Vanclief's fantasyland

[chas]

Well boys the Government is going to decide how us dumbies down on the farm should go about making a living again. I think it will mean more government regulations and control over us country bumpkins. Don't they know that the governments of the world are our biggest problem in agriculture. They must control the life line of the country and the world. Most do not realize the importance of food until they go hungry. Our government wants to control agriculture but they do not want the finicial responsiblity that their control causes to the industry. The government needs to free up the export and domestic markets. There is still a big place for the CWB to still operate. What can everybody be afraid of in a free market. Governments can still retain food security by buying and storing the supply they think they require from the market place. It would be cheaper than subsidizing. Our Commodity Market needs some fundmental changes in the way that trades are made. The market is manipulated to much by large speculators who move in and out of the market just on paper. Lets create a market where if you buy you take delivery, if you sell you must deliver. Lets not speculate what the hell our product is worth lets know for sure. Gamblers can go to Vegas. Speculators won't give a rats ass what the price of grain is but the end user and the producer do. Users have to have supply and producers need profit.
Governments and subsidises don't cut it. Maybe my though won't work either but I'll bet that we would be a lot closer to reality. There I go betting again. Chas
Your comments please.

[cowman]

I agree with most of what you say. The thing we must all realize is our government doesn't really care about us peasants down on the farm as long as we continue to supply a cheap food source. That is what Canadian and American agriculture policy has always been.What are subsidies but a way to keep the old peasants toiling away for another year? The CWB is just another way to control the peasants not to mention a rather lucrative place to take care of some political hacks.
I will admit my ignorance when it comes to the marketing of wheat but I believe barley is a product that should be wide open. The fact of the matter is barley only makes real sense when it is sold on the domestic market. The freight costs make export uneconomical except to the U.S. and due to the fact Americans don't like real competition all that much, it would be a very limited market. Of necessity barley must compete with corn or else why feed cattle and hogs here? Personally I couldn't care less if my calves are fed here or in the states. The CWB, with a very small portion of the barley market, gets in there and distorts the price for all kinds of reasons that have little to do with the market place. That is one of the reasons I would sure like to see it go, but then what you or me might want doesn't cut much mustard with the elites down in Ottawa. After all we are the peasants!

[TOM4CWB]

Chas,

A wise man said 4 years ago, that the only way a grain farmer could remain profitable over the next 10 years, would be to farm the large speculators.

I beleive he was right then, and still is today.

With a good marketing plan, and a realistic veiw of what a good price is for the prevailing stocks and consumption levels, a grain farmer can still make a dollar if mother nature co-operates.

Knowing when to hold, and when to fold em, is a special skill, but a good marketing plan can really simplify this skill.

It takes money to make money, and yes greedy pigs do usually get slaughtered!

Patience is needed, but don't stand in the lights of an oncomming freight train if it is thundering down on top of you, stand aside and get out of the way. In the end, the market is always right, no matter how much we don't want to admit it!

In the Western Producer Page 10 June 14, a Lady said,

"You can't be a master farmer and a master marketer at the same time."

She is wrong, and anyone who is not a master marketer, will not be a farmer at all in short order.

This farmer will be bankrupt.

There are not margins in grain farming to fool around and not know what you are doing!

[ianben]

Hi All
Same thing is happening over here too. We just had an election despite foot and mouth crisis. Now our Ministry of Agriculture has been re-named Ministry for Rural Affairs so the farmers interests will further down the chain.
I agree with Tom that his is the best stratagy to survive at present but not that it is the way we will see the family farm survive long term.
We need something along Chas's lines.
Something which will make a life in farming affordable for our children.
I still favor some sort of minimum price worldwide. A price below which we will only sell a percentage of our production. A way to even out the whims of mother nature and try to keep the surplus for the bad years. A price which fluctuates little and therefore has no need for speculation. I still think I will be 500tonnes down on last year.
How much good has that rain done for you?

[melvill]

Gosh, Tom4CWB, I'm nearly speechless (something my wife thinks doesn't exit) about your post earlier on this thread. You and I have both been saying those things for quite some time but I sometimes don't have much luck with convincing farmers (your term, not mine). Maybe you should come to work with me - you might be away more convincing than I can be!

I especially liked "Knowing when to hold, and when to fold em, is a special skill, but a good marketing plan can really simplify this skill." and ". . . . anyone who is not a master marketer, will not be a farmer at all in short order."

I had this discussion with three brothers that farm together last week when I was trying to convince them that they should thoroughly understand, and maybe use, the CWB Producer Payment Options. The general idea from them was, 'I want to produce. Let them marketing boys do their thing.'

Lee

[melvill]

Sorry, Tom4CWB. It was "rockpile" that didn't like the term "farm manager".

