What kind of deal is this?

[cowman]

In the paper, Farm Gateway, there is a letter to the editor from Albert Wagner, pres. of the Western Barley Growers.
In it he states in the 1997-98 crop year $52.9 million was spent on administration costs by the CWB, in the 2000-01 crop year these costs had gone up to $66.4 million! In 97-98 they marketed 21.6 million tonnes, in 2000-01 that had fallen to 20.3 million tonnes! So it cost $3.26/tonne in 2000-01 and $2.44/tonne in 97-98! Now this year what will be the numbers? I assume the amount of grain will go down but I imagine the administration costs might just go up? Director Art Macklin told a group of farmers that the cost of operating the CWB was on the way up.
Now if GM sells fewer cars do they go out and spend more money? How about Imperial oil? Maybe the CWB needs to take some lessons in basic business? When times are tough you cut back costs, maybe? How do the current crop of directors defend this example of poor management? Or are they just there to collect their own paycheck?

[rodbradshaw]

Cowman
They probably will just churn abunch more money so they won't have to cut costs. I asked the same question in another thread (CWRS).

[TOM4CWB]

Cowman;

I would see CWB handling as the following:

6mmt non-durum wheat;
3.5mmt durum;
.75mmt malt barley

For a total of about 10mmt in 2002/03

At 66mil that is $6.60/t marketing cost.

[parsley]

cowman,

When you do the arithmetic on the Bushels Sold through the Ontario Wheat Marketing Board, and divide it by the Number of Employes at the Ontario Wheat Marketing Board and then compare that to the bushels sold by the CWB divided by the number of employees at the CWB, it will give a comparative basis within Canada.

Parsley

[TOM4CWB]

Cowman;

Even a bigger question than just operational costs must be asked;

For Instance...

If the CWB sold 25% of the expected non-durum crop in early June, .25 times 18mmt equals 4.5mmt.

Now if the CWB realises that they will look bad.. and that it must show that it at least tried to stop the losses, so it bought back half of this 2.25mmt at a loss of say $50/mt.

THis is about $110million.

Now if in the next 2 months the market drops back half the difference or:

2.25mmt times $25/t or $55million, a conservative loss for the CWB could easily be $165 million dollars.

And this all happens because they sell grain that they do not have to sell...

My question is, who approved the CWB forward hedging the 2002 crop, and how did the CWB Act authorise the sale of grain that the CWB did not purchase, but just speculated that it might purchase and market.

I believe a legal breach of many Canadian Acts of Parliament occured, including a breach of the CWB Act.

SO the actual cost of CWB marketing this year could be anywhere between $6/t and $60/t depending on what decisions the CWB did on timing of sales for 2002/03.

Isn't it amazing how that $1/bu figure of lost revenue/bu keeps sneaking back into view...