How much is fair mark up on crop inputs

[chaffmeister]

I have tried – I mean really tried – to be clear.

When talking about <B>GRAIN HANDLING</B>, the use of the term “multinationals” is misleading. (A mistake often made by CWB supporters.) To avoid confusion and misrepresentation, may I suggest we be clear about whether we’re talking “handling” or “buying as an end-user”. And yes, it does make a difference – particularly when we are talking about the CWB’s activities.

I’m sure JRI would be surprised to see itself “elevated” to the ranks of “multinational”. Look at their website – they list no “international” locations. Putting “International” in your name doesn’t mean you are a “multinational” – it’s meant to reflect your “reach”. By your definition, every grain handling firm and just about every grain dealer and many individual producers are “multinational”.

P&H? They have an elevator in Michigan. Separate company – but the same family owners. If I asked Bill Parrish if he thought his company was a “multinational” he’d probably laugh until he fell out of his chair.


Tower said: “Let us know what it is that you do for a living, and who you work for, that we might better judge the value of your comments.”

Isn’t it interesting that since I have challenged you ideas, you now challenge my credibility. Would your judgment of the value of my comments be any different if I said I had worked for the CWB – or if I said I worked for a “multinational” – or if I said I was a farmer? Which has the most credibility in your eyes? (My answer would be “none”, by the way. When dealing in facts, it really doesn’t matter who’s presenting them.)


Tower said: “I know, you have shown me that same quorum study repeatedly. And by it you imply that multinationals make more money handling cwb grains than they do handling non cwb grains.“

Just for clarity – the Quorum report isn’t a “study” – it’s an aggregation of trade data. There’s a big difference. A study has a conclusion; trade is just trade data. Just simple facts – implying nothing. These facts show grain handling firms make more money handling CWB grains than they do TRADING/MERCHANDISING non-CWB grains – from farmgate to port position. Since you seem to want to confuse the story, I hope this has made it clearer. At a difference of about $20/tonne, I think this is material information. Don’t you?


Tell me – since you refer to record profits, how much do multinationals make when they “buy and sell western Canadian crop production”? Now split that up.

How much do they make on non-CWB grains?

And how much do multinationals make on buying and selling CWB grains?


With all due respect and no intent to insult you, we could banter back and forth like this for a long time, but I feel you have some deeply entrenched ideas of what the CWB means to the grain economy and unfortunately they aren’t based in fact. I suggest you get a firmer grip on the reality of grain merchandising, particularly as it relates to Western Canada. You really aren’t arguing from a solid foundation.

[tower]

charliep

Here's a couple of sites people who are interested in grain company returns can look at for info. Have a look around. These guys can afford to do a little loss leader stuff.

http://findarticles.com/p/articles/mi_qn4155/is_20070202/ai_n17205226

http://www.cargill.com/news/news_releases/070821_earnings.htm

Interesting note that the millers wrote to the Alberta government, back in 02, what happened to the Alberta government initiative? I don't think that the following quote from the source you gave me is exactly a ringing endorsement of the cwb. I would see it more as a vote for what we have until something better comes along.

"With regard to the Canadian Wheat Board single desk selling mandate, the CNMA has said publicly and to officers and directors of the Canadian Wheat Board that the CNMA is willing to work with the CWB as a single desk seller, as long as producers continue to perceive a benefit from the single desk CWB system and as long as the CWB maintains complete control over the marketing of wheat in Western Canada."

Perhaps the answer to your other question about why the board provides risk management to processors and not to farmers, isn't found in the attitude of the wheat board but in the lobbying power of the multinationals with the conservatives and liberals.

Another good reason to get our board members to go for the gusto and for us as farmers to lobby like the farm depends on it.

[Fransisco]

You have got to be kidding tower?

Really? Are you serious? Is this all you've got?

You claim that "record profits being made by the multinationals when they buy and sell western Canadian crop production."

And as proof of this you hold up ADM's profits from the <b>processing</b> of <b>corn</b> in the <b>United States?!</b>

[chaffmeister]

“Multinational” grain/food companies don’t do the Loss Leader thing. Each operating division needs to stand on its own. Period. They don’t sacrifice one for the sake of another. On this you’ll just have to trust me (having worked for one).

You may not think the CNMA quote you gave has much conviction. The statement is quite “political” – don’t you think? Even so, they are very “supportive” of the CWB in other ways behind the scenes. On this you’ll just have to trust me – again (having felt the impact of this personally).

Multinationals lobbying government (political parties) to influence the CWB risk management policies? I think you have a future in the Saskatchewan Coast Guard. Trust me.

[tower]

chaffmeister, for some reason we keep getting sidetracked by red herrings,,,, tell us what you would do to improve the wheat board.

[charliep]

Would encourage someone to start a new thread. Wired high speed home/work and loading this thread takes a minute or two for me. Would image dial up would be on all morning process.

