A picture says a thousand words...

This picture was taken from a Regina Leader-Post article. I find the things that protestors put on signs very interesting, the second one from the left especially; "Young farmers want a future, Save the CWB!" This is somewhat ironic, considering that none of the people in the photo appear to be under the age of fifty.

I can't see many young farmers staying on the farm because a government agency will market their wheat and barley for them. My own intuition suggests the opposite is true; As a young farmer, I want the expanded opportunity and greater choice in how my business is run.

The comments are open, so let us know what you think. Geoff and I are both farmers, both under 25, and we do not think that the future of young farmers requires a CWB monopoly. Does support for marketing choice run along age lines?

Cold hard facts

This morning I wrote about appealing to emotion. This afternoon, it's all numbers.

The Winnipeg Commodity Exchange has announced that it is ready to provide international risk management tools for barley should the single desk be removed. In preparation, it is posting weekly international prices for feed and malt barley on its website. There is also market commentary provided by Informa Economics regarding the feed barley market on the WCE site.

The report seems to confirm some of my thoughts from the weekend:

Obviously, the lack of export movement from the CWB is having an impact on feed barley values in some regions of the prairies. Granted the Pool is based on an average of sales over the last six months of the crop year. However, since there are likely very few sales against that Pool yet, it is puzzling as to why the PRO is not more competitive than it is. The fact that feed barley is not being exported out of Saskatchewan does appear to be limiting non-board bids at this time.

And it's not only a couple of sales to Japan:

At the time that this article was written, Middle Eastern buyers were paying as much as US$246 per tonne for feed barley on a CIF basis. It would likely take about US$45 per tonne to ship barley from Canada to the Middle East, leaving the price at about US$200 per tonne at the St. Lawrence or Vancouver. Using a Canadian dollar of 86.5, that converts to about C$231 per tonne. If we assume about $16 per tonne for cleaning and elevation, feed barley would be worth about C$215 per tonne, in store Vancouver or the St. Lawrence.

Under our current system, this is a revelation. In a marketing choice environment, it's just business.

This promises to be emotional

For your reading pleasure, there are two oped pieces in today's Winnipeg Free Press. (here and here) One promotes market choice, the other promotes the single-desk.

One line in the first piece caught my eye. It serves as a lense through which both articles and the entire debate can be viewed: "Any and all changes in Canadian agriculture -- in particular the CWB -- involve politics and emotion."

Since so many of the arguments in the debate, including many of my own, appeal to emotion, I think it important to look at the emotional tone in each article. Jeff Nielsen talks about opportunity and cooperation; optimist that he is, he talks about his excitement at being given the chance to market his own barley. Allan Dawson talks about how proponents of market choice are trying the mislead farmers; he tries to inspire fear at the thought of a competitive market.

In a debate, both sides use disparagement. The CWB debate is no exception. But I have yet to hear an optimistic version of the future that includes a single-desk for the CWB. It is awfully tough to get excited at the prospect of surrendering the marketing of my grain in perpetuity to the single desk.

The word of the day is: "competitive"

I won't bore you with a definition, but I will use it in a sentence, care of ABB Grain, the former Australian Barley Board:

ABB Grain has closed the No.1 malting and No.1 feed barley pools in South Australia at close of business today - but will immediately open No.2 malting and feed pools.

The No. 1 pools have been closed to protect the equity of the growers that supported these pools and benefited from strong prices through the harvest period. The pools have been kept open until now to provide growers ample opportunity to deliver. Opening No. 2 pools will continue to give growers that have not already delivered into the pools the ability to do so.

ABB’s managing director, Michael Iwaniw, said despite the difficult season, the pools had been able to be competitive in a very tight market.

“ABB has been effective in a season with unusually strong domestic activity by staying focused on generating the best result for growers. We look forward to continuing to do this in the looming deregulated barley market,” Mr Iwaniw said.

