CWB Bank

[Everest]

A question for those of you who know the intricacies of the CWB and its Act. Is it proper, and does the CWB have the authority to lend my money from the pool accounts to outside third parties?

Apparently in sworn testimony before the Standing Committee on Agriculture, officers of the Farmers Rail Car Coalition (FRCC) stated that they have had forgivable loans advanced to them from the CWB. From what I can gather, it is well in excess of $100,000, and will not necessarily have to be paid back. I have no information on the interest rate applied.

This calls into question how many other entities have been loaned money from the pool accounts, and what amounts and conditions apply to these loans.

Do any of the rest of you find it objectionable that the CWB puts our money at risk like this, and uses it for non-market related purposes? From what I can see, the FRCC is a special interest group hoping to acquire a government asset for nothing, with membership made up of commercial enterprises, governmental institutions, and some farm groups. Why do they need my money? Why would the CWB bankroll them?

[Vader]

The options for the disposition of the Government hopper car fleet are:

a) status quo
b) commercial sale
c) give to FRCC for $1.00

Option b) gives the railroads the opportunity to acquire the cars and pass all the costs associated on to farmers through the revenue cap.

Option a) allows farmers to continue to receive the benefit of the cars at no cost

Option c) is better than option b).

Funding the FRCC has prevented option b) and has saved farmers millions of dollars. It would appear that the "loan" to the FRCC might have been money very well spent even if it is never paid back.

[cropduster]

Vader,shouldn`t they be selling wheat??Goofed up voter`s list(Ukraine?),full time lobbyist($100,000),85 million deficit.Seems like they can`t do any of the above very well either.Is or will it be public knowledge how much they `supported` the FRCC with?

[TOM4CWB]

Vader;

What exactly is the CWB going to do with the hopper cars it leases.

I understand the CWB needs about $15mil. to buy out the leases.

So, what is about to happen on this front?

[freenorth]

I don't claim to know the intracacies of the CWB but it would seem to me that if they would spend more time on marketing and hedging the dollar
and a whole lot less on self preservation, self justification , transportation,
and farmer advocacy then their costs would be lower and they just might
do a better job of marketing. After all isn't that what they are supposed to be doing.

They gave a $35000 initial loan and two additional traunches of $50,000
in forgiveable loans, if they don't get the cars as I understand it.

No I don't think this is an appropriate way for them to spend yours and my
money I could use a little bit more, how about you.

The maintenance costs are not verified. To think that a party with no experience, no track, and no locomotives, could add value to the system is a bit of a stretch. They would be another additional political interface which may allocate cars in a less than commercial manner hardly the
vision Honourable Justice Estey had.

The FRCC does not set the rate cap, whoever ends up with the cars
will have to replace them and farmers will pay for them in the future.
We must also be wary of whether or not the sale of something in the
neighborhood of $200million for $1 would be seen as a trade irritant
to our southern friends.

[Vader]

The details of the money given or loaned to the FRCC should be in both the CWB and the FRCC financial statements. Why would it be secret when the benefits are so obvious?

[Vader]

The government has delayed the selling of the hopper cars for many years now because of the efforts of the FRCC. This has saved farmers millions of dollars in depreciation costs, had the sale taken place in a commercial manner and the railroads acquired the hopper cars.

The expenditure/loan of 100,000 by the CWB would seem to be an extraordinarily wise move, saving farmers millions of dollars.

[Vader]

Ahh yes. A 200 million dollar trade irritant. Certainly our friends to the south are lily white and have never given their farmers a 200 million dollar subsidy nor are they guilty of actions that have caused us losses of such magnitude.

Wake up!! Refer to slide #1. (an inside joke)

[cropduster]

Enjoyed all of that Vader.Like an aquaintance of mine once said"If you`re explaining, you`re losing".Keep up the good work Vader!

[TOM4CWB]

Vader;

So what is the CWB exactly planning to do about the hopper cars they lease... in which the leases are about to expire?

[wd9]

Actually the deficit of 85 million is a benefit to farmers. The CWB should be in deficit at least $100 million every year if they did their job to take full advantage of the program. Free money - Woo Hoo.

And now back to our regularly scheduled program.

[Vader]

That's good cropduster. Throw out an attack on everything but the kitchen sink and then give a rhetorical remark when you get a response. What remark would you make if there was no response? Something similar I am sure.

