feed wheat v oil price

[ianben]

Checked out the website. Looks good nice to be able to put a face to the name.

Have an issue with the term "below cost of production" as a reason for sale. I find this a very hard thing to put a value on as everyones individual costs are different and swing wildly from year to year.

I believe you mean, sorry if I presume, a sustainable value which allows us to keep producing year on year.
Not a right to make a profit every year.

I do prefer to say know the value of what we produce. While low prices are bad so is under valuing things like Identity preserved and just in time delivery.
Here we regularly jump through these hoops for free.
A CWB who priced like a multi-national different prices based customer need and ability to pay would really be an asset to the world markets.
Priced like this what would a Warberton contract be worth?
Is this highest price wheat being "stolen" too?

[TOM4CWB]

Ianben;

"Cost of production" is a term now used in US trade disputes... and has selling below the "cost of production" resulted in a 14% duty on red spring wheat and hogs going into the US.

We need negotiations to determine a "fair" market value... which needs to pay variable costs and at least a portion of fixed costs. THis will be different for every farm... as you have indicated.

THe CWB is well aware of the numbers used in the trade challenges... and know the standard. CWB lawyers and accountants prepared the submissions that were given to The USITC.

The principal still remains the same.

The CWB needs to encourage value added low volume high value sales... not try to stop them by taxing them. THis CWB action of taxing exports is obviously counter productive to initiating diverse and innovative new markets.

[tower]

The cost of production includes, as mentioned above, the cost of maintaining the land so that it can do the same again next year.

The cost of machinery, repairs, land rental, labour, money, herbicides and fertilizers, or their organic equivalent, and seed etc. have to be included in each farmers decision to sell at a given price wether it's to the board or his own hogs.

The trouble is that few farmers know, myself included, what the cost of maintaining the land in a sustainable manner, costs over and above those more recognized expenses. The same is true for countries, especially when some, like Canada, have been blessed since our inception with the notion that we can put no value on our land because we have so much of it.

Giving our grain away isn't necessarily a sign of incompetence or conspiracy, but rather one of ignorance.

[TOM4CWB]

Tower;

You are sooo right!

I have a letter from Earl Geddes of the CWB to Crop Insurance telling them that any CW Feed Wheat (65kg/hl, 52lbs/bu) or 2CW barley (67kg/hl, 46lbs/bu) that falls below these minimum grades, that the value of the grain falls to nearly zero on a farmgate basis.

Then he asks that they consider these factors in deciding whether to require farmers to harvest these crops.

There is no initial payment for barley below a 2CW Barley, as there is very limited demand for this quality.


Shades of 1992-93... burn your grain in the field... don't combine it.

Does anyone else get a knot in their stomach... when they see this happen?

[tower]

More than just a knot sometimes. With stocks to use ratio lowest since the early seventies, increasing population still, weirder and wilder weather all over the globe, the only explanations for the low prices at the farmgate are the USA and EU subsidies.

That plus farmers have been under constant strain from the agrifood industry, and suppliers for three decades to shovel more profit into the sector to their own and their lands loss.

[Ration-Al]

When stock to use ratio goes negative competition will be a good thing. Until then we are simply competing ourselves right out of the game.

[tower]

I think that's true, but we're not really competing against each other. We seem to be competing with the USA whose government simply wants to control everything, The Eu who sees it as it's place to control as much as it can, Argentina whose first flush of green revolution is where we were fourty years ago. We're good farmers but we're not that good.

We sold off our co-ops that were initiated in the early days to protect farmers from that level of competion, and now we're doing the same to the CWB. Anybody out there into building a farm empire?

[ianben]

Tower, here in EU and perhaps even more in US some people see CWB as the bad guy when it comes to low prices. It is amazing how green that grass seeems from to other side of the fence.

You are right on cost of production though.
I believe it is impossible to put a figure on this.
Demanding we do not sell below cost of production without a figure looks like we demand the right to make a profit.

This Tom is why I dislike the wording on your website. I feel is gives the impression farmers have a right to make a profit no matter what we produce.

Where as knowing the value of our products may or may not give us a profit but why should we sell below the equivilant energy value.

This is a price we could all use as a base value wherever in the world we farm.

This would give us a figure for this impossible never valued below cost of production which would be clear for all to see both buyer and seller.

Once we have a price we all agree to, we are no longer ignorant and have the ability to make rational decisions.

[tower]

I don't think I understand where you are going ianben, for example, equivalent energy value of grain, I was told some time ago that it takes more energy to produce grain than you can get out of it for energy purposes.

I don't know that that is the case, but whether it is or not perhaps a more reliable figure for a sustainable grain industry would take into account the net input/output from the soil itself, including the time and labour required to ensure that the soil isn't being depleted.

