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Natural Gas and Feed Wheat and Barley

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    Natural Gas and Feed Wheat and Barley

    Is there a “CWB NEP” Federal Government
    “National Expropriation Policy”(NEP)?


    Alberta has an election in full swing, which is bringing the issues of Commodity Marketing front and center.

    Both Electricity and Natural Gas deregulation is happening in Alberta.

    These issues clearly bring into focus the supply demand relationships that govern how markets work.

    Can we learn from these markets something about grain Marketing?

    I believe we can.

    In the latest P. C. Alberta Election material, Alberta explains why Natural Gas prices have risen dramatically in the last few months.

    This document states, “Under the North American Free Trade Agreement, the cost of natural gas is the same at the wellhead as it is at the end of the [Alliance] pipeline [which started shipping natural gas to the USA in November 2000] with the only difference being the shipping charges….Over the past years Alberta has been unable to get full value for its gas… Now that constraints imposed by limited pipeline capacity are no longer a factor, Alberta gas can be sold at the North American price. Alberta is finally getting full value for its resources.”

    I submit Supply and demand economics for feed wheat and barley are no different than for Alberta natural gas. Alberta domestic prices for natural gas have risen because we must compete against unrestricted competition from all of North American for this gas.

    Just like the lack of pipeline capacity for exporting Alberta gas lowered prices, the “CWB NEP” prevents grain producers from receiving the higher North American grain prices.

    Grain Farmers must now pay higher energy and gas costs. We pay fair market value for our energy, but have both our domestic and export grain expropriated from us at below fair market value.

    Please show me a time in the last two years when the CWB buy-back on feed grains has not been above the Pool Return Outlook.

    This is not fair.

    How can natural gas producers be protected by NAFTA, but not “designated area” grain producers?

    I looked through NAFTA, and grain producers have the same protection as natural gas producers. Yet the CWB keeps on intentionally distorting the market place.

    How does the CWB create this illegal distortion?

    The CWB NEP Buy-backs force “designated area” Grain Producers to pay, on average, $20.00 per tonne net tariff under Federal Government CWB Law, for permission to export feed wheat and barley to the North American market!

    This effectively closes the valve on shipments of “designated area” grain going across the US border. The CWB now manages western Canadian feed grain stock levels by selling only what grains it feels will maintain comfortable stocks inside Canada, thereby maintaining a non-competitive “designated area” feed grain market.

    What is difference between the CWB Export Monopoly expropriations, and the NEP?

    These CWB policies have the economic effect of a Federal Government CWB NEP (National Expropriation Policy) for the benefit of domestic Canadian users of these Feed Wheat and Barley products, maintaining no-cost high stock levels of feed grains.

    This policy has resulted in CWB NEP costs to grain producers in Western Canada of Billions of dollars over the past decades!

    The Canadian Federal Government in 1993, when it tried to institute the ill fated “Continental Barley Market”, admitted that the CWB effect on barley alone was costing “designated area” grain producers “($121 million per year)” (Page 3102 of Canada Gazette Part II, Volume 127, No. 14 SOR/DOR S/93-360).

    Mr. Ken Beswick, Commissioner of the CWB from Alberta, resigned because the CWB was costing, Alberta barley and grain producers, millions in 1996 alone!

    Ken then promptly left Canada!

    Other feed grain products produced in Western Canada must compete with over 15 million tonnes of cheap feed wheat and barley each year, further making the situation unfairly desperate for “designated area” grain producers.

    The Alberta Government knows these facts, and now that all of us know this as well, will the CWB do something to end the “CWB NEP” and instead allow an open and competitive feed grain market in western Canada?

    #2
    Tom4CWB, there is an analogy between feed grain and energy. And the West is lose, lose, lose when it comes to the Feds.

    With Nafta, export restrictions. went out the window. This presented a few problems for the CWB. The Alberta Boys, or designated Area boys have been growing all this non-Board feed barley and feed wheat and selling it all over Canada, to feed mills and Chas' chicken farm and feedlots. From province to province.

    Well according to Nafta, if the feed could travel freely inside Canadian provinces, it couldn't be restricted at the US Border . There couldn't be an Export restriction on it. Nafta rules. So how could the CWB fix this?

    They schemed up a secret Export Manufactured Feed Agreement. That way, the big companies wouldn't take the CWB to task in front of the NAFTA Panel. Eastern mills can continue to source cheap western feed wheat and barley. They can export their ground up cheap non-Board wheat and barley feed.
    The $$exchange rate makes it particularly lucrative. The Chretien Governments exports to fill the balance of trade is not upset. And farmers can't get the higher US prices. Locked in to producing for cost.

