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November 21, 2008

CWB: Accelerating Underperformance

Newswire;

In "A Bushel Half Full: Reforming the Canadian Wheat Board," Sylvain Charlebois and Richard Pedde draw this conclusion based on a benchmarking of CWB price results with US results for comparable grains. The authors conclude that the average farmer who delivers approximately 700 tonnes annually to the CWB pool accounts earns $18,000 less per year than if he sold at US prices.

A Bushel Half Full (PDF)

Updated: Content from an email quoted in Larry Weber's Nov.21 newsletter;

"In our case, instead of backing prices off to farmer origin, we track US FOB PNW export prices vs. CWB in-store Vancouver, BC prices (which are not precisely the exact same logistical cost points, but differ only in the very small elevator operational cost of moving the wheat from the silo to end of the loading spout).

While CWB would no doubt take exception to this, as they have taken exception to your report, we find that it is a routine practice for the CWB to directly offer price discounts to US market values to foreign customers. At this very moment, there are reports coming from European, Central and South American and Asian markets of CWB offers of discounts between US$10 and $30 per MT below US values - with one Asian customer reporting a recent CWB price indication which was US$ 50 below comparable US values at the time. Naturally, their in-store Vancouver (or St. Lawrence) prices must reflect these discounts to US market prices - and they translate directly into the lower producer returns that you have demonstrated.


Posted by Kate at November 21, 2008 10:20 AM
Comments

Since the economy is now the sole, single, only, exclusive focus of our 'conservative' government, Western farmers can remain indentured servants to the CWB and central Canadia for the next several years.

Or beyond.

Freedom is hard to win, even when your 'friends' are in charge, no?

Posted by: hardboiled at November 21, 2008 10:49 AM

Oh Oh, someone picking on the CWB again. I can see the need for another round of "stress" cheques for their employees...

Posted by: Blackroc at November 21, 2008 10:51 AM

I'm still upset that I wasn't sent a director's election ballot this year unlike previous years when I was. "Interested parties" like landlords had to apply to vote by last Friday for this election. I learned about that on Monday. On Tuesday the CWB quickly modified their website to correct ambiguous text regarding voter eligibility. Too little, too late.

BTW, does anyone have a District 8 ballot they don't plan on using?

Posted by: Darryl at November 21, 2008 10:57 AM

I see the board is already squawking over the report. On their website they are arguing(unsuccessfully) that US elevator prices are not world prices.

Hello board staff! Wake up and smell the morning toast! The Yanks are the largest wheat exporter in the world and they export about half of everything they grow each year.

Posted by: Farmer Joe at November 21, 2008 11:06 AM

Reforming the CWB is a joke and the CD Howe report is seriously flawed. The CWB has been stealing from the Western farmer for decades. No matter how much you polish a chunk of coal it will never become transparent. Reform is pointless and ignores the bigger issue: Choice.

Give the farmers choice on marketing what they've risked and toiled to produce. Then it's up to the CWB if they want to sink or engage in honest competition. My guess is if the farmer ever wins choice, the den of Liberal appointed thieves will disband and slink away into the shadows where they live.

Posted by: Martin B. at November 21, 2008 11:39 AM

what a load of shit. if we sold everything we produce at a profit above what it costs to produce then we would all be well off. oh, jeez that's what we should be doing, i think.

Posted by: old white guy at November 21, 2008 3:06 PM

yeh, martin. pressure makes the coal transparent. keep the pressure up.

Posted by: old white guy at November 21, 2008 3:08 PM

Some of the farmers in my area have done their math and don't agree. One posted their results in the paper. I'm not a farmer but live among them so I take an interest. Here's one of their letters.

Mystery math

I’m finding Barry Reimer’s math a bit mysterious. Mr. Reimer is a candidate in the CWB director elections currently underway. I read his bio, along with the bios of the other District 10 candidates, in my voter’s package. Mr. Reimer makes the claim that “if the CWB is as successful at extracting premiums as it says it is, then our prices should be as good as, if not better than, what the U.S. market pays its farmers on a daily basis.” Mr. Reimer should know that “our prices” are annual pooled prices and therefore cannot be compared honestly to a “daily” spot price. If he wants to make a comparison, he needs to compare CWB pooled prices to weighted average annual prices received by U.S. farmers. Had he done this, Mr. Reimer would have discovered that CWB pooled prices for Red Spring Wheat in the 2007-08 crop year are approximately $1.05 per bushel higher than the weighted average price received by U.S. farmers. For Winter Wheat the comparison shows that Canadian farmers received a premium of approximately $1.29 per bushel over U.S. farmers.