Lee

[TOM4CWB]

ianben,

Our early seeded wheat looks awful east of Edmonton.

It is a really good thing we went to the other farm at Killam and seeded there between the 5th and 14th of May as the later seeded crops at Edmonton are reasonably even.

I have heard, east of Edmonton has about the most uneven crops anywhere on the Prairies!

We have had enough rain to keep all the weeds really growing well, the biggest flush of wildoats I have ever seen here!

Everything germinated after it rained, seems the really dry weather made all the weed seeds sprout!

I was hopeing for low weed control costs, no way now!

[chas]

Tom4cwb: Tom your idea of the good of a large speculator in the market place and my idea of a speculator is at totally different ends of what would create a good market. The large speculator can manipulate a market to his own advanage. If you don't believe that manipulation doesn't go on in the market, I say be careful there's lots of evidences that it does. As for your wiseman (I'll bet he was a broker} as to farmers farming speculators to exsist. The farmer is more likely to get plowed under. If you were a master marketer you wouldn't need to be a master farmer or be a farmer at all. That why I'am farming.
Please explain why we need speculators to make a living.
If you deliver a product when you sell and take delivery when you buy. What do we need speculators to jam up the supply and demand signals for. Its not business its a form of gambling with the most important industry known to man kind.
Lets not complicate our pricing system lets simplify it and bring some honesty and common sense into it. The market isn't always right it just can't figure out what is wrong with all the manipulation it receives daily.
Is dandelion wine production organic farming or what. Chas??????

[TOM4CWB]

Chas,

I really believe that we need to approach marketing from a positive perspective!

Being in the position to patiently wait for speculators to make my farm profitable, is an important state of mind to get into!

The most important question that must be answered is, what is a profitable price?

Obviously my break even will be different than yours, and it depends also what product we grow to how profit margins work out!

Now to value add, make our products the most valuable possible, we must know exactly what our customer needs!

To supply exactly what our customer needs, and make them believe it, we must be master marketers!

This is why we must be both master marketers and farmers to remain profitable today.

We must understand the risks and rewards of each decision we make every day.

Speculators do get carried away at times in the commodity markets, we must cash in when they drive the market higher than what supply and demand would dictate!!!

Take Canola today!!!, it is way higher than what the market can justify, sell it if you have some and put the speculators money in your bank account!!!

[melvill]

Chas & tom4cwb, interesting debate. Chas, like it or not we've always had speculators in the food chain. Look back (away back) to the time before the CBOT when grain dealers in Chicago bought grain in the countryside with the idea that they would move it to the mills in Chicago and make more profit than a small return on investment over and above their costs of transporting it to Chicago. In that environment farmers and local warehousemen were at the mercies of these Chicago grain dealers who thoroughly understood the wheat market but didn't share that info with producers and warehousemen. They were the speculators in their time and they were very few in number.

More recently we have different (or other) speculators in the marketplace. We have farmers who hold their product waiting for the price to go higher. We have farm product buyers who buy product in advance of sales hoping to earn more than a margin over and above their costs of getting product to buyers (which every once in a while culls out a significant number of companies because the market goes down after they've bought product). We have international merchants of let's say, chickpeas, who buy Canadian product and hope the price in their destination country hasn't gone down before they get the chickpeas into the consuming market. We have countries like China exporting corn at opportune times hoping to buy it back later at a lower price. Right now we have feedlots buying feeder cattle at prices well above breakeven specing that slaughter cattle prices will have risen by the time these cattle are ready for slaughter.

For some time now, we have had very large speculators (funds) specing in futures. There's no doubt they create increased volatility in the futures market. That volatility drives prices higher at times and lower at other times than they should be (in the short run) based on straight supply-demand numbers. However, it's very important to remember that volatility creates opportunities for those willing to take advantage of them. Tom4cwb is right about canola, for example. Funds specing on a rise in canola have bought new-crop canola futures and their very strong buying has driven the prices an extimated $20 to $30 a tonne above where supply-demand numbers dictate they "should" be. Of course, crushers have been in there buying, too, as a hedge for incoming supplies in case there really is a very short crop in Canada. Again, though, right now is a tremendous selling or hedging opportunity for growers of new-crop canola, mostly created by funds going long (buying) November canola futures and driving the price up.

Marketing on the farm is all about taking advantage of opportunities. My experience is that is what separates successful marketers from those who either don't know about the opportunities or are too cautious to take advantage of them.

Lee

[ianben]

Hi All
I think the way to solve this problem is to find a way to stabilize prices.

Lee as you rightly say there have been futures markets for a long time and they exist to protect our customers from our inabillity to market our produce with any guarantee on price, quality or quantity.
In the 21st century there must be a better way. Look at the speed we can communicate and at such little cost.

