Canadian Press quotes (among others) Art Macklin, a former wheat board director;
“We had a surplus in durum for the last two or three years,” says Macklin, who operates a mixed farm in northern Alberta. “If the wheat board had not regulated the supply into that market, we would have driven down prices.
“That’s exactly what will happen if the big companies control the market and we have a surplus,” he said. “They will not manage supply for the benefit of producers. The weakest seller will then set the price.”
Peterson said the current Canadian domestic milling quote from Thunder Bay is listed at $6.45/bushel (U.S. funds) while last year the price was just $4.85. At Minneapolis, cash price for durum is $6.35/bushel while a year ago it was $4.70. “So there’s a parallel movement in both markets,” he said. “It’s interesting to compare their price with what they actually pay the Canadian producer,” he said. “The projected pool returns – what comes back to the Canadian producers – is only 36 cents higher while the export price is $1.60 higher. It doesn’t add up. “The fact that the pool outlook has been slow to respond indicates to me the CWB has made some aggressive sales,” he continued. “What they’re projecting at year end, after rail freight charges, is about $4 per bushel U.S.” Another oddity is that the Canadian spring wheat price projection is higher than it is for durum. In the U.S., durum has moved up to a premium to spring wheat.
The Idaho Wheat Commission thinks there’s “no wonder some customers are supportive”.
Mr. Mohamed Kacem, the Director General of OAIC (the Algerian state trading organization involved in wheat and durum production, handling and imports), recently told an Algerian newspaper that CWB provides the Algerian office with a series of guarantees and benefits that are not to be found anywhere else. “… (CWB’s) selling prices in Algeria are very low, since our country benefits from preferential prices,” Mr. Kacem said. “This preferential price saves Algeria several tens of dollars per tonne purchased. No other country gives us such benefits.”
We’re sure Canadian durum growers, who’ve been told the CWB returns premium prices to them, will be happy to know that they bought their market share in Algeria at a cost of “tens of dollars per tonne.” The CWB calls this “marketing.”
h/t to Larry Weber and reader Dennis
The CWB has boasted about that for years. When at grower meeting the staff are proud that all these customers are so happy. It has always bothered me, if they are so happy they must be getting some sort of break, kickback, etc. Every cent of this comes out of the producers pocket. All the crying about the big bad multinationals not making financial info known, are these jokers any better?
Along with many other farmers I have always wondered how the CWB maintains market share if the CWB gets a premium price as the claim they do. Now it is becoming clear the so called premium is simply a myth.
When will we see a response from the CWB on this?
A class action law suit should follow.
So does Algeria have anything they want to discount to us?
Art Macklin’s comments typifies the economic ignorance of the monopolists.
The assumption that there is only ever one type of supply demand scenario, namely excess supply and low demand and therefore chronic low prices is ridiculous. The reality is that both are constantly in flux. Savvy and even not so savvy marketers can make money precisely because of this flux.
As to the ‘market control’ nonsense the big companies don’t control supply and demand they are just the middleman that match up buyers and sellers. It is and always has been price that is in control, and price is always a function of supply and demand. How much is out there, how bad do you want it, and how bad do I want to sell it.
Macklin’s ‘weakest seller setting the price’ theory is also nonsense. One could argue that the most efficient producer’s would set the price since they are able to recover their costs of production quicker. But being more efficient certainly doesn’t make one weak and doesn’t necessarily mean the producer is willing to take a lower price, everyone wants to make, not just a margin, but as large a margin as possible.
All of this Voodoo economics and pretense about trying to get farmers a better return is just a cover for the redistribution of farmers money to other people. When the board was first created it went to Briton to help with the war effort, then to help rebuild it after the war, then to eastern Canada, before Christmas to CWB bureaucrats ($1000 stress bonus)and we find out today to Algeria for who knows how many years now. And there are probably countless other examples.
This isn’t marketing, its maddness.
Reminds me of the ‘hands in my pockets’ jingle from the credit card comercial.
Never been a farmer but have lived in the ME. To do business there, slush funds are required, illegal according to the Lieberals. Along with the fact that these CWB bastards are taking a kickback. That goes for all the farmers who support it.