There is more erroneous information in Mr. Reimer’s bio. He states that the 2008-09 PRO for Winter Wheat as of October 3rd is $4.40 per bushel. The most recent 2008-09 PRO for Winter Wheat was issued by the CWB in late September. It shows the PRO for Winter Wheat to be $6.30 per bushel, backed off to a Mnitoba delivery point. Barry states that the 2008-09 PRO for Red Spring Wheat is $5.88 per bushel as of October 3rd. The correct number is approximately $7.42 per bushel. He shows a PRO of $4.80 per bushel for malting barley when it should read approximately $5.56 per bushel.

Barry then compares his incorrect numbers to what I presume are U.S. spot prices. Of course, this is an impossible comparison. But it’s even more misleading because the 2008-09 PRO numbers he’s using are incorrect. If they were correct, the numbers would show the CWB’s pooled price to be at a significant premium to the U.S. spot prices he quotes.

It’s unfortunate Mr. Reimer’s information was not fact-checked before Meyers Norris Penny circulated it far and wide on the 2008 CWB Director Election web site. I hope farmers in District 10 look at this information critically before casting their vote for Mr. Reimer and the illusionary “benefits” he claims for marketing choice.

Sadly, this is typical of the misinformation being circulated by candidates claiming that a strong volunatry Wheat Board can co-exist with a dual market.
---------
It's up to the farmers to decide and to look at the figures carefully since their is a lot of rhetoric going back and forth. Once the wheat board is gone, it's gone forever ( according to the free trade agreement ) so idealogy and partisian policies need to take a backseat. You have to look at why the wheat board was brought into being in the first place and see if the conditions that made it necessary back then have changed.

Posted by: Leslie at November 21, 2008 7:47 PM

Some of the farmers in my area have done their math and don't agree. One posted their results in the paper. I'm not a farmer but live among them so I take an interest. Here's one of their letters.

Mystery math

I’m finding Barry Reimer’s math a bit mysterious. Mr. Reimer is a candidate in the CWB director elections currently underway. I read his bio, along with the bios of the other District 10 candidates, in my voter’s package. Mr. Reimer makes the claim that “if the CWB is as successful at extracting premiums as it says it is, then our prices should be as good as, if not better than, what the U.S. market pays its farmers on a daily basis.” Mr. Reimer should know that “our prices” are annual pooled prices and therefore cannot be compared honestly to a “daily” spot price. If he wants to make a comparison, he needs to compare CWB pooled prices to weighted average annual prices received by U.S. farmers. Had he done this, Mr. Reimer would have discovered that CWB pooled prices for Red Spring Wheat in the 2007-08 crop year are approximately $1.05 per bushel higher than the weighted average price received by U.S. farmers. For Winter Wheat the comparison shows that Canadian farmers received a premium of approximately $1.29 per bushel over U.S. farmers.

There is more erroneous information in Mr. Reimer’s bio. He states that the 2008-09 PRO for Winter Wheat as of October 3rd is $4.40 per bushel. The most recent 2008-09 PRO for Winter Wheat was issued by the CWB in late September. It shows the PRO for Winter Wheat to be $6.30 per bushel, backed off to a Mnitoba delivery point. Barry states that the 2008-09 PRO for Red Spring Wheat is $5.88 per bushel as of October 3rd. The correct number is approximately $7.42 per bushel. He shows a PRO of $4.80 per bushel for malting barley when it should read approximately $5.56 per bushel.

Barry then compares his incorrect numbers to what I presume are U.S. spot prices. Of course, this is an impossible comparison. But it’s even more misleading because the 2008-09 PRO numbers he’s using are incorrect. If they were correct, the numbers would show the CWB’s pooled price to be at a significant premium to the U.S. spot prices he quotes.

It’s unfortunate Mr. Reimer’s information was not fact-checked before Meyers Norris Penny circulated it far and wide on the 2008 CWB Director Election web site. I hope farmers in District 10 look at this information critically before casting their vote for Mr. Reimer and the illusionary “benefits” he claims for marketing choice.

Sadly, this is typical of the misinformation being circulated by candidates claiming that a strong volunatry Wheat Board can co-exist with a dual market.
---------
It's up to the farmers to decide and to look at the figures carefully since their is a lot of rhetoric going back and forth. Once the wheat board is gone, it's gone forever ( according to the free trade agreement ) so idealogy and partisian policies need to take a backseat. You have to look at why the wheat board was brought into being in the first place and see if the conditions that made it necessary back then have changed.

