How much is fair mark up on crop inputs

[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.

[uef]

To put a number as a fair mark up is difficult. It all depends. If it can be shipped directly from the manufacturer's warehouse or distribution depot the mark up should include the freight plus some profit. But personally I don't think profit should be significantly higher than the prime lending rate.
If there are other costs they should be covered as well (before profit) but I really think retailers should keep their costs to a minimum. And a lot of them don't do that. For instance if there are more people "working" in the office than actually preparing and loading the product.

Anyway, what I would really like would be to buy direct and cut out all the costs produced by the middle men. It just does not make sense to me. Farmers buying their inputs from retailers is as if GMC would buy their parts at the Canadian Tire store around the corner.

[darren442]

To answer i few of you i have worked in the Ag retail bussiness and i observed some shocking things. And i have seen some things so honest it would make your jaw drop. The farm retail that our father trusted are gone. My one boss told be when i was mixeing fertilizer to always add 50 pounds or so to make up some money as long as the farmer wasn't standing beside me. I know large companies send retailers for 2 week trips in mexico and fishing trips to BC and all at your cost. Retailers try and plan your crops 3-4 years in advance so they can get the best bonuses from the chem companies ( there black box) thats why retailers will push alot of product from one company becuase they are getting more money back from the chem company. It doesn't matter if it is the best product for your crop . And it's true ive seen it and was told to do it. I've talked to most of the crop supply companies out there and they always talk about hidden costs pioneer is bad for hidding costs and so is
co-op. They told me they do it to my face. Co-op sends there guys to a course on how to talk you into buying a products.

If i ever got the oppurtunity i would get 20 farmers to invest $10,000.00 each and open a farm retail that charges 20% markup on everything and for those who invested 10%. And thats it but there are no farm visits no frills but then most of us a smart enough that we don;t need someone in our fields every week. and another thing if your paying over $100 for a soil sample your being charged to much.

I think it's time for a change or maybe wal-mart should get into the crop supply bussiness think about that ???

[darren442]

For those who think i'm blowing steam i had a conversation with two retailers at a table near saskatoon about an agronomist position in the spring and i told them how i thought farmers should be treated. Today i cannot get a job as an agronomist with anybody because they know i disagree with hidden costs jacking fertilizer weights ect.

These two retailers got upset when i told them i have my own fertilizer blending programs that i sit down with farmers and enter in every cost to tweak the per acre value. They said i was crazy if i thought a soil sample ( collection and analysis ) should be only about $90.00 dollars.

And if anybody wants to tweak there fertilizer blends and they can't get there crop supplier to get them to do it email me at 4thefarmer@gmail.com and if your in the saskatoon area i will sit down over coffee and do it as long as you have the price for N,P,K,S and the blending fee cost. I can also do soil sampling i will collect the soil and your farm will send away the sample.