CWB premiums

[liberty]

Something that constantly amazes me about proponents of the CWB is how they go on about the premiums that the CWB supposedly gets for western Canadian wheat (Rod Flaman being the latest convert to this mantra). What they don't bother to clarify, however, is whether these premiums ever actually make it to the farm gate. I don't believe they do, and you don't need a 500 page study to prove it.

If the CWB was delivering the premiums it claims to be to the farm gate, then why aren't growers outside the designated area clamouring to get on board? In the case of Ontario wheat growers in particular, this wouldn't be all that difficult (just enlarge the designated area).

If the CWB is actually able to deliver premiums for high quality wheat grown in western Canada to the farm gate, then why would anyone from outside the designated area pass up this golden opportunity to essentially get a free lunch. The decision should be a no-brainer.

The very fact that Ontario wheat producers are moving to the exact opposite type of marketing system is a clear indication that they believe that either single-desk premiums don't exist, or if they do, the farmer never sees them.

[s24]

I agree with you. If the wheat board is doing such a good job why are they worried about competion. Look for example brown mustard this year: it was 18 cent a pound last spring now it is 45 cents per pound. Also what would have happened if thier was a good crop this year, the wheat board cannot move our wheat now and thier is less than 50% of the crop this year. It is time for a change. The wheat board was probablygood when we had horse and wagon but everything changes and they should to.

[winston]

In the case of mustard - if it was on the CWB they would not sell it at the highest price - instead they would hold back supplies for their best customers - like they did with milling wheat this year ( and in 1996 and 1988) - resulting in lower prices for us!

[almoy]

Winston, I was talking to an alfalfa producer the other day. I was kidding him about making a fortune on his hay this year. He replied that he did NOT sell for the highest price he could get as he has customers that buy from him every year. He sold to them at a reasonable price as he wants to keep them as the valued customer that they are.

The top price is not always the only consideration unless you want to look for new customers every year. Unlike some posters on this board I believe the CWB should be looking after our loyal customers.

[TOM4CWB]

Almoy;

The point you make is a very good one... if those selling are allowed to make the decision themselves... and a personal relationship can be built that actually enhances future business development.

However... this theology goes directly against CWB stated principal of the single desk monopoly... TO MAXIMISE MY RETURNS BY EXTRACTING THE MAXIMUM PREMIUM that a monopoly has power to extract.

It does not take a CWB to do business on the above stated principal, as in fact the "pooling" part of this unwritten contract is inherent over multiple years of doing business...

It works something like:

I will respect you when I sell to you (Not charge more than you can afford), and You will respect me and pay a reasonable price every year(SO I can afford to be in business next year).



I sure do not hear this from our CWB wheat and barley customers... infact I believe the opposite is the case.

In fact the CWB spends millions of dollars on P.R. that insults our customers every chance they get... Telling these people that the CWB is "extracting a premium" over what they could buy this grain for if the CWB Monopoly did not exist, every year.

Is it any wonder we get such poor prices sooner and longer than the US... simply because of our insulting and disgusting prairie war over the CWB Monopoly? Our customers don't even know if we will grow what they want next year... let alone in 5 years... as the CWB is publically stating that they are anticipating less and less production... out into the future!

Now, if I were a grain buyer looking for a stable long term supplier, is the CWB the type of entity I would really want to do business with?

1. It puts farmers in jail for giving a sack of wheat to a 4-H club.

2. It is always telling everyone it sells for the highest price.

3. It is continiously being hauled into both local and international courts by; farmers, other countries, and even Provincial governments... for unfair trading practices!

Not exactly the picture of a stable marketer with a long term future... is it?

[winston]

Almoy

Are you that naive to think that those customers give a hoot about your loyalty? High prices only come around once a decade and we must sell at the highest price possible! If you go bankrupt or are forced to quit farming do you think those customers are going to pass the hat for you because you were such a nice guy? I doubt it!

When prices go down again we will have lots of customers looking for cheap high quality wheat.

[Lifer]

In almoy's example the alfalfa producer sold to his own customer. I'm assuming this is one person to another. In this case what ever values each person holds comes into the deal.

The customers the CWB sees as needing to be loyal to may be different then those I as an individual wish to be loyal to.

I'd like to see more options to grow quality wheat for a specific market.

[ianben]

While you guys argue about your CWB look what has happened to production in Ukraine


Ukraine: Estimated Grain Production (1,000 Tonnes)
Wheat
98/99 14,937
99/00 13,585
00/01 10,197
01/02 21,300
02/03 21,000

Is this is a sustainable increase in yield due to better farming practices?Can you as individuals compete in world markets?
Does the CWB at least guarentee a sale if not a premium?

UK wheat prices are today dictated by Black sea wheat We may be free to sell as some of you may wish but is not a lot of help against competion who can produce at 15$US/tonne.

[Lifer]

Ianben,

I'm not clear on how the CWB can guarantee a sale?

They can not force a buyer to buy.

The increased low cost production of Ukraine and others in the future is a big concern of mine. I think we need to look at more ways to produce for markets closer to home. New uses for our grains with consumer focus and profitability for all.

[ianben]

Hi lifer

From the outside looking in the CWB would appear to give the buyer a guarentee on quality.
Canadian wheat is nearly a brand like Coke or Pepsi.
I am not saying the CWB is perfect but this fact must be a marketing advantage.