    And a few farmers just as pleased as punch to continue being the cow.
    Parsley

    Comment


      #3
      Natural gas vs wheat & baley,
      Tom4 and Parsley make some interesting, but somewhat convoluted observations when comparing natural gas prices to wheat and barley prices, in that it is eroneous to believe that either is set by some unobstructed factors outside of supply/demand economics. First of all, do not ignore the impact on grain prices from competitor subsidies. They are real. Second of all, differentiate between markets - ie. natural gas, confined to the richest marketplace in the world - North America, and staple grains, used globally. The unexpectedly high prices for natural gas were supported by the Alliance Pipeline coming on stream, and releasing the past surpluses of gas reserves into the North American market, but like farmers, the resource industry will drill itself into lower prices. Maybe not as low as historically, but certainly lower than todays. Also, pay attention to the price differentials between various suppliers, like Atco North, Atco South, Alta Gas, and Gas Alberta Inc. Each bring a different price to the table at the very same time. It is due only to regulatory and time factors, but in the end, everyone will pay about the same. Parsley, you say that subsidy support is bad for the West. How wrong you are. It only helps to level the playing field with everyone else in a perceived global economy. For us to be left out is historical suicide. Tom4, you say that the current election is a showcase for unregulated market economics - then how do you view the 4.1 billion in energy support payments we are getting from the Alberta Govt? Is the 150 dollar per homeowner and 6 dollar a gj subsidy to farmers to be overlooked and ignored? To be sincere, it would be hypocritical to accept one (the energy rebates), but to slam cdk the other (CWB), but then that is the typical Alberta advantage.
      Rockpile

      Comment


        #4
        Rockpile,

        I doubt that the $150.00 will have a significant effect on how much profit I make on my grain farm this year. The .04/L federal sales tax on off road fuel is certainly much more important, when it comes to energy costs for the farm.

        If the CWB has no effect on the non-board feed market, then why continue the buy-back on lower grade wheat and barley at $20.00/t over the PRO.

        This is obviously a block intended by the federal government to keep lower grade grains inside Canada.

        The Grain companies are loosing millions in handle by the CWB preventing an increase in feed grain movements like barley over the past 3 years. We are loosing hundreds of millions, and the grain companies want us to make money, so we can spread some their way!

        As previously proven, by the Western Grain Marketing Panel and the George Morris Centre,the CWB cannot extract premiums on feed grains.

        The opposite is true. The CWB prevents the arbitrage of Canadian feed grain markets with the international markets.

        When we get short on feed grains, then instantly $30.00/t is gained as we go from a surplus producer to an importer!

        The CWB prevents this from happening, and the domestic users of our feed grains never need to bid our grain up to get it away from the export market unlike the Canola crushers in western Canada.

        I find it amazing that China will compete with Japan for our Canola, without discounts, but when it comes to wheat, we are forced to sell to them at discount prices!!!

        Aren't we being blinded by CWB brainwashing?

        Comment


          #5
          Tom4cwb and parsley can you find a better price for feed wheat and barley in the USA now. I can't when I have to truck it there even without buyback. Besides I don't grow barley or feed wheat. Why is barley coming into Canada from USA last year. I thought the price was better there. The open market will not cure our ills. Don't forget USA doesn't produce enough natural gas for its own needs.
          Apples to oranges here. Chas

          Comment


            #6
            "Tom4cwb and parsley can you find a better price for feed wheat and barley in the USA now."

            Yes, Chas
            Parsley

            Comment


              #7
              Parsley: show me where and how much I can't find any markets that are better.
              Why are you growing feed wheat and barley, poor weather or mismanagement. Chas

              Comment


                #8
                On the issue of feed wheat and barley;

                When I grow specialty wheat or barley that the CWB does not normally market, what does the CWB do?

                They grade it Canada Feed.

                It does not matter how good the quality is our what intrinsic values that are special, if they do not fit in CWB grades, by law this product is forced to be graded Canada Feed. In turn, then these unfair tarriffs are charged which have nothing to do with reality.

                You say that natural gas is needed in the US, but wheat and barley is not?

                What about Canadian built vehicles going into the US?

                What about Japaneese vehicles going into the US?

                What about EU Airplanes going into the US?

                What about Canadian Cattle going into the US?

                All these products could be totally supplied by the US to itself, no question! But we choose to allow trade to dictate where these products flow, hopefully not politics!

                I am concerned that if the CWB is not able to find premium markets for lower grades of wheat and barley, which by the payments we get proves they have no market power, then why on earth would the CWB prevent me from finding my own market?

                Instead the CWB fines me for trying to create new value added markets for lower grade grain. Why am I evil for doing this?

                This is the valve that stops the movement of our grain.

                The USA is according to all the experts the weight holding down the world market for grain.

                I ask again, how can any grain producer be cherry picking the CWB's markets when selling into a lower price market, which everyone says the US is?