Tom, when the time comes to make a decision about the hopper cars there will be a cost benefit analysis and a business decision will be made. The hopper car business seems to be one of feast or famine. The construction of the hopper car fleet was done in response to a car shortage. Then for many years there was a surplus. Now if nobody takes action we will be headed for another shortage. In the meantime farmers have had the use of all of these cars at a minimal cost. That is unlikely to happen a second time.

Who should put money into new hopper cars? Should it be the government, the CWB, the railroads or some other private entity? It is extremely unlikely that the government would repeat the exercise. If any of the other players build new cars the producers will pay. Will producers pay the cost or will they pay cost plus?

wd9 - very observant. So what exactly do you think the value of the government guarantee is? Bear in mind that back in the early 90's that because of the Export Enhancement Program the CWB incurred a deficit of some 900 million (making the 02/03 deficit look relatively small). The government coughed up that money without so much as a whimper. Is the guarantee a right of farmers? It is enshrined in law and was made as promise. Is it like the crow benefit. Were farmers properly compensated for the crow and will it be likewise with the guarantees?

[freenorth]

Vader there is a couple of things we agree on. The government does want
to get rid of the cars because it doesn't want to deal with replacing them
this is true. However the FRCC is just Sinc's dream to find a job and has already cost Sask taxpayers a few hundred thousand as well as the farmers who grow CWB crops. They want to set up as a publicly traded
company with a full host of committees at what cost? All that needs to be
done is hire a fleet management operator someone with experience just
needs to be given direction and oversight. They will also need to buy cars and send farmers the bill for it. Cost plus or not is a fair comment but it can be dealt with without having another political interface.

On the subject of subsidies Vader yes the government covered the losses
in the pool account again a trade irritant. Yes the U. S. and the EC have
subsidized much more than Canada. They have stayed within their
allowable limits it is Canada who took advantage and cut further than it
had to. Why is it that Canada and in particular Saskatchewan fails to stand behind it's producers to the same degree that other countries and provinces do. In the war on subsidies it matters not how much was spent what matters is how it was spent and whether or not it was spent in a countervailable manner.

This is why if Canada can't play the subsidy game it should have a strong
trade position yet again Canada fails to step up to the plate to accelerate the rate of reduction of production distorting subsidies and shorten the time frame for export subsidies.

As usual politicians are interested in getting reelected not acting in the
interests of the whole. Some day in the not too distant future the CWB
will be significantly different and we will have a better trade deal than we
do now but it will probably be to the credit of Australia and Brazil.

Looking forward to a better future.

[Vader]

Freenorth, well said.

It is unfortunate that the United States is working supposedly in good faith at the WTO table and on the other had are making bilateral trade agreements on the side.

The US has firmed up a bilateral agreement with Morocco which will give them a preferential tariff on durum wheat in the new year. This may effectively shut Canada out of that market. I wonder what Morocco got out of the deal. I wonder if the US will attempt to do the same with Algeria and Tunisia. If that happens durum wheat growers in Canada will be in big trouble. The US has also made a bilateral agreement with Australia. Here it is much more obvious what advantage Australia may gain. But still does this undermine the entire WTO process? Perhaps North Dakota Senator Dorgan is right. He says we should go back a fix the trade agreements we already have before we enter into any new ones. Obviously he is not setting the US agenda on trade agreements overall. He is however having a significant effect on Canada US trade relations.

[Everest]

Back to the central issue here. For the moment, let’s set aside whether the FRCC’s desire to get into the railcar ownership, leasing, and allocating business is beneficial. Perhaps that debate can go on in another thread.

What is germane here the issue of the CWB’s stewardship of my money. Nowhere in discussion, either in a historical or current perspective, have I ever heard it mentioned that the CWB was to be in the business of lending money from the pool accounts. Nor do I think it is provided for in the Act. (Again, maybe someone with intimate knowledge can enlighten here) It matters little whether the issue is right, wrong, benevolent or otherwise. The CWB directors and management have a duty to manage my money in a responsible manner. Putting it at risk by providing forgivable loans or spreading it around by making indiscriminate contributions to third parties is gross neglect, and calls into question the seriousness with which directors take their fiduciary responsibilities.

Providing contributions and forgivable loans to third parties doesn’t qualify as proper execution of fiduciary responsibility, at least to my way of thinking. We now know about this organization and its fortunate receipt of western farmer’s funds. Does this kind of CWB largesse go beyond FRCC? One has to arrive at the conclusion that it must. There are many good causes out there that could use our money.