Posted by: Leslie at November 21, 2008 7:48 PM

Speaking of the Australian Wheat Board, the Cole Inquiry and Oil for Food...

Posted by: Hannibal Lectern at November 21, 2008 8:00 PM

Anyone looking for some solid price comparison data should go to these two pages


http://rolfpennerforcwb.com/category/charts/


http://rolfpennerforcwb.com/category/price-comparisons/

Posted by: Farmer Joe at November 21, 2008 8:36 PM

One of you farmers has to take this CWB bull that allows a Quebec or Ontario farmer to sell his property to whoever he wants, while prosecuting a prarie farmer for doing the same, to the CHRC. This is a clear violation of a farmers human rights that because of location in Canada one farmer can make more money than another, this is bull! Right now in Shelby Montana wheat is around 8.50 and what is it here oh great Wheat Board theives.

Posted by: bartinsky at November 21, 2008 9:54 PM

'You have to look and see why the CWB was brought into being in the first place and see if the conditions that made it necessary back then have changed'.

Yea things have changed - slavery has been abolished in the Western democracies, and 'liberty' was declared a right of all Canadians when Canada signed the United Nations Charter of Rights in 1947.

'Liberty - 1) freedom from oppression, tyranny, or harsh domination. 2) Freedom from confinement or slavery. 3) Freedom of thought or action, or exemption from forms of compulsion or indignity, regarded as a human right.' - Funk and Wagnalls

The most amazing thing about this is that it looks more and more like some politicians are going to have to be ran over by grain trucks before they finally get it thru their thick heads that this is not an arbitrary, voteable right.
Property rights and freedom from the CWB domination is a human right.

And it has nothing to do with whether the CWB sells grain for pennies more than the US farmers or not.
Besides the CWB is full of BS anyway.

Posted by: rockyt at November 22, 2008 1:28 AM

A politician without a budget is nothing.

And they'll keep their heels on the back of your neck as long as possible.

Free yourselves.

Posted by: hardboiled at November 22, 2008 12:54 PM

In their self interest, the CWB has been quite successful in speading the new myth that they are now under the control of farmers and Government's role is to do what the farmers want. But do a little checking - the CWB Act is easy to access and reveals the truth.

The CWB Act is filled (over 41 times) with the phrases: “with the approval of the Governor in Council,(GIC)” and “the GIC may make regulations”. In addition, section 18.1 specifically states the GIC can give directions to the CWB which the directors must follow and section 6(1)(j) states that the CWB may be an “agent of any minister” or an “agent of Her Majesty in right of Canada”.

On the other hand, there are four places in the act where the Government directions and regulations are specifically restricted by the words of the Act: “the minister SHALL NOT…”

These include: Section 3.06(2) – regarding election of directors; Section 3.09(2) - regarding appointment of President;
Section 47.1 and Section 47.(5) - regarding removal of grains from Part IV. Our Government is picking only the areas of the Act where their powers are specifically restricted.

To get our freedom, we need to convince the government to order the CWB to grant western farmers licences just as they already do for eastern farmers. That's all that eastern farmers have ever had.


Posted by: John at November 22, 2008 8:20 PM

A good one John!

As for the farce of the CWB being under the control of farmers, why doesn't the CWB publish the names of all the farmers that told the CWB to hoard 4 million MT of grain off the world market this year when wheat prices were at all time highs.
After all, $2 billion is a lot of money to be left on anyone's table. In any other reasonable commericial corporation these idiots would be fired tout suite.
For instance, how would it look if the grain price markets totally tanked with the stock markets and grain farmers had to go begging the govt for bailout financing right after a careless CWB just let $2 billion slip thru their hands?

We should also see how much wheat these proud CWB controller farmers have left in their bins, because you know, the CWB model treats all farmers and regions absolutely equally.
I mean, we wouldn't want to find out that some Manitoba farmers support the CWB because they are always able to clean out their bins and most Alberta farmers can't.
Or that some farmers in one region of Manitoba gets 'most favored farmer' status and are treated better than the rest of Manitoba, would we?

You know maybe a book called, 'The Real History of the CWB: The Sordid Story of Lies and Deception Involving the Liberal Party of Canada' would be in order to help clear the air of how the CWB really operates.

Posted by: rockyt at November 22, 2008 11:41 PM
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