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The Future of Marketing Grain: Why Choose Choice. By Minister Chuck Strahl

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    The Future of Marketing Grain: Why Choose Choice. By Minister Chuck Strahl

    The Future of Marketing Grain: Why Choose Choice

    By Chuck Strahl,
    Minister of Agriculture and Agri-food
    and Minister for the Canadian Wheat Board

    Canada’s New Government believes Western grain farmers should have the freedom to choose how they market their grain, allowing them to maximize their returns, while preserving a strong, viable, yet voluntary Canadian Wheat Board (CWB).

    Firstly, let me be clear about our government’s intentions for the Board: It will be there for farmers. Recent events would suggest to me that the CWB clearly has a solid base of support among farmers and an excellent reputation with its customers around the world, in the grain industry. And that is great news and assures me that the future of the Board remains strong. Given any change to the Board’s monopoly on barley, I know there will be farmers who will want to continue doing business with it.

    We believe that, since farmers take all the risks and make all the investments, they should not be punished or jailed for pursuing opportunities outside the Wheat Board that make good business sense. Whether selling to the Wheat Board or outside of it, farmers should be allowed to seek out the best price possible for their work.

    Therefore, for many this is an issue of freedom. I know that farmers are strong, independent-minded folks who have been in the business for years if not generations. As farmers’ are taking all the risk, it only seems fair to them that at the very least they should have the option on how best to market their grain. Just as those who produce canola or pulse crops or apples or cattle or any number of other farm products raised in Canada.

    But for others, the right to choose is not only an issue of freedom but comes down to dollars and cents. For example, an Ontario wheat grower selling hard red spring wheat with 13.5% protein would get about $5.50 per bushel right now in the spot market. A grower on the Prairies selling #1 Canada Western Red Spring with 13.5% protein through the Canadian Wheat Board is currently forecast to receive about $4.40 per bushel as a final pool return, $1.10 less than received by the Ontario farmer. And this projection can change. Not only would the Prairie grower receive less, but he or she would have to wait for months to find out how much less.

    Lastly, there have been some studies published recently that claim that the removal of the CWB monopoly on barley will be detrimental to farmers, or that the CWB is a major economic driver of the economy. Other studies show the opposite. The fact of the matter is that it is the Canadian grain industry and the hard work of its producers that contributes to the economy. The CWB is a part and not the sum of the industry. Therefore, to suggest that jobs, buildings, or other tangible benefits somehow would not have existed without the CWB’s monopoly is false and misleading.

    …/2
    Therefore, we need to stop the fear-mongering that somehow a vote on barley represents the end of the Board – because it does not. The Wheat Board will be there. So let’s allow farmers to have there say.

    Additionally, many opponents of allowing farmers to have the freedom to choose say that our government has absolutely no support for what we are doing. Well, for starters, I would suggest that groups like the Western Barley Growers Association, Western Canadian Wheat Growers Association support our efforts. Countless farmers across the prairies have written letters to their local papers in support for what we are doing. One person wrote:

    "I commend you for following through with your campaign promise to provide marketing choice to Western Canadian wheat and barley producers." (Western Producer, 2006.10.26)

    In the upcoming plebiscite on barley I am urging barley producers to consider the option of choice – the option to market their product in the manner of their choosing to the Canadian Wheat Board or any other domestic or foreign buyer. We have also committed to hold a further plebiscite on the marketing of wheat at an appropriate time. Western Canadian farmers have the Government’s commitment that no changes will be made in the Canadian Wheat Board’s role in the marketing of wheat until after that vote is held.

    I look forward to what farmers have to say on this issue and trust that those eligible to vote will take the opportunity to do so.

    #2
    Just some number for you out of the 2004/05 CWB statistical tables. The CWB handles about 2.7 mln tonnes of barley out of a total crop of about 12.5 mln tonnes (Canadian production) - 22 %. Variability between years is large. Of the 2.7 mln tonnes of barley that is handled, about 650,000 tonnes (ten year average). The feed barley buyers are Saudi Arabia and Japan but only in years when international prices are high/Canada has excess feed barley. Of the 2 mln tonnes, about 1.05 mln tonnes is exported as malt barley seed with the major markets US (480,000 tonnes) and China (408,000 tonnes). The 950,000 tonnes is malted domestically with 636,000 tonnes being exported and just over 300,000 tonnes used domestically. If asked, I can make a list of the malt processors in Canada.

    Just information for the discussion.

    Comment


      #3
      The Malting Industry Association of Canada (MIAC) is comprised of four firms that operate six plants:

      Canada Malting Co. with plants in Calgary, Thunder Bay and Montreal
      Dominion Malting Limited located in Winnipeg
      Prairie Malt Ltd. located in Biggar, Saskatchewan
      Westcan Malting Ltd. with a plant in Alix, Alberta


      "One explanation for the malting industry support for CWB control is that the total value of
      services provided by the CWB to maltsters, in the form of very favorable (to the maltsters) selection
      rates, maltster free storage and inventory control, and flat competitive pricing on offshore sales, far
      exceeds the extra price they may pay."

      Qoted from:
      http://72.14.203.104/search?q=cache:RdE8rAL3BQUJ:aic.ucdavis.edu/oa/stecwb.pdf Maltsters %2B Canada&hl=en&gl=ca&ct=clnk&cd=12


      Parsley

      Comment


        #4
        ooooooooooo dang personal pledges....(only charlie will get this)

        Comment


          #5
          More stuff on barley (Tomorrow's PRO will be interesting).

          2) Malting Barley in Tough Competition with Feed

          The domestic price of feed barley is as high or higher than the
          price expected for malting barley in many parts of the Prairie region.
          The normal premium for malting barley has evaporated this year.

          Canadian Wheat Board market analyst Jason Newton addressed this
          issue when speaking recently at Crop Production Week in Saskatoon.
          During his session (Jan 12), a new stocks report had just been released
          by the US Department of Agriculture, and American corn prices were up
          to their price limit.

          The entire feed grains complex has ratcheted higher since harvest,
          and the Canadian Wheat Board's Pool Return Outlook for malting barley
          has not kept pace.

          Newton says the CWB made a lot of malting barley sales commitments
          during the June-August time period before international prices
          increased. He says this is limiting the ability to get better overall
          returns when the price is pooled for the entire crop year. Newton says
          that early sales were considered to be at good values. He notes that
          American growers also contracted much of their malting barley
          production at lower prices.

          With feed values high, Newton acknowledges that enforcement of
          malting barley delivery contracts could become an issue.

          Source: Profarmer Canada

          Comment


            #6
            Parsley.

            Thanks for posting the study link. I note from 1998. I suspect the honeymoon between maltsters and the CWB ended after the 2002 drought so comments from this industry might be slightly different today (depending on which company you are talking to).

            Comment

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