Pricing Versus Marketing

[charliep]

Thanks for your request for clarification/last comment. From my private/grain days, I am very sensistive about customer issues.

Re: Preferred access. A bad choice of words. An example might be a better explanation. Two neighbors - one with hogs and the other with barley have developed a long term supply relationship. The barley grower is committed to providing access/first right of refusal to deliver heavy barley (if possible) even in years of tight supplies. The hog barn is commited to taking barley from this neighbor first even in years of large supplies. Supply agreements are made to ensure barley is requested/delivered when needed during the year. Pricing is done using western barley futures and an agreed to basis. The basis can be reviewed regularly to reflect market conditions. Each party is free to hedge using futures if it is felt it is a good business decision/risk management tool without impacting the other party. This is the kind of relationship I am talking about.

I hate the word premiums. I would like to think of value instead - that is having a customer pay a price above the market because we are able to deliver a consistent high quality product that exactly fits the custmers needs over a period of time when needed. The higher price we are able to achieve above Portland DNS is not a premium but rather a reflection of the value we provide the Japanese Food Agency in supplying their mills with a consistent quality product during the whole year.

Does this happen now? Yes - the JFA buys 110,000 /- t every month of 1CWRS 13 % protein CWRS wheat from Canada and has done so for a long time. Could this business be done outside the current pooling system? Yes but even the grain companies would have to develope a contracting program to make sure we are able to fill the ships as they arrive every week.

Can we increase sales to Japan at expense of the US? I can only answer with questions. First a comment - Japan is a very mature/stable market that buys a very consistent volume of grain every year - our growth in sales has to be at the expense of other exporters. Are US and Canadian wheat co-mingled or is it kept separate and delivered to mills based on quality characturistics? I suspect US wheat has a different market so we may end up selling a different grade/type of wheat to increase market share. Would the Japanese food agency source all their supplies from one country or do they make the decision to source from both regions as a method to reduce supply risk, risk of paying too much (increase competition) and for political reasons (spread sales around a bit)?

I look for others thoughts.

[chas]

Two concepts of marketing, deregulated(open) the wealthy survive, regulated (controlled)market everyone benefits.
Deregulated causes more competition and is to create lower prices for consumers. Thats why corporations merge to gain market and control of prices. Farmers are in a deregulated market, so if we want sustainablity we must merge into marketing agencies to have some price control.
Some are questioning the CWB on alot of things that have no answer but yet they will sell all their grain to some profit making grain company without a question. They could have done better if they were running the ship. Isn't it odd that we trust things that we know nothing about over things that we know something about and could possibly excersize some control over.
Lets hire our own marketers. I can't trust a system that is working for their own interest and not concerned about my profitablity. Tom4cwb I think it was you who said that you love to trust those people who put their own interest ahead of yours. Chas

[freebird]

Re: the open market vs. regulated one.
The open market maximizes the price to
producers while minimizing the price to
consumers. That is the result of
competetition.

This paranoia against grain companies is
what, I guess, causes some to have a
love-in with a state sponsored entity
that will throw you in jail if you would
dare try to sell grain that you grew by
your own effort to someone besides them.

Regarding the CWB, any issue besides the
fact that they operate with coersion is
entirely irrelevent. I don't care if
they do get a premium for wheat, I
should still have the right to sell my
grain to whom I choose. And I don't
care if 99% of other farmers vote to
surrender their minds to the CWB - they
don't have the right to surrender mine.

Adolph Hitler was head of a
democratically elected government - the
majority is often wrong, that's why
there has to be constitutional limits on
government.

A farmer who grows grain has the right
to sell it to whom ever he wants, by
grace of the fact that without his skill
and effort, it would not even have
existed in the first place.

[TOM4CWB]

Freebird,

You really seem to have a bur under your shorts!

But I am afraid that I must agree with you!

The best example of how a free and democratic society must work is respect for each other, and with that goes respect for each other's property.

A little story to show how democracy should and should not work in our society.

Agri-ville members think TOM4CWB should buy all other members of Agriville new computers so you can access Agri-ville easier. So now what does TOM4CWB do when 4000 members vote in a democratic referendum to make TOM4CWB pay Agri-ville $12 million for new computers?