Free trade? Hmmmm, me smells a rat, could it possibly be that Canada didn’t have a leg to stand on with the softwood lumber issue, makes me wonder who ultimately gets the shaft?
Farmer Joe:
“Voodoo economics” was GB Sr.’s derogatory term for Supply-side economics something championed by Ronald Reagan. Even though it was meant as a negative, many now consider it a compliment considering the source (GB also said “no new Taxes”).
A more accurate and I think more damaging descriptor would be Stalinist Agricultural Economics – you know, the stuff that starved millions of Ukrainians to death in order to keep the vodka flowing and the caviar fresh in Stalin’s kremlin offices – all the while the farmers who whose families were perishing wrote letters to Stalin and talked about “if stalin only knew what was happening”…
The CWB is just like the Crow Rate, the biggest beneficiaries of its abandonment are will be the very producers who most oppose such action.
“If the wheat board had not regulated the supply into that market, we would have driven down prices.”
“That’s exactly what will happen if the big companies control the market and we have a surplus,” he said. “They will not manage supply for the benefit of producers. The weakest seller will then set the price.”
Any bone head that thinks this Marxist ideal of supply control is good is only interested in fattening their wllet at the consumer’s expense….no wonder they denounce the type of competition that frees supply and demand to give the consumer the best price.value. They require marketing monopolies for enforce backward flow economis
BUT…
“It’s interesting to compare their price with what they actually pay the Canadian producer,” he said. “The projected pool returns – what comes back to the Canadian producers – is only 36 cents higher while the export price is $1.60 higher.”
unaccountable market monopolies will always present an irresistable opportunity for institutionalized skimming on the sale price to end users…always.
So in the end game, greedy producers get the shaft on their production and support market corruption with cost rationalization in sales.
Geee….who’d ‘ev thought it eh?
“Reminds me of the ‘hands in my pockets’ jingle from the credit card comercial.”
Reminds me of that great line from Chevy Chase in the movie Fletch:
“Moon River. Got the whole fist up there Doc?”
Why are the accounting books secret?
Gee…really goes against their mission statement:
The CWB has no interest in selling grain for low values. Its mandate is to market quality products and services to maximize returns to farmers. An independent group surveyed about 100 grain buyers in 1996. The buyers indicated that they had to pay top prices to get Canadian wheat. However, they felt it was a good buy due to the excellent customer service and product they received
right off the cwb web site…I guess things have changed since 1996…
When it comes to the ‘Grain Market’, supply and demand is NOT the major price setter. Carry-over is. (see ‘The Merchants of Grain’, by Dan Morgan)(also the USDA’s near panic during the Russian ‘Great Grain Robbery’)
If all the hungry of the world were well fed, grain prices would be through the roof. The First-World countries manage their carry-over to control food prices(cheap food policy, disposable income for food has dropped to ~11% from ~18% ) and to secure their supplies first and foremostly. I once mentioned this to a Maurice Strong CIDA type. He went ballistic on me. Did the truth hurt ??
Ever hear of millions starving in the third world ??
http://dieoff.org/page57.htm
Although I suspect anything out of the United Nations, they did report in 1996 that 1 to 2 Billion(yes B) humans in the world are malnourished
They can not afford it, no, but the first and second world sure can afford to buy it from the Farmers and send it to them. Should we ?? That’s another question.
Nothing gets a population’s dander up like food shortages. Europe still has not got over it.
In my mind, there is no doubt that the Canadian govt(especialy Liberal) has used the CWB as a foreign and domestic policy tool. Who knows, maybe that is where they got the idea for Adscam.
Fletch! heh heh! I hate to be a stickler, but I think the actual banter was:
Chevy Chase: “Mooooon River….thank you, Doc. Ever serve time?”
Dr. Jellyfinger: “Just relax”
Chevy Chase: “Using the whole fist?”
Back on topic, I think the Auditor General needs to look at the books-YESTERDAY!
Art Macklin was a former director of the CWB, and coincidentally, is/was also on the board of the organization called CIGI- Canadian International Grains Institute. 3w. cigi. ca/bod.htm
“Incorporated in 1972 as a non-profit market development organization, the Canadian International Grains Institute (CIGI) promotes Canada’s field crops in domestic and international markets through educational programming and technical activities.”