He said that with less grain to export, ABB had used its marketing expertise to maximise returns for pool growers and will continue to do so.

“Flexibility within ABB’s marketing programme has allowed ABB to respond to rapidly changing market conditions,” Mr Iwaniw said.

“This has enabled us to reflect competitive prices - by tapping into the domestic market and prioritising international sales to key premium markets.

“We’re beginning to see signs of the domestic market softening, which suggests local buyers have satisfied their demand, in the short term at least, which is another factor taken into consideration in closing the No. 1 pools.”

The current gross pool indicator prices for the pools which closed today were: Malting barley No. 1 (South Australia) $338/t, Feed barley No. 1 (South Australia) $246/t. These prices are unchanged from the last pool update issued by ABB Grain on January 17.

Mr Iwaniw said the new No.2 pools currently have indicative prices of $333-$338/t for malting barley and $229/t for feed barley.

“We will continue to provide competitive pool options with the intention of maximising grower returns,” he said.

The release can be found here. Incredible things happen when grain companies must compete for farmers grain. No talk about "scary multinationals" or "pitting farmer against farmer"; instead, "generating the best result for growers" so that both sides benefit from the transaction.

Some people just get it

A good summary of the latest CWB shenanigans can be found over at smalldeadanimals. It is nice to see non-farmers who understand the fundamental premises behind farmers opposition to the single desk. (And are willing to send traffic our way, thanks, Kate!)

That said, I don't think Kate is voting in the upcoming plebiscite. It is up to farmers to move marketing choice forward, so if you can vote, vote early and vote for choice.

When will market signals reach us?

Today's big news surrounding barley is not about anything the CWB has done. Really. It's about what the CWB refuses to do.

Agricore United has begun posting an international feed barley price, representing what the company would pay farmers in a marketing choice environment. The price was posted at C$233.70/tonne, basis Vancouver. The board's latest Pool Return Outlook for the B Pool on feed barley gives a price of $190/tonne, also basis Vancouver. The Board acknowledges that the higher price is out there, but refuses to offer it to farmers.

Now, the Board can't use the excuse that it had made lower priced sales earlier in the year - there are two pooling periods for feed barley, with the B Pool running from February 1 to July 31. It can't say that the bottom is likely to fall out of the feed market. According to the CWB's PRO announcement from Thursday, "Global feed grain prices are expected to receive support from the U.S. corn market well into 2007, with U.S. corn ending stocks expected to be at the lowest level since 1995-96." If that is the case, why the huge disparity between sales that can be made now, today, at this moment, and the price it says it can deliver to farmers? Why not attract grain to the B Pool to meet this demand? A cynic might say that the Board just wants to make sure that its feed price stays below its malt price. The Board does not want to admit that it hasn't done the best job of marketing farmers barley. But we already know that; the evidence is plain as day.

The board has cultivated its image as a protector of Canadian farmers. If this is protection, being 'sheltered' from high prices, then count me out.

Profitability and Board Grains

Yesterday, our farm completed analysis on the projected profitability of crops for the 2007 crop year. Not surprisingly, canola provided the highest return at almost $200/acre. Also, not surprisingly, barley and HRSW provided the lowest gross margain, almost $100/acre lower than canola. ($114 and $109 for HRSW and malt barley, respectively)

When I see the $20-40 extra an acre in returns that are stolen from our bottom line, the true benefit to "orderly marketing" is quickly revealed.

Me thinks there is something rotten within "The Designated Area".

Debunking junk economics

Just recently, the CWB released a study it had commissioned at the farmer's expense to look at its own economic impacts. PriceWaterhouseCoopers, the international consultancy, performed the analysis. Not surprisingly, it found that the CWB had major impacts, generating $1.6 billion in economic activity and "creating" over 14000 jobs. This seemed ludicrous. Then I looked at the study. I saw that they took the value of "premiums" earned by the CWB straight out of other CWB commissioned studies by Andy Schmitz, Richard Gray, and the like and treated these mythological premiums as having a direct, tangible impact on the Canadian economy. Sounds fishy. But the study also treated all CWB expenditures as having economic impacts. I always thought that farmers funded those expenditures, not the CWB. Those expenditures would exist with or without the board in place, so attributing them to the CWB seemed incredibly arbitrary.

