CWB Rejects 50% /30% of Wheat

[parsley]

ProFarmer,

vader's arguments lack logic.

The CWB consistently sends the message to farmers, that only top grades of grain have value.

Farmers can, and do, do better than Board experts.


Commissioner Ken Beswick best reflected that same old, same old attitude in the November 24,1994 Western Producer article, page 5,:

"Local feeders get the best quality barley while the board gets stuck with product that's lightweight or high in moisture"


Why can't the CWB would be able to figure out that the highest price gets the grain?

How can producers get the message to the CWB that ALL grain has value?

Parsley

[silverback]

Vader,

I almost thought you were making some good points for a while, but then I got thinking (scary).

I realize that this year is a dog. Everything is really crappy, except for calves right now. Anyway, I can plan for years like this because I know they come around. I also know that things turn around and prices go up sometimes. Sometimes to very good levels where farmers can set themselves up for the future.

My question or point is, when the markets turn around and prices go up, I need to take advantage of the highest prices I can get to keep me in the game. Can the board deliver me the best returns in a high market as well as a low one? I have not seen that. If there is proof that this happens, plese feel free to direct me to somewhere that I can see it in writing. It seems that we are never getting the chance to capture the tops. Why is that?

If I can struggle through the bad years, I need to take advantage of the good years. To do that I think I need the freedom to choose who markets my production.

[TOM4CWB]

Vader;
Sorry you feel insulted.

I asked for a practical plan...

holding grain for a "higher" price is how thousands got in trouble this year... get low prices every year!

Therefore holding grain even when prices were "higher" hardly could be counted in the practical "plan" category IMHO.

1. Pricing Targets, what are they?

2. Volume targets, of which grades; what are they?

3. Timing, when are the go-no-go dates; do these exist?

4. What percentage priced is the pool now?

5. What will be the determination factor for the CWB to take the rest of our wheat/durum?

6. What risk management is in place to maximise our returns?

Marketing takes a huge amount of work and planning... if it is to create a profitable outcome for the products it aims to sell.

We need to know the above parameters of the marketing plan to judge it.

Or is this too much to ask and just insulting the CWB?

[Jagfarms]

Could the rest of the world supply the Durum market without Canada?

[charliep]

Jagfarm

I will leave the debate alone but can help with your question. I would divide into an understanding of customers, competitors and implications.

Customers - The biggest importer of durum is North Africa. They produce a lot of durum themselves so Canada is a residual supplier. Having said, they buy significant amounts and likely do not have the same quality/protein requirements of many of our other customers. Europe and US (and to a smaller extent Japan) are the major importers of high quality durum.

Competitors - The US and Europe are also competitors although in different ways. US exports lower grade durum they don't find value in at home (use their product in high quality pasta market). Europe is not a major exporter of durum but rather semilina - they value add at all quality ranges. With higher durum prices relative to other wheats (excluding this year), many new exporters are entering the market starting with Australia. I would look for more competition out of places like middle east/western part of Asia and perhaps some areas of eastern Europe in the future. You only need climatic conditions like southern Saskatchewan.

Implications

Users have been very inovative in including other types of wheat in pasta (at least at the lower quality end).

New competitors will enter the durum market over time.

Pasta consumption has been decreasing but the trend will likely switch somewhat with things like Atkins diet falling out of favor.

The challenge is to grow markets. Many areas of the world do not consume pasta (mainly noodles) but they may be interested as an alternative to their regional diet. When they think of durum/pasta, these customers think of/buy Italian product (associate with this region/not Canada). Similarly, the industry needs to look for new uses of durum at both the high and low ends of the quality spectrum.

[charliep]

Just to put some context to the discussion, I will post two web side with Canadian durum supply demands.

AAFC market analysis can be found at:

http://www.agr.gc.ca/mad-dam/e/sd1e/2005e/oct2005_e.htm

The Alberta Agriculture one can be found at:

http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/sdd5326

[TOM4CWB]

Charlie;

Vader mentioned about an alternative use for DUrum... at HRS values... what is this all about?

Can Durum be used in products other than Pasta?

[charliep]

Vader - What alternative uses are you looking at?

The most obvious alternative use is couscous for the North Africa. Not sure on the starch profile/use in ethanol but this has to be considered for lower grade durum to provide competition to the livestock industry noting they don't like processing the hard CWAD kernels (not ideal feed relative to other alternatives so only goes into rations when cheap).