3w.sasktrade .sk.ca/html/showcase/members/2025459.shtml
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**** 30% of the funding for CIGI, also created in part to market grains, including barley and wheat, comes from the CWB.***
Western producers, of wheat and barley, will want to know IF there is a doubling up of costs to the Western producer, for having now, two organizations marketing the same product?
Gt those books opened up!
~~~
Moreover, the CWB also contributes ***significantly*** to the capital costs for the CIGI, but the CIGI deals in more than wheat and barley:
Page 13: “Canadian International Grains Institute Inter-relationships
The Canadian International Grains Institute staff and facilities are utilized for demonstrating the technical and product functionality, quality parameters and uses of Canadian grains and grain products for domestic and international customers.
The Government of Canada provides approximately 47% and the Canadian Wheat Board contributes approximately 30% of CIGI’s operating funds. The remaining 23% comes from course registration fees, programs, fee-for-service arrangements, etc.
Additionally, CIGI obtains significant capital funding from the Canadian Wheat Board with additional funding from the Government of Canada and other organizations.
CIGI is instrumental in liaising with technical and marketing staff at the CWB in order to collaborate on technical issues pertaining to wheat and barley. CIGI staff also conducts numerous applied pilot-scale research projects for the CWB that demonstrate the functionality and quality of Canadian wheat and facilitate international sales.”
http://www.cigi.ca/pdfs/Centre%20of%20Excellence%20Report%20Nov9%20final.pdf
~~~
By the way, there is some movement, as shown by this study produced for them in the above link, to establishing one single ‘facility’ in Winnipeg, tied to the CWB. We understand why politicians and unions are being so strident. It has less to do with the benefit to the farmer, one suspects.
From page 5: “It would include the The Canadian Grain Commission (CGC), Canadian International Grains Institute (CIGI), and the Canadian Malting Barley Technical Centre (CMBTC) may be required to relocate by 2008 due to structural issues in their current building…”
Some interesting questions posed by the study group, from page 24:
“1. Is Winnipeg the appropriate location for such a Centre of Excellence? Location needs to be strategically as opposed to politically determined. Processors and food companies are located in Eastern Canada, while the malting and feed industry has the largest presence in Alberta. Saskatchewan has major research and development capacity in the grains, oilseeds and pulse sectors and is more central to the prairies. These organizations are perceived as West-focused and locating them in a joint facility in the West will not change that perception. It has to be for Canada and that has to be clearly communicated. To be relevant in the East, there should be a mechanism for interaction and collaboration that is clearer than it is now. From an Ontario point of view location in Winnipeg does not focus on the consumer/customer. Product development and serving the market and those functions best fit in Ontario or Quebec, where the commercial activity happens. Locating in Manitoba might preclude opportunities for excellence in these areas in Ontario.”
~~~
All in all, farmers in The West deserve to know what their share of contributing to this study will bring them as a benefit. They deserve to know how much, if anything, farmers outside of the Western boundaries contribute to this study, or its outcome.
Our Western barley and wheat farmers deserve to know how much they contribute to any/all of these other organizations and departments.
And deserve to know the balance contributed, if any, from farmers producing grains, other than wheat or barley, and living out of the jurisdiction of the CWB.
…”The savy and not so savy marketers can make money precisely because of this flux”.
Over the long haul ?? By timing the market ??
As any Wealth Manager worth his salt will tell you, “try to time the market and you will eventualy have your head handed to you”. True on the Dow-Jones, true on the WCE and CBOT also.
The Commodity Exchange is for, at best, hedging. Grain in the bin is much better. Nail the paper longs at the top with physical. Drives them nuts.
Is there lots of people, farmers or non-farmers, making a living by speculation ?? No. But I know of lots that tried and lost their shirt. University Econ Profs at that.
Also where do non-farmer investors make money on agriculture ?? Trading on the WCE ? Buying machinery for tax purposes ? Or buying and holding farmland ?? Follow the money.
Perhaps the AG should be allowed to look at more than just the CWB’s books. Is there any chance of a little kickback to ‘supporters’ of the CWB? Maybe a looksee into some farm accounts are in order.