To assure you that this idea isn't totally crazy, I refer you to Tyler Cowen, professor of economics at George Mason University and author of the popular econ weblog Marginal Revolution. This was posted under the heading, "Don't Trust Economic Impact Studies." It refers to impact of the arts but it applies to studying the economic impact of any organization and it is crucial to any critical look at the study released by the CWB. (Emphasis is mine.)

We should be skeptical of “economic impact” studies that show the importance of the arts to a community. A study of this kind might show that an arts festival or new arts arena brings millions of dollars in economic value. But these studies typically treat arts expenditures as creating value out of nothing. Implicitly it is assumed that if the money had not been spent on the arts, no other economic or social values would have been produced. Again, the relevant comparison is whether an arts arena leads to more value than some alternative. When we look at economic impact studies for one industry at a time, they all appear to show high benefits. But this means that the net benefits of any single project are low, zero, or perhaps even negative on average. By investing in one good idea we are always forsaking another good idea. In essence these studies list gross benefits rather than net benefits.

Indeed, the relevant comparison in the case of the CWB would be the impact of marketing expenditures in a competitive market. It is a comparison that can't be made.

It is the height of arrogance to think that the gross benefits of Western Canadian wheat and barley marketing are the result of the existence of the CWB. The only conclusion you can take away from the CWB's Impact Study is this: the CWB has such a lack of respect for farmers that it believes that they couldn't generate a single dollar of economic activity in its absence.

Keeping it real

I did inadvertantly mention this yesterday, but I didn't link to it. Also the article I posted referred to it as 'barelyvote.ca'. I'm thinking, "don't barely vote, don't hardly vote, rather vote decisively, vote passionately, and vote often."

To set the record straight, the site is www.barleyvote.ca. It is chock full of information on barley marketing and how you can get involved in bringing about a voluntary CWB, so check it out yourself. The group behind it is the Market Choice Alliance, or as I've heard them called, "The Real-er Voice for Choice". Because let's face it, a pro-monopoly group calling itself the Real Voice for Choice is like a Saskatchewan Roughrider fan wearing blue and gold.

Putting the "east" in Easter

Combing Google News this evening and what do I come across - a Liberal Party of Canada press release. I am not sure what bugs me more; the fact that Google considers Liberal Party press releases to be 'news' or that Wayne Easter, PEI native, Liberal MP, and former NFU president, has decided to open his mouth with regard to the CWB plebiscite issue.

Here are some of the things that Wayne Easter had to say:

Chuck Strahl still doesn't understand what study after study, including his own discredited task force on undermining the wheat board, have said - namely that there is no such thing as dual marketing. It is either the open market or single desk!

This puzzles me. It puzzles me because I am pretty sure that Ontario lies somewhere between PEI and Western Canada. I would think that Wayne Easter, sitting in PEI, could see that Ontario has a marketing board for wheat that operates on a voluntary basis, a 'dual market' if you will.

The release also comments on who should be voting in the plebiscite:

The Minister must respect the fact that permit book holders should be those eligible to vote.

Wayne, you so crazy! You expect me to believe that our farm which grows ten of thousands of bushels of board grains while holding a single permit book should receive the same vote as the retired farmer who hasn't delivered a bushel in years? Or worse yet, the same vote as the estate of someone who owns a quarter section? Yes, it appears that Wayne Easter believes that bonafide farmers should have the same vote as dead people.

In opposition, let me put forward the simple idea that growing barley, not holding a book, should be the eligibility criterion.

