Does the CWB understand Marketing?

[TOM4CWB]

thalpenny and the CWB;

At 8:00am this morning you announced an increase in 2001-02 initial prices you pay we farmers for our grain.

This must mean that on Jan 31st (and most likely well before Christmas) you knew that the 01-02 initials were increasing.

Jan 31st was the signup deadline for the B-series CWB Contracts.

On CPS CWES wheats the initial increase was close to $20.00/t and would have an impact on decisions to contract this wheat to the CWB.

I believe you don't understand the saying "a bird in the hand is worth 2 in the bush"

The CWB PRO (which are not assured payment in any manner) projections do not motivate deliveries anywhere near actually paying, in cold hard cash for my grain.

It appears the CWB is too tied up in politics and not paying attention to what matters, serving those in western Canada who they market grain for (grain producers in the "designated area" just in case you forgot)!!!

LACK OF UNDERSTANDING of what motivates real farmer sales decisions is at the very core of why the CWB has become marginalised and irrelevant to many grain producers in Western Canada.

Farmers must pay bills, and need cash to do so!!!

WHY Doesn't the CWB have a cash purchasing program for our wheat and barley yet?

Wouldn't this be much more useful now when I know the Quality and Quanity, rather than ending PPO programs on July 31st when I know neither?

Hopefully we can learn and change, does anyone believe this could be possible...?

[charliep]

My thinking is that the farmers will vote with their acres this spring on the CWB issue.

If it stays dry, spring wheat acres are likely to stay the same to drop a bit reflecting the fact wheat is likely a lower risk crop in a dry year (comments??). The shift will Alberta will be to more prairie spring acres to provide more non CWB alternatives (I look to comments from SK./MB. on mid quality wheats).

If Alberta and Saskatchewan get some rain this spring/there is some level of comfort on soil moisture and price outlook remains the same as it is today, spring wheat acres (excluding durum) will be down 10 to 15 % with CPS wheats holding steady and CWRS taking an even bigger hit. Small seeded crops like canola will increase but also likely more barley, oats and pulses (mainly peas).

Lower acres will mean Canada will be less and less a factor in the world wheat market.

Thoughts??

[TOM4CWB]

Charlie,

With Fusarium and wheat midge problems moving west one wonders if the CWB is willing react quickly enough to have "designated area" wheat and barley production remain competitive on a world wide basis.

Farmers are fighting an unbelievable battle when the environment and the government both turn against them, as has happened in western Canada!

What can we do to reverse this long term problem Charlie?

[rodbradshaw]

Tom

Maybe the CWB should just borrow another couple hundred billion and we wouldn't need to grow a crop, we could just live off the interest their making on this so called investment practice.

[TOM4CWB]

ROd,

Albert Wagner said exactly the same thing to me!

Do you understand the implications?

Just have a little talk with the person who discovered this Billion dollar scheme, and see exactly who benefits from it, Bankers and Brokers?

I am afraid the taxpayer of Canada, (which is you and I, Rod,) will end up paying big time for these shennanigans!!

Rod, do you really believe we can get something for nothing...(selling our...) from the CWB, has it ever worked this way before?

[rodbradshaw]

Tom

I am very concerned about this practice. This can not be all government guaranteed investments we are talking about. The other thing you mentioned is how much is someone getting paid on commissions to do all these transactions.

[rodbradshaw]

Regarding the borrowing of billions, I think you can understand that this is short term investments in the money market. The amount that was reported in public accounts was the cumulative amount over a one year period. So to finance the operations of the CWB (ie pay farmers the initial payment before funds collected from the buyer) and to finance existing credit sales, a significant amount of money needs to be available.

So the CWB 'buys' this money on the market in exchange for interest. It just so happens that the interest that we have to pay is less than the interest that we collect from customers who buy grain on credit. That's how the interest is earned for farmers.

It's approximately $60-75 million per year ... nothing to sneeze at and more than covers the administration costs of the CWB.

Tom

[TOM4CWB]

thalpenny,

In 1998 the CWB churned 185 Billion dollars. By granting this credit;

How much commission did brokers make that were involved with these 100's of Billions of churning?

Which Banks and exchanges were involved, and how much money did they reap off these 100's of billions of churning?

Are you absolutely positive that the taxpayer of Canada did not accrue one more cent of national debt for Canada out of these 100's of Billions of churning?

Is it true that the CWB is still churning the over 1 billion that was written off by the Canadian gov. for Poland and Egypt in 1993, but not off CWB books yet?

[TOM4CWB]

I don't know the answer to your last question.

I know the economic judgement that gets made by our finance people is to generate the largest net return on these transactions. So the transaction costs are likely less than the interest benefit that is being gained with short term money. There is also value in maintaining liquidity.

Not to deflect, but this is a classic example where you're really looking the gift horse in the mouth. If the CWB wasn't there, the Export Dev. Corp (ie fed govt.) would likely be providing the debt and keeping the interest spread - farmers wouldn't receive this benefit.

Tom

[TOM4CWB]

thalpenny,

Is it fair Tom, to other crops grown in western Canada, that do not have this opportunity of easy money?

Again, my understanding is that much of the volume of the CWB churning activity is based on the long term CWB debt mostly to FSU and 3rd world countries that cannot pay!

If the CWB were just doing these transactions on day to day business this is on thing, but specifically churning bad debt increasing it by doing so dishonours the country who we lent to as well!

And the CWB's solution, don't tell Canadians about it, in the future, and hide it, is this a solution, or a coverup?

[TOM4CWB]

Thalpenny and the CWB,

What are you going to do with the barley pool, when you have such large interest earnings and such a small tonnage in the feed barley pool?

Are these interest earnings going to remain in the feed barley pool in 2001-02?

[rodbradshaw]

Is it not allocated based on the percentage of business done by CWB?

[TOM4CWB]

Rod,

The problem as I understand it is that the specific grade sold in the 1970's to 90's is supposed to be returned to the same grade and pool.

Since much of the interest income created by CWB churning came from feed barley sales, then it is supposed to be returned back to the same pool account.

When the CWB used to sell 3million tonnes of feed barley the distribution was a small amount per tonne.

But if the CWB only handled, say, 50,000t then interest churning income influence on the feed barley pool could be astounding...

Now the CWB must find another way to launder this money, as it is simply too distorting...

[rodbradshaw]

Thanks Tom , I get the picture. We are finally getting rain, first measurable in 19 days, it is a welcome sight.
Rod