CWB ship buying

[wd9]

Grain Growers Question Ship Purchases
Written by Kelvin Heppner
Monday, 14 February 2011


The Canadian Wheat Board has raised some eyebrows by purchasing two lake freighters.



With the Canadian Wheat Board announcing the purchase of two ships, the Grain Growers of Canada are calling for some discussion on the role and future of the CWB.

"The Wheat Board is starting to acquire assets, and they've also asked the government if they can take over responsibility for interim and final payments, so we would applaud the Wheat Board for moving forward and being a much more business-oriented organization in that way," says Richard Phillips, Executive Director of the Grain Growers. "But then you have to ask yourself who actually owns the Wheat Board, and who actually owns these assets, because technically, it's still a quasi-agency of the government."

He says now is the time for a discussion involving the CWB, the Federal Agriculture Minister's office and the Grain Growers to discuss what the Board needs to look like going forward.

"If the goal is to have farmer ownership of the Board and these assets, then is it a new generation co-op? Are there shares issued like what was done for some of the co-operative grain companies? What sort of model is the Wheat Board going to have going forward that would have the farmer ownership in it so there are some clear lines of responsibility and control," he says.

"The Wheat Board is buying assets, but who actually owns the Wheat Board? I'm asking that question. Without any share structure to it or any new generation co-op type shares to it, arguably it's the Government of Canada that owns it," says Phillips. "They had a vision a number of years ago where they would get more into transportation, maybe farm supply businesses, if that's where they want to go, then it needs to separate itself from the Government of Canada."


Interesting.

[TOM4CWB]

WD9,

The buying of these ships... brings far more issues into question... than what kind of a business deal it is.

WHAT is the CWB Plan?

What will the CWB do... if the return on investment is 7% instead of 15%?

Who is at risk, growers who use the ships... or everyone including the government of Canada? If it is comming from the pool accounts... the taxpayer could be on the hook if the CWB has a bad year!

[charliep]

[URL="http://www.cwb.ca/public/en/hot/choice/harvesting/pdf/harvesting_opp_0806.pdf"]harvesting opportunity[/URL]

[Braveheart]

This whole thing smells. The involvement of Upper Lakes Grain Group and its' subsidiaries seems highly unethical and reeks of anti-competitive business activities (a la mafia, like casinos in 1950's Vegas). In essence, corruption. The truth should be exposed. An Order in Council should be immediate to cease and desist this deal until an investigation is completed.

Better yet, just ban the CWB. Canada doesn't need another outlaw motorcyle gang.

[wd9]

They said they couldn't compete in an open market without infrastructure. Maybe this is the answer.

[parsley]

"gang"

We can learn something. Even late-bloomers.

Take what you want. Take what you need. Don't look back. Beat down, anybody who stands in your way. Use anybody to get your way. Offer a deal that they can't refuse. Use force. Pick only partners that can stuff pockets with cash.

The secret is in not giving a damn. No guilt. If you don't care about anybody, there are no regrets, no hesitations, no obligations, no exceptions. Run over lives.

That's how you win. Winning becomes all about counting the cash. One goal. Sounds like a perfect evolution.

And get that kind of goal legislated. A New Parsley

.

[TOM4CWB]

WD9,,
AWB said the same thing... WHAT Happened?

Why would the CWB end any differently?

If the CWB Directors and culture... can NOT deal fairly with growers on the purchase of 2 simple Vessels... what makes you think they will ethically respect the private property rights?

The 2008 contingency fund fiasco... the ships... and bedding down with Measner... what more proof do you need that the CWB is corrupt and could care less who they trample over... in the pursuit of 'saving' themselves... (the 'single desk')

[TOM4CWB]

Dear Charlie,

I believe it was Wednesday last week BNN did and interview with the President on this paper.

A question clearly arose... when Canola and pulses were examples of the shining stars of the new generation well working systems based food initiatives... BOTH of which have NO MARKETING BOARDS governing the Value Chain.

The poor guy was very embarrassed... as he was obviously told NOT to talk about marketing boards!

It can not be clearer... government regulations and value chains... are like oil and water... value is lost when the two are mixed together!

BNN to its credit picked this up INSTANTLY!!!

[Braveheart]

All the CWB talk of competing better if (owning infrastructure) is just a disguise for anti-corporate language. The truth is that most of the business world whether construction, manufacturing or even agriculture knows that you don't have to own an asset as long as you have access to it when you need it. In fact it is often poor business management to own an asset that rusts or rots, or in this case, sinks.

[wd9]

Agreed Tom4, this is a blunder of immense proportions. On the brightside it may be their downfall.