Finally, this nugget:

This Minister has a track record of using threats, tampering with voter lists, and firing CWB officials who have defended the CWB from the Conservatives' attempts to destroy it to fit their ideological agenda. Western grain producers deserve better.

Wow. Partisanship, thy name is Wayne Easter. If ever an 'ideological agenda' existed, it belongs to single-desk supporters such as Mr. Easter. It takes a great degree of confidence in the ideology of collective marketing to suggest that all farmers be forced to market collectively. It takes even more gall to suggest that only farmers in another area, not a single one represented in parliament by Wayne Easter, be the ones forced into a system of collective marketing. If only I could move my farm to PEI the same way Wayne Easter moves his ideology west.

The revolution will be blogged

Via smalldeadanimals comes news that David Anderson, Saskatchewan MP and longtime advocate of marketing freedom, has started a blog of his own. The blog has been around since the 15th of January, so I guess I'm late to party, but better late than never right?

His most recent post is a fun time-waster. Guess who owns the web domain www.marketingchoice.ca?

Plebiscite question: Let the hysteria begin

Not to go all smalldeadanimals on you, but I'm on a blogging roll this morning. I do need to get back to work, but I'll leave you with this article from the Winnipeg Free Press today. The anti-choice crowd is out in full force, suggesting that the option of a voluntary CWB is absurd.

Not surprisingly, the National Farmers Union is front and centre:

Stewart Wells, president of the National Farmers Union, is an outspoken critic of what he sees as Strahl's attempts to dismantle the board.

"I wonder why they stopped at three questions (on the barley plebiscite)," Wells said. "They may as well have asked if farmers would like to sell their barley to little green men from Mars for $200 a bushel."

Wells believes that would be just as valid as the second statement on the plebiscite that reads, "I would like the option to market my barley to the Canadian What Board or any other domestic or foreign buyer."

It amazes me that our mainstream media continue to give credence to these kinds of smear tactics while at the same time casting aspersion on those who support choice. The final paragraph of the article is a real doozy:

Ballots will be mailed out to barley producers by the end of the month, but the campaign to influence producers has already started. A slick website called www.barelyvote.ca is sponsored by something called the Market Choice Alliance.

Ok, "a slick website", "something called the Market Choice Alliance"; yep we must be "scary conservatives" with a "hidden agenda". This type of reporting makes me sick. It abandons any pretense of objectivity. I still hold out hope that the barley campaign will be a reasoned and reasonable debate about what is best for barley farmers, but if this is the way the media chooses to cover the issue, it seems unlikely.

Say it like you mean it

I just got word of an event that some people might be interested in. The title was what grabbed me: "Show me the money!" As in: If the CWB is improving the bottom line on my farm, show me the money!

It baffles me at times that some farmers are so trusting of the CWB that they forget to ask where the benefits are. Even farmers I know who aren't passionately for or against the single-desk can acknowledge that if the monopoly powers of the board were taken away that the price they receive for their wheat wouldn't suddenly decline.

I am not a 'shout-it-from-every-rooftop' kind of guy. I am not going to quote entire scenes from the movie Jerry Maguire, but I am going ask and I hope everyone else does the same: CWB - Show me the money.

Opening salvo

As a wheat farmer, the last six months have been incredibly frustrating. Commodity prices moved higher, wheat was the one crop on our farm that had decent yields, and yet here we sit, our bins full of wheat and no cash in my pocket to show for it. What did farmers talk about instead of marketing wheat? They talked politics. They talked about whether a government-created marketing board should have the privilege of marketing our grain. They talked, as they have for years, about the Canadian Wheat Board.

I hope you can hear the frustration in my voice. I hope you can understand how ennervating it is to be mired in debate when dollars are slipping through our fingers. The title of this blog, 'The Designated Area', is borne out of this frustration. I hope it reminds us of the arbitrary and unfair manner in which the Canadian wheat and barley business is regulated. Hopefully you all stay tuned for more reaction and comment, criticism and praise, that comes straight out of the designate area.