Business Structure for the CWB

[Vader]

adamsmith,

How many mom and pop companies out there selling tires to Goodyear?

How many mom and pop companies out there selling cars to Ford?

How many mom and pop companies out there selling soft drinks to CocaCola?

How many mom and pop companies out there selling oil to Shell?

How many mom and pop companies out there selling grain to Cargill?

To me that is the difference. In virtually every industry out there except for agriculture the conversion to corporate entities is complete. Why should agriculture be different? Why should the corporate objective in agriculture be to keep the mom and pop business healthy? The corporate objective does not depend on the mom and pop businesses. And by the way I mean no disservice to family farms when I call them mom and pop. I simply mean the family business model regardless if it is a quarter section or if it is 20,000 acres.

[AdamSmith]

Well I was responding to the example of Monsanto and it’s RR Canola.

Do my analogies correspond exactly with a farmer selling grain to Cargill ?

Well maybe not exactly but the main thrust of my argument does.

They are both business transactions, whether it be a farmer selling grain or a farmer buying seed and chemicals or a farmer buying tires for his tractor.

Vader you believe I am too incompetent or to naïve or to simple to conduct my own affairs. You believe I need a surrogate to negotiate on my behalf because well I’d just sell my soul for a few desperate pennies. Well that’s not how I see it. I have much more confidence in people than you seem to Vader. I know much better than you what I need on my farm. And my neighbors know much better that either you or I what they need for their operations.

I once had a discussion with Andy Sirski the editor of Grainews. We were both musing as to why the cwb supporters get so personal when their ideas are challenged. He was actually concerned for my own safety. The thought never even entered my mind. Yet he explained that the more fervent cwb supporters actually feel, as individuals they have no identity. They only see themselves as members of a large group not as individuals so when I attack the large group (the cwb) they feel as if I am attacking them personally. This isn’t personal and find it quite sad that so many people have such little faith in their own abilities.

I’ve plowed this same ground so many times, but I guess I need to be prepared to plow it a few more times if that’s what I have to do.

[TOM4CWB]

Vader;

We are talking about production chains.

Are you telling me none of the groups quoted have family business partners?

Cargill itself is a "Mom and Pop" business!

[Vader]

Tom, give me a break. Cargill does over 60 billion dollars a year in business. Cargill, ADM, Bunge and Dreyfuss together control over 75% of the world's trade in grain and oilseeds.

You say we are talking about production chains. I say we are talking about corporate concentration. This is not healthy.

Adamsmith you say that you are competent and I believe you are. You say you have confidence in people and so do I.

I look at all the other industries around the country and I see the same thing over and over. Where once there were small family owned enterprises they have slowly been absorbed by their respective industries. It has happened in the oil industry, confectionary stores, the garment industry, airlines, automotive, wine, fast food, insurance, even logging and fishing.

Only in agriculture do we have an entire industry whose production is still controlled by small entities. I don't know why we have managed to hang on longer than the wildcat drillers and all the other businesses from the early 1900's.

Some days I think that we are really fooling ourselves. At an average age of 58 years old we are quickly moving towards the endgame. Saskatchewan started with something like 800,000 farmers when the province was opened up through homesteading. Today there remains about 85,000 farmers in western Canada. Now that averages out to only 580 acres per farm and I know that in my area 1200 acres is small. Obviously there are a lot of 1/4 section farmers. If you apply the 80/20 rule there would be about 17,000 farmers producing 80 percent of the grain on about 40 million acres. My math tells me that these farmers average 2350 acres. Even that is small when it comes to cash flowing a new airseeder, combine or high clearance sprayer. Let's apply the 80/20 rule to those 17,000 farmers. Then there are 3400 farmers operating 32 million acres. These guys are running just under 10,000 acres. I am not sure if Stats Canada would bear me out on this but I know a few 10,000 acre farmes in my area. Sounds about right to me.

So is this the "industry" we are talking about? Just over 3000 operations? And are they healthy? Are they profitable?

Where do we draw the line? Which farm size is "important"? Who will survive? Shall we give the 3000 of the largest operators a weighted ballot? If they can set the agenda will they be better off? Can they compete at these low commodity prices? Can the 1/4 section operator compete at these low commodity prices? Honestly I don't think most operations can continue at these low commodity price levels. A few of the largest operators can and will continue to produce and compete at these levels and that will drive the process of elimination.