                Why is our highest price and value CWRS wheat being subsidized by the CWB into the US through the buy-back?

                I thought our high value CWRS was the product the CWB could extract a premium from.

                Apparently not? I do not get it!

                Comment


                  #9
                  Darn it Chas, watch your logic.

                  You asked a question...."Tom4cwb and parsley can you find a better price for feed wheat and barley in the USA now."

                  Lots of people can find you a market with more $ than than the Board.

                  And then you presumed I had feed wheat or barley........" Why are you growing feed wheat and barley, poor weather or mismanagement."

                  Who said anything about growing wheat or barley? Who said anything about feed? You did, not I.
                  Don't presume Chas. I can see why your logic in other areas don't hold up either.
                  Away all day ystdy, and am just leaving again. Want to respond to rockpile, but no time yet.
                  Parsley

                  Comment


                    #10
                    Regarding buyback values into the US, they reflect the value the CWB could attain from that market on that day. The PRO reflects the value to all markets, over the full marketing period. There is no artifical barrier put up with the Producer Direct Sales values - they are the prices the CWB could attain for that quality product on that day.

                    If a producer can achieve a more lucrative return, the farmer will pay the pool account (all other farmers) the market value the CWB has determined, and he/she can collect any premium he can attain over that. This in effect prevents 'cherry picking' of the most lucrative, and often closest markets away from the returns of all farmers.

                    Of course, the farmer will receive the pooled return for that grade of grain from the CWB, and the premium he/she achieved over the market value on the day of their export transaction.

                    Don't assume the values in the US represent the only values for grain. Other markets will pay more for certain characteristics, and others will pay less, depending on what other products are competitive in their marketplace.

                    Tom

                    Comment


                      #11
                      High buy-backs and the CWB

                      I can only assume from the CWB logic that the most valuble grain which a farmer can get a premium from by exporting to the USA is feed grain or lower grade wheat and barley.

                      Yet #1CWRS buy-backs are pay-backs to the grower who does them.

                      I can only interpret this to mean that the CWB discount sells high quality wheat into the US, but prevents the sale of lower grade wheat and barley from freely flowing into the US because of the buy-back tariff.

                      How else can I look at it, from a purely economic standpoint?

                      Comment


                        #12
                        Freedom Fighters: The CWB has got you boys right where they want you. Their not going to give you any freedom to price your grain. The next thing you know who'll be demanding your guns back so you can have someone ride shotgun while you deliver your grain to a USA point. Export trade comes with a price, you boys don't like your cost or any of the answers your getting. The free trade agreement should have been called the cooperative trade agreement. The name is confusing for you boys.
                        I compare prices with three American Farmers (Ohio, Dakota and Kansas} prices are about the same. Their inputs are higher.
                        If you manage to create your free export market think of the negative results that you might get there.
                        Lets not talk logic you boys will get tongue-tied. Chas

                        Comment


                          #13
                          Chas,

                          The point really is that I do not want to export to the US at all!

                          Freight costs 50% more to get to a pacific port, and if we could have the innovation of competition, Western Canadian farmers could do $20.00/t better than US prices!

                          This is where I am headed, are you really satisfied with the prices the CWB provides on "lower quality" wheat and barley?

                          I thought you didn't grow any of this product?

                          So am I supposed to ship my #1CWRS 13.5 to the US and rip the pooling accounts off for $15-20/t. Would that make you happy?

                          I don't get it Chas, am I supposed to become a CWB theif, and be bribed with your money?

                          Comment


                            #14
                            Tom4cwb: No I don't grow lower quality wheat or barley because the world price doesn't cut it, the domestic open market doesn't cut it' the CWB doesn't cut it and $20 more a tonne won't cut it.
                            Competition, what might that be wheat burning stoves.
                            As for being a thief, suit yourself.
                            God only knows a support a bunch of them already, their called politicians. Chas

                            Comment


                              #15
                              Chas,

                              All I want is for people to be able to make an honest living, without being required to lie, cheat and steal from my neighbours.

                              The CWB started my whole fight because they expect me to do the above things, and a long as they are paying me, it is all supposed to be fine.

                              Andy M had a choice in 1994.

                              He could do a feed barley buy-back with his unregistered barley, by law it can only be graded and bought by CWB this way.

                              If he did this he could only sell it as feed in the US.

                              The other choice was to refuse to lie and just haul his grain.

                              Andy chose the second choice and never to this day has the CWB properly charged him for breaking the CWB Act.

                              If farmers are actually breaking the law by just hauling their own ungraded grain, then why does the CWB refuse to charge us for breaking the CWB ACT?

                              Could it then be proved that the CWB is breaking NAFTA Regulations?

                              WHy did the CWB Stay my charges when I hauled across the border without an export license?

                              Could it be I was not breaking the law?

                              Comment

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