[DogPatch]

Whats the depreciated value of the hopper cars that the CWB bought? Maybe we outta scrap them all and let someone else buy some? Any volunteers?

[TOM4CWB]

Dogpatch,

Since the hopper cars were bought pre-crow... and can be used anywhere in North America... I do not see why it is even brought up in the same line of thought as the 2 vessels.

Rail cars are a very different asset than ships. Like tractor trucks vs. trailers only rail cars are better as they have steel wheels instead of rubber tires that rot!

[jdepape]

The railways were running out of old box cars because the oldest of the old were wearing out. So the govt stepped in to buy 2,000 cars.

Someone told me that when the first cars were purchased, there was some legal impediment to the government actually owning the cars, so the CWB was made the owner - at least in name.

I was also told that the CWB at the time did not want to own them and complained bitterly.

Without these cars, grain movement would have slowed to a crawl.

Totally different picture than the laker story. Whereas rail freight was in a stalemate back then and someone had to step in to do something, that is not the case in lake freight.

Lake freight is not regulated and a good business case should attract many investors / shippers.

[gustgd]

Feb 14th Hursh

The old debate over the Canadian Wheat Board has developed a new twist. The CWB is purchasing two new lake vessels at a cost of $65 million. The CWB says there’s a need to replace the aging fleet of freighters on the Great Lakes. The cost is equal to approximately $1 per tonne, paid over the next four crop years. Meanwhile, the transportation cost savings are supposed to amount to at least $10 million per year. CWB opponents have been quick to pounce noting producers were never consulted on the purchase. That’s true, but the CWB directors are elected to make decisions on behalf of producers. Although $65 million sounds like a lot of money, it pales in comparison to the money that is made or lost during the CWB’s regular marketing decisions on wheat, durum and export barley. And there is a precedent for the CWB owning transportation assets. It has long owned a fleet of 3,400 rail hopper cars. Some opponents also argue that the benefits of ship ownership, if any, will not necessarily accrue to those who finance the purchase. Producers who are planning to retire soon will end up paying the tab without seeing the longer-term benefits. Using that argument, the CWB shouldn’t invest in new computers or staff training either. The true, but unspoken reason for most of the opposition is probably the distaste for the CWB expanding its sphere of influence. I’m Kevin Hursh.

[gustgd]

Ag commentator Kevin Hursh has defended the CWB’s decision to buy lakers with farmer’s money by saying that the CWB directors are elected to make decisions on behalf of producers.



Yes, to a degree they are. However, very few farmers – even some supporting the single desk – ever expected the board of directors to make the decision to take the CWB outside of its conventional role as grain marketer. Even fewer expected the directors to make the decision to use farmers’ money to buy something not required to market grain – without even asking. (You can argue you need transportation services to market grain; but, you don’t need to own them.)



Mr. Hursh suggests that the price tag of $65 million “pales in comparison” to the money the CWB makes or loses in marketing decisions. His comments align with the CWB’s condescension that this is no big deal, since it represents only $1.00/tonne. To one farmer I talked to, $1.00/tonne over 4 years is equal to $16,000 – money that he would rather see come his way because of a total crop failure last year.



Hursh also suggests that buying vessels should be acceptable since the CWB already owns a fleet of 3,400 railcars. He calls it a precedent but it’s not.



The situation back then was completely different – the fleet was made up of broken down boxcars and they weren’t going to last much longer. Somebody had to buy railcars because the railroads refused, since there was no money in hauling grain under the Crow. It was the Federal Government that bought the cars and made the CWB the owner.



Back then, nobody took farmers’ money to buy the cars, like the CWB is doing to buy the lakers. Also, railcars had to be bought by someone but nobody wanted to. That is not the situation with these lakers; remember, Algoma and Upper Lakes are buying 6 lakers themselves.



Mr. Hursh likens the purchase of these lakers with the CWB’s investment in computers or staff training. The difference he misses is that computers and training are required to sell grain – the CWB doesn’t NEED lakers to fulfill its mandate of selling grain.



But he misses an even more important point. Farmers are being forced to pay for these lakers but they will never own them. The CWB will own them, but farmers don’t own the CWB.



I guess in an ironic way this is proof that you can actually benefit from something without owning it.



Hursh really misses the message in the tea leaves when he suggests “The true, but unspoken reason for most of the opposition is probably the distaste for the CWB expanding its sphere of influence.”



Farmers are angry because the CWB is taking their money to spend it on something they don’t see as necessary and without being asked; they would rather invest in their own farm operations or their local communities – or pay bills. It’s like being forced to pay for a B-train even though you’ll never own it and you prefer to use custom haulers anyway.



As one farmer put it, “I don’t even let my kids spend my money. And I love them.”



I’m John De Pape