Perhaps there are those out there who do not subscribe to this theory. Perhaps we don't want to believe the writing on the wall. So we keep doing what we are doing. The auctions continue. The average farmer's age keeps going up. Numbers decline.

Who will still be here in 10 or twenty years? Will it be Adamsmith? Will it be Tom4cwb? Will it be Agstar, parsley, incognito? Who knows?

I wonder if we can change this scenario? What do we want the future of rural Canada to look like? Can small towns in Saskatchewan survive as farm numbers continue to drop? Perhaps the question is "Should they survive?".

Agriculture is not a simple business as it relates to lives, families and communities.

My view is simply that there are two outcomes. The corporate model where rural Canada becomes virtually depopulated or a co-operative model where farmers band together to sustain the family based model and living in rural Canada is a desirable outcome.

The corporate model is supported by those who want to "go it alone".

I see the CWB as supporting a cooperative model. If we throw it out what exactly will replace it that will actually empower farmers? The CWB may be far from perfect but it is way better than nothing. It can be fixed. There was a time when I was "mad" at the CWB as I know many still are. You need to get past that and work on a solution. Unless of course you do support the corporate model.

[AdamSmith]

Vader, Agriculture is indeed a complicated industry. So complicated in fact, that for any one individual or group of individuals to even suggest they have all the answers is just ridiculous. In Canada alone, we have several different soil types in several different climactic zones and varied geographical areas. Land use and cropping practices too can be as varied as the individuals who farm that land. Some farmers are workaholics but aren’t big risk takers. While some are big risk takers but also embrace much of what life has to offer outside the industry of agriculture. Yet still some are both big risk takers and workaholics (can you say candidate for an early coronary) while some work only the bare minimum and are risk averse.

I believe that with all this variety to land and life it is impossible for any one person or any one group to devise a system that can properly accommodate all. I recognize that the free market system can’t do that either. But I do believe that the free market system, with all its flaws, still fits best with the varied nature of our industry which I described above.

You cite the many examples of corporate take-over in you post and I agree these things have happened. You also see these things as negatives. I guess I look at the other side as well. I believe you have made a false assumption that they are all negative to society. I believe some are but many are not. I will give the example of a good friend’s son who decided farming was not for him and decided to go into the restaurant business. With the help of Mom and Dad he bought an existing chain restaurant. As I understand it he is doing quite well in this endeavor. So is it a Mom and Pop and Son venture or is it a corporate take over. I see it as the former, you may see it as the latter.

Co-operation is good, compulsion is not.

[cowman]

Vader: I think you answered your own question? At an average age of 58....there are no kids!
The "agricultural industry" as we know it is moving exactly where your worst nightmare takes it!
And still there will always be some that survive...and yes even thrive!
It won't be done collectively. You know that...and so do I. It will always be the guy who takes a chance...its called free enterprize?
There are people out there making a go of it and doing well...thank you very much!
Maybe they aren't like these "pure hearted farmers" but they are still down on the farm, still producing food, still enjoying most of the lifestyle?
A long time ago I made up my mind that I was a "businessman" instead of a "farmer". Now without a doubt I love this darned old land more than life itself...but one day I said " I refuse to work for nothing!" If that meant I had to do other things...then that was just how it was going to be! I "diversified" into something else...and got rid of the things on the farm I really didn't like and got into things I really did like?
Nope I'm not a "pure farmer"! In reality I make more money with my other ventures than with the farm.... Maybe sort of like all these value added types...who still think they are "pure farmers"?
Bottom line: As long as I choose to remain on the farm and pursue an agricultural program, I can? No banker knocking on my door? Can't say that is going to be possible for the "pure farmer"?

[TOM4CWB]

Vader;

The Corporate structure of Cargill is private, owned by the Cargill family; Last I heard the news on their profits a couple of days ago.

If a family has the wisdom to run a business in this manner, build communities; feed the hungry world: who are you or I to demonise these hard working folks? NOT ME!

All of the complaints against Cargill you make... can be shoved right back in your face... and proved just as well about the CWB and it's management of grain grower's resourses in the CDN "Designated area".

In Fact; I would be happier dealing with Cargill any day over being FORCED to deal with the CWB "single desk"!

At least Cargill doesn't impound my truck and threaten to put me in jail for seeking to make a living for my family and friends!

It takes one to know one;

Jealousy of Cargill will get you in a heap of trouble Vader!

[onearm]

"Co-operation is good, compulsion is not."

Best idea posted here about the future of the grain industry.