prices?

Could it be that the CWB markets 80% of our grain in the bottom 20% of the market?

Isn't this what most cash marketers do?

Isn't the CWB mainly a cash marketer?

Why can't the CWB make sales against the Fixed Price Contracts, and actually do some business when a farmer commits to sell grain, instead of just turning everything back into the pooling accounts? They just continue to sell like they always have, so how do we expect the sales results to get better?

[ianben]

Hi Tom
I do not think it is my place to comment on the workings of your CWB.
Except that I have learnt it is not the holy grail it appeared from across the Atlantic.
I hope you have learnt that we cannot live on subsidies over here and need to get a price very similar to you in order for our family farms to prosper.

I believe this is very important information and I thank agri-ville for the forums so we can comunicate in this way.

The weather is reponsible for the rise in canola prices not someone willing to give a fair price.
They do know what a fair price is, cowman did didn't he, but if we are prepared to sell for less, thats what they will pay.
As I have said before if I could find someone to sell me fert at £20/tonne I would buy it, wouldn't you?

You Tom are a master marketer but Lee's 60% are not and I don't think ever will be.

We all need guidance on price.

This was my vision for your CWB I thought they might lead the way.
How wrong can you be?

Can you not see a need for someone to collect data on our behalf and give us some idea on price.
Ex farm in terms we understand!!!

It might even help the CWB at least they would have a figure to aim for.

Without a price to aim for does our marketing lower prices for everyone and create this volatile market??

I will be happy when canola trades in a narrow band around $7/8/bu I don,t want to see $5 or $10.
$10 is possiblly worse than $5 as customers will switch and we might see $4 before they return.
I am sure even with your marketing skills you have had to sell at $5/bu.
I did ask way back for your highs and lows over last few years.
Would you be happy with $10 canola?

Regards Ian

[TOM4CWB]

Ian,

As with you Ian, I would like Canola prices to be stable.

Last year we sold some Canola at $5.80 and some at $6.25. We deliver most everything off the combine harvester, and this is why the $5.80 on the last few bushels per acre that I am not comfortable hedging because of production uncertainty.

So in our "pool" I believe in 2000-01 we were a little over $6/bu and that was the target I was shooting for.

This year I pave hedged our base pool at $6.30/t and the call options have now added about $40/t net to this price.

The last 30% of production we expect is going to be sold at the market value this fall unless I see the need to buy Puts if prices start to drop.

I would be happy dealing with the CWB IF THEY WOULD RESPECT MY FARM'S Assets, and if they would respect the Grain Industry participants assets.

The Agricore United merger I believe was made possible because of lack of CWB respect for grain producers and their grain companies that they themselves own!!! THE CWB is the catalist that made this happen!!

Isn't this ironic???

[ianben]

Hi Tom
Yes Tom it is ironic.

Ironic also that we compete and drive prices lower when we both want the same thing.

Doesn't comunicating and realizing this help?

Not while it is just you and me, I know, but if farmers could stop seeing each other as "the enemy" and understamd the real price we each need to produce.

Could this go some way to acheiveing our wish for stable prices??

Regards Ian

[charliep]

Ian

Your ideas are good. The question is how to make it work in the real world when everyone has different cost structures/willingness to sell. Farm managers are a pretty indepentant lot. The other assumption is that crops are generic - most crops have value based on quality characturistics as well. How do we establish value for these products?

The other side that needs to be thought about is the demand side. It is interestng to look at wheat versus soybeans.

Wheat production has been stagnant to declining over the past 3 years and yet it hasn't been able to mount any price excitement in the market. Steady demand but nothing exceptional. No major player like China in the market buying massive amounts.

Soybean production has been rocketing higher (both US and S. America) but the market place has for the most part absorbed this increased production. Chinese buying interest is the major factor here.

A major challenge ahead will be to learn how to grow market volumes (both export and domestic). Bio fuels?? Life science products?? Nutricuticalss?? What are the opportunities?

[ianben]

Thanks Charlie
I know some of my ideas may be hard to reach from where we are now.

Most people see the present system as the only way to establish prices for our comodities.
I think you see like me that low prices do not reduce supply or reduced supply increace price.
How did that market report by the CWB phrase it "customers are happy to operate at this level"
Unless we farmers learn to give some guidance on price they will remain "happy".
IF Tom can produce wheat/canola for less than me all it will mean he will lose less than me, but I am amazed how close we are on a cowman price.
You have our subsidies worked out right.Spent on land values and rent but it is the volatile prices which do the harm.

Have you in your job ever researched what each farmer in the main producing countries needs to make a sustainable income.
What do Brazilians FARMERS really need ?Is this new land sustainable?
My high yielding canola was from a field which had not grown canola before. I estimate that gives a one off 7cwt/acre bonus

I believe this is information farmers can relate to, presented in the right way perhaps Lees 60% would hold for a better price.

It is a chicken and egg problem but someone like yourself giving us some guidance on price, figures, based on market research for farmers. Along side the present system ,might help stablize prices.
With stable prices all those markets you mention will, I have no doubt become, a reality.
With increased volatility, which the present system seems to encourage, no-one will invest hugh sums of money only to have it go pear-shaped when commodities double in a season.

Stable prices are the answer to our problem.

How do we make it happen?

Do you agree??

Have you any ideas which might help?

I just want to at least try to improve things a little.

Regards Ian

[TOM4CWB]

Ian,

I do agree it would be nice to have stable prices, now how could this possibly happen?

Wheat affects Soybeans, Corn affects Canola, Oats affects Wheat and on and on!!!

So how do you propose we reduce volitility, when we can't control the weather, which means we can't control how much we produce?

I see many consumers who cash purchase, because they have found 6 out of 10 years this will give the cheapest prices.

And as long as everyone cash buys they compete with, then they are all on equal footing.

Seems like farmers, and particularly grain farmers are the least able to stop weather production fluctuations, therefore as the base ingredient for the industrial agricultural economy, grain is the most variable in supply and demand!

This chicken and egg is going to make us crazy, do you really think there is a solution?

[ianben]

Hi Tom.
A total solution, perhaps one day when grain production and marketing is in the hands of the multi- nationals.

They know how to fix a price and maintain a supply.

Can farmers like you and I achieve this I must admit it is unlikly.

Could we improve the present system??

Well my optimism makes me think we could if we could understand each others needs and limitations better.

We would need help to achieve this but if someone could give guide prices, perhaps we could avoid extremes both high and low the present system seems to encourage.

I just feel in the computer age with the speed information can be sent round the world farmers need to join in or we will always be behind the game.

To say things cannot improve and farmers are a special case will in time I believe lead to the solution I outlined to start with.

Perhaps that is the only solution but I hope not!!!!

Have you a better idea?

Regards Ian

[TOM4CWB]

Ian,

Maybe if you and I got together, with your British and our Canadian Agencies, we could supply the common sense leadership needed to make things better?

Or could we trust ourselves with all that power?

Would we become worse than the problem we are trying to fix now?

Does gov. power forcing people to do certain economical social policies ever really solve a thing?

Most times doesn't the cure end up worse than the desease?

Or is there wise enough people around the use the power wisely, to the benefit of all of us?

Do you have a cerial board in England Ian?

What kind of marketing power do they have?