Premium-priced market development contract programs for farmers

[charliep]

Just a note to highlight the 2004 CWB variety specific programs. (http://www.cwb.ca/en/news/releases/2003/122903.jsp)

1) Will you be signing up on these programs? What factors influence this decision?

2) Do you feel these premiums reflect the value of these newer varieties relative to standard grades? On what basis can a farmer evaluate this?

3) Within the pooling system, should the market developement costs of a new variety be shared by all participants? On the other hand, if new varieties achieve premiums over and above the amount paid out under the programs, should this wealth be redistributed in the pool to everyone?

[boone]

charliep: in regard to your questions here I would like to respond to #3 I believe it is important to treat Hard White as a separate pool after an introductory time frame to offset initial costs, maybe 5 years. Keeping in mind we are half way through year 2.
This will keep the value of opportunity transparent to other costs.(Certified seed every year, compulsory seed treatment, special bins etc.) and force benefit evaluation.

[TOM4CWB]

Charlie;

The delivery restrictions and extra cost to produce and deliver IP grain eat up all payments on these CWB programs.

$5/t doesn't even come close to paying for handle and interest VS. delivering straight off the combine feed wheat.

The CWB must double the incentives if they are serious about us doing all this extra work, shipping on a whim on a days notice in the middle of winter to catch a train.... etc. The 21 days notice on the contract is a farce, as it was on the feed barley last fall.

We got to haul 1000t in 4 days... thank GOD the week before Christmas was warm weather!

[charliep]

Boone

Are you suggesting different pricing pools for different classes of wheat over and above separating out hard white sring wheat?

A comment is the CWB has done this on the producer pricing options when they have separate futures market calculations for alternative wheats.

MGE for CWRS, CWWS and CWES.

KCBT for CWRW, CPS white and red.

CBT for CWSWS.

Timing of sales and adjusting for capacity port constraints are issues in pooling are the historical justification for limiting the number of pools to four. Do these reasons still apply today?

Example - the freight adjustment factor is still applied even though capacity constraints are no longer an issue on the west coast with a 12 to 13 MMT wheat excluding durum export program. The implication would be the freight adjustment factor should be eliminated from the CWB deductions on the east side of the prairies. Further, with the 14 % US tariff on Canadian spring wheat tariffs, this should also have an impact on draw areas used in the frieght adjustment areas used for things like extra strong wheat.

The issues around price pooling/market signals and CWB deductions are very complicated. I look forward to peoples ideas in communicating this information in a way that will help farmers understand the issues.

[boone]

charlie: I have always had a hunch the eastern freight adjustment factor was as much political as substance, now we will see as durum and cwrs is tariff neutered in this draw area. As for cwhws. If I understand correctly under the letter of the ruling it would be exempt, but time will tell. It is surprising to me that the initials etc. are exact same value as red wheat which speaks to me of stick handling. As premiums for storage and growing are negotiated separately. WE will be wiser in a year or broke.

[TOM4CWB]

Charlie;

A development claimed by the CWB is that grain can be shipped east to port position cheaper by rail in the winter that by using the normal St. Lawerence seaway system during the rest of the season.

Possible premiums with cheaper ocean freight off east coast positions to EU/Middle eastern markets may change this skew back to a more "normal" pattern?