Hoax, I wasn’t necessarily talking about speculating. What I was getting at was if you know your cost of production(and every farmer should, but a lot don’t) there are opportunities to lock in a profit in any given year. But you have to know your costs and you have to know and watch the market.
How to get Algeria’s votes when you want to be elected to an important position in the UN?
Librano Career Paths 101.
..”locking in a profit …” can work for a farmer, however.
Problem is, when a lot of producers do that, the buyers downstream have now been shown the farmer’s collective hand. How much he intends to grow and deliver and when and what grade and what price ect. The end-user is now not as concerned about his needs and therefore not as likely to bid up the price as long as he feels DDs will continue to be signed. The producer, on the other hand, is ‘on-the-hook’ to produce and deliver as the DD states.
And sure, as always, buyer(seller) beware. That’s business. If I was a buyer I would also try to push DDs. But what puzzles me is, why did non-market-player entities like the Manitoba Depatment of Ag “experts” encourage Farmers to tip their hand ?? Food security, carry-over control enhancer ??
When one is haggling on an automobile, fridge, tractor or whatever, you often hear the phrase ‘only have one left’. First rule of retailing, do not show your hand.
I imagine Govmits and the trade would love to mandate ‘from-the-road-sight-guages’ on farmer’s bins. Production contracts, 6 months in advance, are even better. Not ??
To all Bush haters out there. We are on the verge of another trade war re agricultural subsidies. The cwb is considered a subsidy by democrats. Has something to do with corn and ethonal. Hope all those envirowackos heard the report against wind power for alternative energy on the cbc today. Seems they need a constant supply of wind, and if the wind is too strong problems arise. Remember, climate is weather. Will May and Layton stop the blizzard tonight. Hope it hits TO so they can complain about the cold and snow, and maybe call in the army. Remember the commercial, Don’t fool with Mother Nature. Europe is finding that meeting kyoto targets is expensive and industries are closing and jobs are being lost. Isn’t europe the headquarters of the world wide green party. How many cdns know May is taking orders from France re policy.
Mary T.
“To all Bush haters out there. We are on the verge of another trade war re agricultural subsidies. The cwb is considered a subsidy by democrats.”
Actually, the U.S. considers the CWB as a trade advantage and subsidy and has been fighting them for 20 years. The CWB wins because it doesn’t violate any trade rules.
Canada ( the Harper gov’t ) has filed a claim against the U.S. for unfair trade subsides. The U.S. gives billions in tax dollars to their farmers. This claim involves corn.
Les
As I recall when the Liberals restructured the CWB in 1998, Ralph Goodale made a point of giving immunity to previous CWB employees from any lawsuits arising from mismanagement that might (would?) be found in the future. His excuse at the time was that they wouldn’t be able to get anybody to work for the CWB if they didn’t. Gee I wonder why?
I’m absolutely astounded that the Premiers of Manitoba and Saskatchewan cannot yet see that the CWB Act gave total control over one of their greatest provincial resources (agriculture) to Ottawa. Why can’t they see that the CWB has been badly misused for the purely partisan political fortunes of the Liberal Party of the Ottawa Ozarks? Selling prairie grain was just a sideline for the Liberal CWB.
Just think. If Peter Lougheed of Alberta didn’t fight Trudeau’s insane National Energy Program, half of Alberta’s oil industry would have left. And those who weren’t left begging for Ottawa handouts (like Doer and Calvert do now), would have been thrown in jail for smuggling a barrel of oil across the border. Or worse, for passing gas.
I would think that new, progressive wealth-creating governments are needed in those two provinces, and the sooner the better.
“I bet the Algerian was lying.”
You know you cannot believe anything thev anti CWB people come up with. I bet the Algerian is a fraud, not a real person. I bet this fellow does not really exist. AFter all the CWB sells to a different world that what the rest of the countries do, I mean that is why they get more money for wheat in every other country and I mean that is why we need to accept less for our wheat than the rest of the world.
Just a taste of how the people who support the CWB respond to facts like this.
Sorry folks proof is not a proof unless the CWB supporters believe it, and they will
NOT.