I do understand that there are people here too who see the CWB as the culprit in low grain prices. As I mentioned I think that prices are undervalued to the extent that societies where ever they are undervalue their land.

[TOM4CWB]

Tower;

We have the power to stop the CWB from selling at low prices... if we change how the CWB buys our grain.

CASH purchases are manditory... all year long... to signal when a sale is acceptable or not.

Hedged sales can fill in the blanks... and keep the supply chain moving and working.

We have two forces at work... the consumer who wants prices as "low" as possible... and the supplier who needs "high" prices.

The CWB works well for the consumer... who talks to the CWB sales dept. every day.

The pool accounts on the other hand give the CWB a unlimited bank roll... and no seller screaming when the sales values drop to hurtful levels. Cash sales will make the CWB accountable... and all our trading partners... with out exception... require the CWB to operate under a system that diciplines the CWB thru a bottom line cost of doing the business.

IS there any reason we farmers should require any less dicipline from the CWB?

[tower]

Tom4CWB, The consumers are in touch with the sales department of the CWB each day, The idea of having farmers on the board is that the sales staff are in constant communication with the producers as well. Not that some of the members of the Board don't also represent consumtion of grains, there may be a question of balance.

My point again is that the marketplace, being a competitive one, is what dictates the low price for our product. The only reason that competitiveness enters into it is that in competition for profits companies, countries and country people tend to under value their costs in order to make their incomes look better.

And yet those costs are there and will eventually show up, maybe as mentioned earlier, when the stocks to use ratio goes negative.

[Ration-Al]

ianben,

It is interesting that people in EU see the CWB as pushing prices lower. What impact do you think EU subsidies have on prices. American farmers derive 80-90 percent of their net farm income from government subsidies. This allows them to "compete" in world markets regardless of the market price of their grain. I assume that with equal or higher subsidies in the EU that the situation is the same.

Canadian farmers must then compete on world markets with EU and US farmers without the benefit of those high subsidy levels. This tells me that Canadian farmers are much more efficient that American and European farmers.

For Tom to suggest that cash buying would change the world price of wheat is absurd. For Tom to suggest that Canadian farmers are deprived of market intelligence is likewise absurd. If today's pool return outlooks are not sending a signal to farmers not to sell how could a daily cash price be any different. Prices suck. They suck because we have a glut of feed grain in the market and they suck because of American and European subsidies.

[ianben]

Our subsidies mostly get gobbled up in rent and land prices. Lots of farmers competeing as usual and guys who can work out the value to the farmer of their land ie "the subsidy"
I will list my competitive advantages
20 million consumers within one hours drive of farm gate
Deep sea port 10 miles. Nowhere in UK is more than 100.
3 tonne/acre milling wheat/ malt barley
4 tonne/acre feed wheat.

Your ex farm price may be competative but can your transport it thousands of miles to port with increased energy prices.

All I want us to do is understand it is not the subsidies or the CWB that gives us low prices but our insane competativeness and refusal the know the value of our produce to our customers

Grain has a value as energy lets all use this as base value for our produce.

Feed wheat is worth $3.50/bushel

[TOM4CWB]

RationAL;

CWB and cash prices... no wonder the CWB does not want them! The CASH Prices show the CWB is unfair to farmers.

Here is why.

CPS Red Basis March 22/04 negative 41cents/bu. Oct 29/04 positive 17cents/bu.

CWRS Basis March 22/04 31cents/bu; Oct 29/04 85cents/bu.

The 55cents/bu the CWB keeps... is a straight subsidy to the pool account... since the cost of PPO contracts is the pool price in the first place.

The poor farmer who signs a basis... ends up with feed wheat... then on top must pay the CWB over 50 cents/bu to buy out the basis... pure profit for the pool... or contingency fund.

The CWB steals the carry in the market... and pockets that in the pool account too.

A Cash price, all year long, gives measured performance criteria... of CWB sales. So the CWB refuses to offer year round prices... so they can play these games and take the risk management premium away from those farmers who are taking the risk... and stuff it in the CWB's own pocket.

Is this your concept of a fair marketing system RationAL?

I know... stick with the pool... you fool!

[Ration-Al]

Tom you said

The 55cents/bu the CWB keeps... is a straight subsidy to the pool account... since the cost of PPO contracts is the pool price in the first place.

I don't see where the CWB is keeping 55cents. These pricing options vary over time with the futures markets and are priced accordingly. All grain committed to the pricing options is hedged against the futures so that risk is removed from the pool account. Any gains or losses incurred by the program go into the contingency fund and not the pool accounts.

Perhaps your interpretation of these PPO's is tainted by your negative position on the CWB. You may want to dispute your negativity, but all I ever see you posting here is criticizms. It is easy to point out problems. It is much more difficult to actually build consensus and move towards a solution.

I know that you are an extremely intelligent person. You could move mountains if you used your energy constructively.