Contracting and Grading of Malt

[wd9]

wedino It is the charge because of the usuual elevation deduction of board grains. I often wonder if the concept of knowing all the costs along the way is better, as in shipping, elevation, true basis, logistics costs etc or the way canola and other grains are sold where the price is at the point where risk is removed.

I don't know which way is better? What if canola took that route? $400 per tonne as the first line on your cheques than all the deductions until it hit your truck. It is more open and transparent, but seems to work only when it is all pooled. If I shipped to ADM in Lloyd, I wouldn't pay rail so I wouldn't get that 400 initially. Or would I as the oil gets shipped out by rail? Gets convoluted quickly.

Again, does malt need to be like the other grains and the price you get is the price delivered, not the price the customer gets minus his costs. This is where the industry needs to wake up and price properly. What about malt used here in western Canada? You shouldn't have to pay rail cost to Vancouver like a pooled malt of the old days. This is what this topic is about.

Thoughts?

[kamichel]

WD9 take dockage for instance, the CWB pooled accounts still deduct frieght , handling and cleaning etc on the dockage so in my case I end up getting charged 1.68 dollars per bushel for my dockage weather the ellevator cleans it or not. Maybe most of the time this amounts to a small amount. But sometimes like this year when some farmers have 10 percent midge damage the deductions can be huge. My local feed mill gives me 0 dockage, shrink, additional cost.
So I say give me a price at a certain point delivered. Pooled prices can also be at a certain point delivered.

[parsley]

wd9,

I think there is reticence on the part of industry that needs to be taken into consideration at this point in time.

I would bet a dollar to a donut that the Multis are lobbying Ottawa, desperately trying to keep the single desk.

Single desk is their cash cow and CWB's employee's cash cow. They will not repond to farmer needs until they are faced with the absense of his forced participation. hence, no accomodation, no changes, no action.

The only stick that farmers have to bring chamge, is right before an election. Governments do not like angry farm communities before/during an election.

Parsley

[sawfly]

a lot of items like freight & handling & cleaning are irrevelent, the net is all that matters.
You will not put a cheque in your pocket for freight on malt or canola processed on the praires.

in a competitive market
all the processers have to do is offer 1 cent more than you can get any where else. only enough for you to dump it in the pit.

[charliep]

The assumption is that malt is 100 % a commodity and there are not other ways to create value.

That may be the case for exporters who simply blend malt barley at the local elevator/port to meet a customers minimum standards for a 25,000 tonne sale. Will also note the different tone in this past weeks western producer between grain elevator companies with port facilities on the west coast and those without.

Will also note the difference in malt companies between the ones who have purchased grain handling facilities/are blending themselves and those who have minimal storage/require just in time delivery.

There are also differences in the quality/trait requirements of the brewers that are the maltsters customers. I understand there are significant differences in both price and quality parameters/requirements around agronomic practices in the US between a Coors, an Aneheuser Busch and a Millers contract just to pick on some examples. These differences will come out in the contract specifications and prices

Will also note that I think significant amounts of malt barley will be contracted in one form or another. I got cranky with a CWB release with the use of 75 % but I suspect is right (particularly that malt barley makes up about 75 % of US barley usage). Malt barley buyers (domestic and exporters) will have to provide incentives to participate in these programs (not discounts as the CWB currently offers you). If both farmers and malt barley buyers chose to do all their business in the fall, then both will be at the whims of the market.

[wd9]

Good points Charlie. All I want to see in the end is that when maltsters tell me my sample makes malt according to their own specs, that 4 months after I ship it and it is in the same condition as when the sample was taken and still meets their original specs the contract was made for, they can't say it is feed because they bought too much or found something better.

To achieve that I think is 80% of the way to a stable malt industry.

[charliep]

wd9

I agree with your comments and also note nashty comments. Curiously enough, the cash clearing house proposed by western barley growers may have malt barley as it first trial. The basis of the cash clearing is to have clearly defined delivery rules for both the buyer and the seller including ways of sorting out grade/quality disputes.

The only other comment is that any farmer who stores malt barley on farm should be paid good premiums for the risk and the better storage facilities to maintain malt quality/manage moisture content.

[kamichel]

I see a problem here with the storage payment and pricing malt daily. IF the price goes up per say and the farmer is just allowed to get out of a contract by submitting a poor sample so as to get it resellected under a higher price then that is likely what most farmers will do. Not to put us farmers down, but that is what will happen. So likely I think possibly what will work only is contracts to deliver at a certain date at agreed upon prices. This will likely mean much more premium for defered months. And also put risk to the farmer for keeping his malt in condition. Say if his malt goes out of condition he should be charged the difference in price at the time of the buyout. Some farmers who want to speculate may hold their good malt for a better price or a poorer price. Same as canola would work if there was a contract on canola and it goes heated. I am game for that if it gives the users of the malt a better situation for business. Which in turn will mean more malt plants more malt exported more demand for malt barley.
Well this is business, possibly insurance could be bought to counter the possible buyout from spoiled malt barley.

[kamichel]

Furrow ticker, your comment shows how the CWB has failed the maltsters. They are forced to purchase low qualitly barley. They are not tickled pink by buying it like you have stated.