[AdamSmith]

Vader

A farmer grows 1000t of Durum and can only sell 500t it for $167/t. That equals
$83,500 to pay expenses, reinvest in his farm and just plain live. That’s what the CWB has decided for him. The other thing they could have done for him was buy all 1000t for $130/t which would give him $130,000 to pay bills and live.

Vader, in case you haven’t heard those of us trying to survive on grain sales alone need that extra $46,500 just to get by into next year.

What good is a higher priced durum next year to the guy who is forced into having an auction sale this winter????

When is the board going to get a grip on reality?

Every one involved in agriculture is making different decisions based upon today’s new realities. Why does the CWB think they can just keep doing what they’ve been doing for years while everything around them has changed???

Narcissism has no bounds.

[JACKFLASH]

Vader:
As to the question I posed on another thread. Why did the CWB stop Prairie Pasta from shipping durum to Carrington N.D., by jacking the buybacks so high. The plant at Carrington was going to take a good Quantity of Durum of all grades. It didn't make much sense to me to limit farmers from a market. Everyone stood to make some money.

[Vader]

Adamsmith,

If I understand your example, you are advocating lowering the price of durum wheat by $1.00 per bushel so farmers can sell more grain.

I will repeat what I said earlier.

Would you rather sell more grain for less money or sell less grain for more money?

I know your answer and I feel greatly for those farmers who are in the midst of a cash crunch. The reason for the depressed prices of commodities around the world is selling more grain for less money. This is a vicious circle. Income falls, farmers have cash flow committments...grain sales don't cover the costs.... must grow more grain to cover costs... production goes up.... prices go down.... must sell more grain...and so on and so on and so on.....must sell more grain.

You all know the old saying. If we keep doing what we are doing we will get where we are going.

We don't have supply management in the grain sector and the CWB cannot make you stop growing grain. The CWB can send market signals either with low PRO's or with limited contract acceptance.

A 50% contract acceptance is a MARKET SIGNAL. Pay attention.

[TOM4CWB]

Vader;

THe CWB holding up prices artificially... creates even more durum production in other nations that are not under the "single desk".

If the CWB were the only seller your little theory might have some legitimacy... but many nations sell durum.

Even then (with a true monopoly)the subsitution factor still comes into play where other food products that cost less replace durum products and the price must drop to gain back or maintain market share.

Reality Vader... Canadian "designated area" grain producers have good reason to be very angry about the Christmas gift the CWB just gave to the US, Ausie and EU farmers!

We in western Canada cannot afford to be the residual holders of world grain stocks at no cost for the Canadian government and other nation states! globally!

[Vader]

Tom, the hole in your argument is that the CWB is not selling any less durum wheat than they normally would. There has been no hole left in the market place for anybody else to fill.

Western Canadian farmers simply produced more than they normally would. Go out and look at all the piles of grain on the ground.

Can you ignore reality simply to support your hatred of the CWB? How can you claim that the LORD is on your team? I find nothing more disgusting than those who use religious righteousness as part of their arguments.

[charliep]

Should the CWB estimate market demand and enter into supply contracts with farmers to grow the volume necessary to meet these needs? If you are growing outside the CWB contracting program, you would be at the vagrancies of the market (price could be higher or lower than the contracted price).

I have to note the implications of withdrawing from the market. Durum prices are not all that good this year even with " monopoly controlled market access". The issues of a higher loonie and ocean freight rates are impacting durum just like other crops. The question comes down to competitiveness in world markets and our ability to maintain/grow market share on the one hand and to develop higher valued markets/processing here in Canada on the other.

Given the successes in canola and the new health based markets for barley, can anyone help me in identifying a new markets for durum? Where does responsibility and accountability flie for this lie in the current marketing system?

[parsley]

Vader,

Perhaps not everyone agrees with the personal religious element in TOM4cwb's philosophical approach to reasoning, but I think everyone on Agri-ville truly appreciates his awesome expertise and contributions in so many areas, istead of finding them disgusting. And his raw honesty.

I regret that you cannot be tolerant of, nor respect, other people's heart-held beliefs, which inevariably help to shape their opinions and approach to problem solving.

Parsley