Income Assurance Program (draft proposal)

[oldbob]

If you would like to have a look at this program which has been developed by a group of Manitoba farmers, but which could be applied to Saskatchewan and Alberta as well, check out this website. www.rescro.com/iap

[monaco]

Look-out , here is the return of Social Gospelism .When the going gets tough the religion gets going .What is this all about plowjockey ?

[plowjockey]

I don't know about your socail gosbelism but we are just talking about not growing a crop for a year! At the same time buying futures to ensure compliance! I think this will work and at the meeting I went to over 75% of the farmers signed on! It's about time that we controled our own future rather than corps. dictating to us what and how it will be! 306-752-5362 or 306-752-7217

[monaco]

I apologise plowjockey - because you used sabbatical capitalized I assumed you meant it in the religious context rather than 'sabbatical leave' . I think your idea has merit - it would cause a frenzie in the local feed market and would send a clear message to Ottawa . How do you hope to sell this message to the rest of the prairies ? Perhaps the farmcrisis site could be a start : www.farmcrisis.net/

[bushed]

the idea has merit but there is only one major flaw to this idea .The only ones who can achieve this are those who have all bills paid and owe no money to fiancial institutes.If the bank even had a feeling I was not going to put in a crop they would be on me like an wolf on a rabbit.Those heading this up still have grain in store and probably no bills owing,and what is with this $4000/month b.s.Sounds to me like a couple guys are trying to get rich.There is also an organization called Farmers Of North America .They concentrate on lowering input costs and eventually they will be marketing and have dabbeled in it all ready. If we could get all these things working together we would have something . If we can acheive higher prices it will only get us higher input costs , we have to gain control of inputs first then go after pricing.

[dfarms11]

I agree with both, as a farmer with huge financial debt, I cannot afford to plant any crops. and sell my grain. however, I do think it is what the world needs for farmers not to plant a certain crop for a year.(the biggest flaw to this approach is however, that if it were possible to get 90 % of farmers to do this, the 10% who dont follow will make a killing). The thing I am severly PISSED OFF at is we are the only producers in the world whose prices are dictated to by EVERYONE ELSE! VETS, Fertilizer comps, chem dealers, etc. all set the prices they want. We cannot , and it makes me so mad.

[monaco]

Controling input prices is the place to start - but - do you see the fertilizer , machinery , herbicide and pharma co.'s making big bucks ? All of these sectors have been buying up each other to become more viable - the pharma co.'s have spun-off their ag divisions because they are showing only small profits . The real culprit here is the federal gov'ts. progressive tax laws . Take the damn taxes off our input products , let us make a profit and tax us on income -

[plowjockey]

To address the no money issue if you have money for imputs use that to buy your futures contracts instead of imputs. If the price goes up 3 times you have tripled your money(looks to me like its easier than growing a crop!) I am not a rich farmer by no means! We can't blame it all on gov.Do you honestly think monsanto lost money????

[avanderwell]

Yes Ottawa is the main culprit behind our problems. Off of a quarter section of malting barley they make $2.5 million in tax revenue and on the same field of rye the stinkin' politicians get $14 million in tax revenue. Compare this to the farmers share of roughly 1.3 cents a bottle of beer. It just doesn't add up the way it should. Continually they tell us the problem is foreign export subsidies(which is illegal under NAFTA and WTO regulations). So what do they do? Dick all.

[plowjockey]

Ottawa is not the main Culprit! We are, and only we the Farmers can get us out of this mess! Yelling at the Government will not solve anything! Lots of Corps make huge profits! I don't see them running our hospitals or building our roads!If the Gov. is collecting that much money I dare ask how much profit the companies they are taxing made!! As farmers we must pull together regardless of political views and save our and our families asses! I still believe FOS is the way to go! I have not heard a better plan ever!!

[dfarms11]

where do you get these govt tax figures?

[dfarms11]

where can I find out more info on this FOS thing? can u prove to me that if most farmers did not plant a crop, that the prices would double, triple , whatever and i would still get an income? If so, sign me up and all my neighbours too!

[noelm]

The sabbatical idea is interesting, but I suspect has more potential as a political statement than an economic strategy. Canada is one of the larger exporting nations (although it does not rank as high now as it did 30 years ago), but compared to many other countries is not a large producer (USA, Russia, Ukraine, France, Argentina, Brazil, Australia, India all produce more grain than Canada). So the sabbatical is in some ways a local action that is attempting to influence world prices. A bumper crop in one or more other large producing countries could easily make up for the lack of production in western Canada, and keep grain prices low. Buying futures is a high-risk game, but perhaps no higher risk than planting a crop! As more people sign up for the sabbatical, I think it is critical to keep media folks informed, and maybe create some awareness and sympathy among urbanites (who have their own survival struggles to deal with). This might eventually get through to politicians. What are the other ways to use the land that is not being cropped to bring in different sources of income if you choose the sabbatical?

[twoklive]

MY OPINION ONLY and this is before I attend the meeting scheduled for Feb 5th. I am forming this opinion based on discussions with other producers and opinions read here and elsewhere. I will modify this after the Feb 5th meeting if necessary to do so.


If 8 billion bushels of grain production was removed from the system, and the farm group was to attempt to make the difference up in futures contracts, the idea would fail. And here is why:

Futures open interest as of Jan 31/01 for 8 forward months of all grains and oilseeds was 887,261. This equates to approximately 4.5 billion bushels.

8 billion bushels as the group suggests equals 1.6 million in open interest or a 360% increase.

For a farmer to make 100.00 per acre at an average yield of 30 bu per acre, that equals 30,000 bu for a 1000 acre farm. Each U.S. futures contract is 5000bu so this is equal to 6 contracts. 100,000 dollars divided by 6 contracts equals 16700.00 dollars per contract.
1.6 million contracts times 16700.00 dollars per contract equals 26.7 billion dollars.

Who would be on the short side of these contracts? Speculators, commodity fund managers, and hedgers. The hedgers are basically farmers, and if this plan was put into effect, they would no longer be there. That leaves the speculators. When these people see the large demand for long positions, buy bids start coming in, a few thousand contracts might be sold. Demand for long positions increase, the Speculators start to back off. Bids go up as demand increases, but there are no trades because the Speculators are not writing calls. Hence no trades.

Speculators are not stupid. They do this for a living each and every day. They will want to be long also. Nobody is going to be hung out to dry to the tune of 26.7 billion dollars.

The theory is good, the reality is it will not possibly work. Please if you trade futures for hedging, ask your broker, if you know someone who does, put the theory to them, give them some numbers to think about, and see what an informed futures trader thinks of the sabbaticals plan.

Just my opinion, it is up to you to be informed about the whole process.

Thanks for your time.

Comments to kostrosb@cadvision.com
Brian Kostrosky