Would it be fair to take all TOM4CWB's money for the rest of his life, and the rest of his childern's lives to pay this debt that was created by a binding democratic referendum?

I certainly don't think so!!!!!

So this is the problem with democracy, it must be based on mutual respect and voluntary contributions for it not to be a dictatorship!

My point on Japan is only that an entity that worked on a voluntary basis like Excan, or AgPro, or UGG could all easily be providers of high quality wheat to the Japaneese market, and even private companies Like Cargill, Louis Dreyfus, or Conagra could provide the same services.

I think time will prove me right that trade balances and trade alliances and preferences are important to doing business, not just the quality of a product!

Am I right?

[charliep]

I'll let others deal with the top part of your message Tom. With regards, there is nothing stopping Japanese trade under a open market system (similar to canola). There likely are long relationhips/political implications, but at the end of the day, whoever sells Japan wheat must be able to land a 25,000 cargo of 1 CWRS 13 to 13.5 % protein every week for a whole year.

[chas]

Freebird welcome to the thread. Freedom at last! Freedom at last! Who is this CWB that is forcing you to deal with them. Do they not listen to the people. Are they determent to bankrupt us all to obtain their dictatorship goals in this country. Could we possibly trust Cargil, Louie Dreyfeus, AgrPro, Agricore or anyone else to market our grain with our profitablity in mind. Free can also stand for no money get the drift. If you don't like the market don't use it, grow rye or hay there great free market commmodities. You want to export your grain to the USA I suspect because of the nighe markets that show up from time to time. Even if the CWB allowed that to happen the market would disappear in a moment because someone or some company would fill it before you could start your truck. Besides some American is going to shoot you if he sees you to often filling his market. Thats why there are tariffs and the World Trade Organization to try and sort out the disputes that take years to even talk about them and then Governments are involved and then a whole bunch of people we don't understand want their view point heard and on and on until the farmer goes broke. The farm crisis has been a continuing problem for 152 years. Thousands of farmers and wantabe farmers have disappeared, was this because of the CWB or the open market. The open market tells me there is a over supply in this commodity or that one but I'am not forced to hold any grain in the bin. I still have the same buyers buying it for less money but the end product they are making still remains at the same high price. Where is that freedom money going. Theres a surplus when no one wants to buy my grain and I have to store it, that hasn't happen in 26 years that I have farmed. Freedom comes with a high price tag. What makes you think your in jail if you have to cooperate with the majority. Democracy is the worst possible form of government except for all of the rest.(Winston Churchill)
Tom4cwb & Parsley freedom is a frame of mind and your not app to ever get it.
Your old chicken herder: Chas

[TOM4CWB]

Chas,

In my rotations, I need wheat and barley to grow to have a sustainable farm in the long term.

I grow Canola whenever possible because it has enough volume that speculators and mutual funds make a liquid market, and I can make a profitable living growing this crop when I have this liquid vibrant market.

I have freedom to market with Canola and usually sell to all the major grain co's so I have competition.

During harvest, my trucks will be heading in three directions at the same time from the same field, and this way I know, and more important they know I know, if the particular grain co I am delivering to is grading my Canola fairly!

When the CWB gets to a competitive system where buyers come asking for my wheat, like they already asked for all my Canola, 3 months before I have even seeded it, then maybe we will get somewhere.

Chas if you are so unhappy with the open market system, which I remind you the CWB is a part of and must sell to, then why do you grow grain?

[freebird]

Chas, I would not have the cheek to try
to tell you who you should sell your
grain to, all I ask is that you extend
me the same courtesy.

fb

[freebird]

Chas, I would not have the cheek to try
to tell you who you should sell your
grain to, all I ask is that you extend
me the same courtesy.

fb

[chas]

Freebird and Tom4cwb you are both 40's years or younger and both are addicted to gambling and don't know it. The open market is putting your whole farm at risk and you want every body to gamble their farm, thats why so many farmers have lost it all. Just be because you boys are such miracle price getters. Just look around can you replace every farmer who isn't or don't want to be a stressful price getter when marketing acgencies would probably average you a better price over the long haul.
Firebird I don't intent to be cheeky but I did give you a choice to market your grain. You can't always have your way give alittle it will make you feel better. We can make a deal that suits us all.
Tom4cwb you can't see the big picture. Chas