Canadian Wheat Board

[TOM4CWB]

Vader,

When the government of Canada sets initial prices, they set in motion a whole chain reaction of prices and competitive responses in other grains.

Further, the initial prices determine the latitude of the CWB sales dept and where/what markets they will sell grain into. A high initial means cautious sales with careful risk management, if careful marketers are in control of the sales program approved by treasury.

A low initial means practically no oversight on risk management from treasury, with the latitude to sell into any market at the bottom of the market.

This "initial price effect" has a direct effect on prices distributed to "designated area" grain farmers.

[nejar]

I don't think anyone person or government agency has the right to take away the producers right to manufacture just because their opinion is that there probably is no market. Small business finds a way; always.

Remember the wingnuts who used to be notillers. Remember the other wingnuts in left field who were organic. Where are they now?

It's fundamentally wrong to take away rights in one part of the country and not in the other. Farmers marketing creativity is stifled and the whole system is satisfied with mediocraty. If the CWB is so good then it should be able to compete at least with just a few innovative farmers. Who knows what can happen. New small markets can pop up any where and no one is capable of predicting what those are. Ony innovative small business entpreneurs can figure it out.
The world has become a very accessible trading area for everyone. For one government agency to make it a crime to participate in this market is an injustice unparalelled in the free world

[Vader]

tom4cwb, I agree with you. Initial prices suck. We need to completely delink from the federal government so we can set our own initial prices without government interference. On low value grains like feed wheat the default program should be a 100% EPO or guaranteed delivery contracts.

[Vader]

nejar, get off you philosophical butt and go manufacture something. The fact of the matter is that without the CWB the playing field would be severely tilted in favor of the larger players. Because of the CWB all manufacturers purchase at the same price, a distinct advantage for smaller players. In fact CWB pricing policy makes central Saskatchewan the cheapest place on the continent to acquire raw grain for processing. Go do your homework.

[nejar]

Vader
"the cheapest place to buy in the world."
Sitting on my philisophical butt - What does that tell you about the CWB

[Vader]

no nejar, not the cheapest in the world. The cheapest on the continent because of the freight advantage. Grain is priced at export position minus freight. If you want to buy grain from the CWB in the middle of the prairies you get the greatest freight back-off.

[TOM4CWB]

nejar;

The highest freight backoff does mean the cheapest price in the world! You are right!

The highest costs, with the lowest price.

[Vader]

tom4cwb, the lowest price in the world is probably somewhere in central Ukraine or Russia or Khazakiston. Take black sea wheat and back off the freight to central Russia and you will probably find the cheapest wheat on earth. They do not however have the costs that we have. They pay for their freight in funny money. Their ownership costs are hard to determine as they come out of the commune system. They don't use much in the way of fertilizer or chemicals and for many, their equipment is ancient if they have any at all.

How does $50.00US per tonne back off to central Ukraine? That is $1.65 CDN at port. Does this put $1.25 in the pocket of the Ukranian farmer? Does that make the Ukranian farmer profitable? I don't know. But they keep doing it.

Does China buy any Ukranian wheat? Argentinian prices can be competitive with Black Sea and China certainly buys from Argentina, especially when they produce more than they can sell to Brazil. How do you move a large volume low quality Canadian crop into the world market against this type of competition? You can't do it at a profit and it certainly isn't sustainable.

The only solution is to find alternative uses for low quality wheat domestically. That means either livestock or ethanol. Both are good. Ethanol would seem to have more long term volume potential. Energy demand is huge and continually increases.

Lets quite harping on the CWB and recognize the real problem and work toward a solution. Lets develop markets for non-milling wheat in Canada. Let us discover the needs of these markets, and breed wheats with specific traits based on these needs. Wherever necessary let us change regulatory systems to facilitate these ventures. And perhaps most importantly lets make sure that government is onside and recognizes the importance of success of this sector.

[charliep]

Vader - First, a thank you for your participation. The discussion is excellent.

1) Just a comment on how much our quality has struggled over the past 4 years - not a farmer/organization issue but mother nature. I have heard one CWB official comment that the bottom end of some of our 2 CPS/3CWRS/etc. was of poorer quality than Ukraine, Russian and Argentine wheat. Our customers judge our product by how it performs in whatever their are manufacturing/milling.

2) I would watch how Canada measures competitiveness for these eastern block countries. Based on my trips there, the Ukraine is a basket case in terms of financing, regulation, grading, etc. - all the things Canada prides it self on. Where I did see success is supply chain relationships where farmers (supported techically and financially) can move specific quality through a commited logistic and quality system (usually backed by one of the multi-nationals but not always) to an end user. Watermelon to Sweden. Strawberries to Russia. Sunflowers to various locations. Why not malt barley to China set up by a multi national and monitored by someone like SGS. To illustrate, the phone system in the Ukraine is a basketcase - old technology/poor service. Everyone has a cell with service likely better than ours - newer technology from Europe. Canada cannot be sitting still - we will get passed.

3 We all agree on the need to develop new markets for wheat in Canada. The disagreement is looking at not only the lower end of the quality spectrum but also encouraging innovation and investment at the upper end as well. The question is how we do it and whether the current marketing system allows this.

[nejar]

I was in Australia in 2001 and they were already marketing white wheat to Japan under contract. In 2004, 3 years later, Canada wakes up and starts to promote white wheat. Why so slow?

I for one don't have faith in our bureaucracies to keep pace with world markets.

New market niches I'm convinced here in North America where price is not as large of an issue as quality. The organic farmers have already figured it out and are haveing to deal with the CWB red tape to market their product which I think is absurd.

Vader, some people think that the CWB is the problem. Maybe we could share some thoughts on defining the "problem" which is low prices and high input costs. What has to change any who should be changing? I don't think the Canadian farmer can carry on the way we are and survive long term.