[chaffmeister]

The problem with the CWB is it is costly - on 3 levels.

(1) Admin costs / overhead. Probably the smallest of the three. What makes matters worse is that operationally, most of what the CWB does is redundant - the grain handling firms and AEs are already dong it.

(2) Poor marketing performance. Real data shows CWB returns are well below what they should be. Pooling doesn't work.

(3) Lower non-CWB prices. Canola prices in particular are much lower in the fall than they should be as farmers sell and deliver canola for cash flow - because the CWB doesn't allow you to. They overdeliver which drives the basis wider.

Solutions:

(1) Allow farmers to avoid the redundant overhead costs (if they want) by making the CWB voluntary.
(2) A voluntary CWB should solve the poor performance issue. For those that want to use the services of the CWB, the CWB should provide either cash prices or very small pooling periods. Pooling just doesn't work in this environment (and we're seeing that in spades this year, particularly in barley).
(3) Between a voluntary CWB (a choice market) and a more market savvy CWB that uses price to allocate the grain handling "resource", the issue of low non-CWB prices due to over-delivery will be solved.

I know for a fact that Canada has lost investment in both primary and secondary processing due to the existence of the CWB and its control over the market. This means lost jobs and tax base at a local level. In the millions of dollars. A voluntary CWB or no CWB at all would be the solution - but I'm afraid to say, for some its already too late.

So the short answer to your question, make the CWB voluntary or make it go away altogether.

[parsley]

1. Make the CWB voluntary.

2. Separate the national licensing function AWAY from the CWB all together.

3. CWB ONLY perform the regional marketing function.

Parsley

[TOM4CWB]

Tower,

You Said: "Tom4cwb, I would think, before throwing the bible into an argument, about being certain that the words aren't a two edged sword. Perhaps "When pride cometh, then cometh shame: but with the lowly is wisdom"


Who is confiscating the property of whom?

Please explain why defending the oppressed... that the CWB "majority" takes advantage; of is wrong?

Where does the Bible say anywhere CWB "Single Desk" pooling is for the wise... and people who are not fearful... who need the opportunity to look after their own affairs... are fools?

[Fransisco]

Tower said, "for some reason we keep getting sidetracked by red herrings"

Coming from the guy who thinks that the money ADM makes from processing corn in the US is the same money they make from buying and selling prairie grain that means so much.

[Muttley]

As a farmer I wish there was a small mark up on all products. But in the real world it's what the customer is willing to pay. I have neighbors buying fertilizer and chemical now. Trying to save money for next spring. As long as people are still buying and most product is being sold why would a retailer lower prices. Nice to dream about but as long as demand is there the price will keep climbing!!!

[FarmRanger]

I don’t mind paying more in a competitive market, as I can arbitrage the price freely. This insures the fairest price to both the buyer and seller. The problem arises when we have captive markets with no ability to force either buyers or sellers to be competitive. While the fertilizer market isn’t captive, isn’t there more than just a freight difference between our and offshore competitor’s prices? If there is, then I would expect production capacity to increase over time, assuming no other impediments to building new fertilizer plants.

In the meantime, is it possible for any of us farmers to be able to buy offshore and import fertilizer?

[kamichel]

In the meantime, is it possible for any of us farmers to be able to buy offshore and import fertilizer?

Sure FNA. At the least they may cap the price of 46 0 0 N at 48 cents per pound of actual N. These high prices are surely stressing my relationship with my input supplier because I cannot accept that they are not in on the inflated prices. Then again I just calculated the price of grain in storage sold and in the field yet and was pleasantly pleased. I like to squeeze every dollar out of my grain sales. The situation is quite different, high fertilizer prices may cost me 50 to 80 thousand more dollars. High Wheat prices may cost the Canadian consumer a few cents on a loaf. A crop failure has a higher chance of breaking everything I've worked for for 10 years with higher fertilizer prices. If this mark up is on the manufacturing level then I believe it should be short lived. If on the retail level then it will collapse more easily.

[kamichel]

Hey home heating in Sask. is going down. Are Belle Plain manufactured fertilizer prices to follow???
But back to the original post what percentage is fair. I have no idea. I believe farm input suppliers have been living off of too little in the past. Its a tough business. Seems there has been lots of pressure from suppliers to set prices higher and lots of back stabbing to undercut to get business.

[skhadenuf]

Recently in the headlines, it was stated that the difference between fertilizer sold in western Canada and that sold in the U.S. was anywhere from 40 to 60% higher here in Western Canada. I expect the same for chemicals. If anyone doesn't think we are getting screwed over by the corporate and independant supplier think again. Yes it's a tough business but so is running a farm. What I would like to know is who is making this spread is it the manufacturer or the end supplier. Independent's in our area all live in Million dollar plus homes and that was through a time when barley was 80 cents canola 6.00. Not that anyone is not entitled to a decent return but what has been going on here is pretty much loan shark type activity.