There is also a lot of complaints about cwb discounting to obtain sales or pre-selling when there is a shortage.

Can they ever win if one year you produce 8million tonnes and the next 22million.

The only way to market sensibly is to try to regulate supply with demand.

We all seem to have very irratic production a round the world could we not with a little international consultation and co-operation smooth out the peaks and troughs.

A better deal for farmers and a better sevice for our customers should be our aim dont you think?

[TOM4CWB]

Ianben;

1. THE Canadian Grain Commission is responsible for grading and the quality of Canadian grain, not the CWB.

2. The CWB has no right in law to market grain it does not own, yet it presumes to take this station without jurisdiction to do so. I have no problem with the CWB pre-pricing my wheat, if the CWB has a contract with me (or someone else) to secure a supply, otherwise the CWB is far beyond the "Ordery Marketing" objective the CWB Act sets for CWB Marketing functions.

3. The CWB has no ability whatsoever to control the supply of grain grown that they must market, other than to give very low future market outlook prices... that would or could discourage planting of CWB crops. However... the forcast of unjustified low priceing forcasts then creates a credibiltiy problem for the CWB, disrupts our Crop Insurance programs, and is not ethical to begin with...

I am afraid the "benefits" that you place at the CWB's feet, are not created by the CWB, rather are the product of hard work by farmers and the grain handling system in Canada.


The CWB is a great field leveler, and this lack of transparency covers a multitude of problems and solutions with but one answer...

Having one single monoplistic entity make marketing decisions for everyone in the "Designated Area"... cannot and will not respect the needs and aspirations of all but a very few it is supposed to be serving.

Sadly, the CWB believes it is in charge of everything, but refuses to be responsible for anything.

[Lifer]

Ianben

With clearer market signals I believe supply can more easily adjust to demand. I'm not excited about having to regulate this.

The CWB has a greater chance of putting a guarantee on quality then any one farm as long as western growers will continue to grow into this system.

This guarantee of the best grain from a region can be achieved through production contracts spread over a large enough area.

We need a better deal for farmers absolutely. If we continue to play this game of trying to run everybody's farm we are going to lose wheat growers. We need to work to get better market signals on wheat to us so we can make decisions for our own family and farm.

By connecting growers more closely with end customers we will know more what they need and we should be able to provide more service. Part of this is clearer price signals. Improving on the Pool Return Outlook (PRO)and Early Payment Option (EPO) would help.

[TOM4CWB]

Lifer;

Good Points!

Added to the point on supplying what our customer needs through a closer relationship... is the "value added" factor.

What do I mean?

If I supply a more valuble product, that adds value to the consumer and end-user, then I should both have a more loyal customer and receive more value for the product I produce.

The CWB pooling of everything, especially in our domestic human consumption markets, stops this from happening most of the time.

Further, If the CWB claims to get more from the domestic North American market, and less from most of the rest of the world markets, they fall into the trap of subsidising sales into the rest of the world market from our domestic markets. This has been ruled by the WTO to be illegal.

WHether we like it or not, "price discrimination" by STE confiscation to distort the market will change CWB selling practices over time... I sure hope the CWB is preparing for the day that the monopoly disappears, because it certainly appears it will.

THe CWB is setting itself up for being dismantled... by claiming it cannot operate in a market where competition exists!

[ianben]

I can see the diadvantages of the CWB andthink a way should be found to allow inidviduals to optout.
However I do not see the opertunities for adding value you imagine materializing in the freer market I enjoy.
Garenteeing supply of quality and quantity even by a group of individuals is a problem for producers and fixing a price can be a problem for buyers if cicumstances mean their competitors gain an edge.
Regulating supply was perhaps the wrong word. I do not seeek to fix quotas or have any mandatory system.
I just want farmers to monitor each others production and costs and market in a more orderly way. Ukraine may be able to produce wheat at 15$/tonne but they only produce 21million tonnes an insignificant amount in world terms.
We desparatly need abody to advise us on customer requirements and supply avaiability. To give guidance on price and quantities to sell or store in order to maintain steady prices and continued supply.
The basic service every customer demands and deserves.

Can individual farmers or the even CWB provide this basic service year on year?

Would you buy a combine with out spares or service backup?
Do you willingly accept huge price hikes without trying different supplyers?

Our future as family farmers lies in providing a 21st Century sevice to our customers not on the survival or not of the CWB.

Can we come up with the goods?

[ianben]

Sounds like I missed something in the marketing choice sonero. I would assume that if an individual farmer had freedom of choice wouldn't that freedom extend to grain handling companies.

Grain handlers already have the management to market all of our grain why would we exclude them from freedom. The CWB uses many companies now to market our grain world wide. Grain companies can retain quality of our product now why would that change under marketing choice.

Just let the free market roll, if we can grow quality it will be marketed that way, bought and sold for a premium.

When the CWB and the AWB have the monopoly on 40% the world wheat export market and the world knows it can buy it for less than the world price. What does that do for producers everywhere in the world. It holds the price of wheat down. Think about it. If a large quanity of wheat is held out of the world pricing mechanism and priced at a we won't be under sold attitude. That will keep the price of wheat down world wide. It acts as a subsidity to the consumer.

No wonder the USA farmers are upset with Canada and Austrailia. Little wonder why Europe and USA subsidize their farmers.