Tom you are right to try and produce what the market wants but true master marketers also provide a garanteed supply at a fixed price.
This is the way modern marketing is done!
The price is X How much do you want?
Obviously X will be different depending on where you live but isn't this how the market works today based on Chicago
Minniapolis etc.
We would still compete, but why do we all need to loose money for a couple of years and do untold harm to our communities, just because someone decides the market is over supplied.

I do not believe you are making a REAL profit including interest on capital and deprecation at todays prices. No matter how good you are with futures options etc. you cannot get away from a low price.
CWB or no CWB that is still true.

If we could stabilize the price there would no longer be speculation as there never is in commodities which don't have wild price swings.
We would have to learn how to manage our stocks and ajust our production but that sounds more like farming than gambling to me.

What do you think Chas??

Regards Ian

[TOM4CWB]

Ian,

You are right to say in the end supply and production restrictions are required to stabilize wheat values!

My question is, morally can this be justified?

How many starving people in this world are ok?

If the starving people had the power to blow us up with an A-bomb, then what would we do?

Who says, and by what justification, that I am poor, when by the standards of northern Africa, or India, China or Russia, I am in the top 1% of the richest people in their countries!!!

We are talking over 50% of the worlds population in the countries just mentioned, is anyone involved in this discussion willing to go and farm in any one of these regions?

No Way, and you and I both know it!

We have things really good, are families are well fed, can get a good education if we want, and good health care compared to 95% of the rest of the world!

Now, do we have the right to say production should decrease so more poor people will starve, so we can fill our bank accounts?

Just because other segments of "civilization" like big muli- nationals do it, does this make what they are doing right?

Do we want to be accused of the same evils, and be part of destroying the world, instead of making it a better place?

[ianben]

Hi Tom
I think stable prices would help the third world.
Most of thier ecconomies are based on agriculture so realistic prices would be better for them too.
Ultra low prices are not passed they get gobbled up along the way.
Look in your supermarkets!
OUR CUSTOMERS LIKE STABLE PRICES is the excuse they use over here for not lowering prices.
Lets give them what they want I thought that was part of your master marketing plan.
I don't want to hold the world to ramsom just even out the peaks and troughs. It is not a new idea it is in the bible! you know the story of Joseph in Egypt and the 7 fat and 7 lean years.
That would be the way I hope it would work.
Where is the morality in futures trading anyway. Do you think speculation is done for the good of mankind??or to protect the multi-nationals butt!!

Chas's view is nearer the truth, gambling without going to Vegas!!!

Regards Ian

[TOM4CWB]

Ian,

I disagree that hedging my grain is gambling!

Economics dictate that at $5, $6, and $7 a bu different people will be able to survive and make a living growing Canola!

This year, people had the chance to sell canola over this range of prices!

If my farm couldn't make a profit at $5, it could likely at $7.

The market got supplied, we were competitve world wide, and noone held a gun to my head and said I had to sell my Canola at $5!!!!

The speculators needed Canola and were short of this product, but it is amazing how much could be found when the price hit $7!!!

That 15,000 short spec position got filled in a hurry.

Now about Egypt and Joseph the inspired one.

I wouldn't trust anyone today to know what the weather, or the production ability over the next 7 years should be to make sure everyone has a full tummy!!

If a benovolent dictator who is as wise as Joseph was shows up, let me know, I would like an appointment with him right away!!!!!!

How this wise person could ever get into the position of power Joseph had; today this would be less possible than having this special knowledge to begin with!!!!!!!!!!

Boy we are really hitting the fantasyland topic square between the eyes tonite, but hey, its fun, and it is really interesting!!!!!!!!!!!!

[ianben]

Hi Tom
I agree you are not gambling, I was refering to speculators who just trade paper and questioning the morality of that.
Now I am not waiting for Joseph either, but I know there will be fat and lean years, can't beat nature no matter what!

How are your crops looking ? Still looks like a very lean year here, not quite enough water now but darn't pray for rain in case it never stops again.

Lets try something with those canola prices I think I could live in that range too.

Between $6&$7 we would sell as before.

If the price dropped below $6 we would put some in the lean year bin if we had had a fat year and hope that stoped the fall.

If the price got down to $5 we would NOT sell. I still fail to see how silly low prices help anyone only middle men they never reach the end user.

When the price was over $7 we could sell from the lean year bin and hope this kept the price down. I don,t like high prices either they just alienate customers, not a good marketing stratagy.

No dictators, no laws, no hard and fast rules, grow what you like.
Just use your common-sence and hold the minimmum price.

Why not ? Would that be immoral?
It need not be a fantacy now we can comunicate like this.

Regards Ian