So long single desk

Well, the results are in. For anyone still stopping by this old haunt, you can find them here. The big news is that Strahl has confirmed that we will be marketing barley in and outside of the CWB starting August 1, 2007. Think I'll have a barley sandwich at lunch to celebrate.

Lies, damned lies, and statistics

This article has all three.

I would love to have to store oats all year round like do with wheat and barley. I'd love to export offshore instead of to the Upper Midwest, where I do have a transport advantage. Some people will say anything. Canadian oats rarely competes with oats from Australia, but if it fits with your argument why not include it, right?

I hope that anyone out there who hasn't yet voted in the plebiscite reads the article I linked to. Farmers know the smell of b.s.

Your three options: Reverse weighted?

Further to my last post regarding the number of ballots sent out in the barley plebiscite, you have to wonder if the eligibility rules actually reverse weight the vote. By allocating the same vote to anyone who has produced barley in the last five years, those who produce barley year-in and year-out have the ballot weighted against them. Similarly, large producers or farms that consolidate their production under a single individual or corporation are punished. Hopefully no one has considered changing their incorporation structure simply to receive more votes in future plebiscites.

Your three options: One in 84000?

I have been meaning to comment on the plebiscite itself for some time, so here goes. The three option ballot was the right way to go for reasons I mentioned here. But in issuing ballots to 84000 producers, the government abandoned some of the fundamental principles that ought to guide it in dealing with the CWB. The most important of these is that consultations should be conducted with farmers who have a continuing commercial stake in growing wheat and barley. Translation: You have to make your living as a farmer. There is simply no way that 84000 people in Western Canada make their living as farmers, considering that there are only approximately 8000 grain farms with revenues of more than $250000 according to Agriculture and Agri-Food Canada. In the end, it is the result of the plebiscite and not who voted that will carry the most weight, but it would be a shame to have the process marred because farmers did not have their voices heard.

We report. You decide.

I am going to try to post barley prices during the plebiscite period on the sidebar to the right. If they aren't 100% up to date, please do not get on my case too much; I do have other work that does not involve barley prices and it must also get done.

CWB prices are taking off the CWB website. WCE prices come from the WCE website. North Dakota prices come from here. Montana prices come from the USDA. More prices can be added. I still need to track down the Agricore United export feed barley price and others and add more deliver points. If you have any suggestions, comments are open.

Stocking up on content

I'm not sure what posting frequency will be like over the next few days. Geoff and I are both headed to Calgary for the annual convention of the Western Canadian Wheat Growers Association, which runs Wednesday night through Friday afternoon. This years convention is jointly held with the Western Barley Growers Association and should be a blast. Hopefully I pick up plenty of excellent info and anecdotes that can be posted here. The highlight should be the appearance of Chuck Strahl, Canada's agriculture minister on Friday. Consider yourselves invited to the party. See the above websites for details on agenda and registration.

Spinning dangerously out of control?

The following letter ought to win an award. You've got to hand it to the CWB; they can spin with the best of them.

February 9, 2007

Letter to the Editor

It was suggested in the February 1 issues of the Manitoba Cooperator and Farmers Independent Weekly that an Ontario farmer currently selling hard red spring wheat with 13.5 per cent protein would receive $5.50 per bushel, whereas a grower on the Prairies selling 1CWRS would receive about $4.40 per bushel as a final pool return—approximately $1.10 less. The implication is that this is because of poor performance by the CWB. That implication is incorrect, because of several errors in the comparison.

To begin with, the comparison relates a spot price (the Ontario price) to a pool value (the CWB Pool Return Outlook). This is a misleading comparison. A pool value is by definition an average of prices achieved over an entire crop year. In a rising market such as we have experienced so far this crop year, a spot price is always higher than a pooled price. Is the CWB selling wheat at those “high” Ontario values and returning those dollars to farmers? Yes. In fact, CWB values are even higher, as noted below.

The Ontario farmer spot price of $5.50 per bushel is presumably a price at or near an Ontario mill. Therefore, an appropriate comparison would be the current price of CWB wheat landed at an Ontario mill. On February 5, the CWB offered eastern mills No.1 CWRS with 13.5 per cent protein for $230.47 per tonne at Thunder Bay. Add to this freight charges of $25 from Thunder Bay to the mill, and the landed price equals $255.47 per tonne or $6.95 per bushel.

The comparison, then, is between $5.50 per bushel of hard red spring wheat to the Ontario farmer and $6.95 per bushel for CWB wheat sold in Ontario. This $6.95 per bushel would be added to the pooled payments western farmers receive for wheat sold throughout the 2006-07 crop year. Because the CWB’s Ontario sales prices are based on competitive North American values, western farmers can obtain similar cash values today under the CWB’s other pricing options such as our Daily Price Contract. It appears that Ontario farmers are receiving prices that are significantly under current market values.

The truth, therefore, is the exact opposite: CWB prices are higher.

Sincerely,

Gord Flaten,

CWB Vice-President of Marketing

The entire letter rests upon the CWB's belief in its own power, that they can tell processors, millers, and bakers what the price of wheat is anywhere and everywhere. I suppose in some fantasy world perhaps, but what buyer would pay $6.95/bu to the CWB when it can apparently buy from local growers for $5.50?

The CWB's "offered" price is not the price the farmer delivers against. The farmer delivers against the PRO or against Fixed Price and Daily Price Contracts that are based on US futures prices adjusted by basis levels and CWB deductions and "adjusting factors". But if they can claim this made up price to be "the truth", then I suppose I can claim that my farm is "offering" canola for $15/bu this year, oats for $3.50/bu, and confectionary sunflowers at $0.40/lb and make the accountant and the credit union really happy.

The single desk seems to give the CWB a monopoly on one thing: crazy. I hope no one else is buying what they are selling.

All the news that's fit to print?

Google News earns my disdain again today; apparently savemycwb.ca is a news site. One look confirms that it is chock full of propaganda from the NFU-left, where the 'con' in conservative stands for conspiracy.

One example, if I may:

In addition Strahl will be stuffing ballots with propaganda
The ballot envelope will be stuffed with material from anti-CWB advocates Dr. Barry Cooper from the University of Calgary and Rolf Penner from the Frontier Centre.

What is not mentioned is that Prof. Murray Fulton has the privilege of "stuffing" the ballot envelope with 'propaganda' in support of the single desk. But why would you tell the whole story when you have political objectives to achieve?

Reading these guys, you might think that Chuck Strahl is the second coming of Machiavelli. Or maybe worse, according to some of the signs at the pro-single-desk rally in Winnipeg in December. (Apologies for the bad cell-phone camera picture.)
Sadly, there is simply too much material on savemycwb.ca to rebut. It amazes me that so many are going to such incredible lengths to castigate those who would give farmers a choice in whether they market their grain through the CWB. It takes a lot of gall to suggest that choice, opportunity, and freedom are some kind of crazy conspiracy.

Monopoly or Bust?

Thomas Hewson, vice-president of the Western Barley Growers Associations, raises some interesting questions to farmers who do not believe a voluntary CWB to be possible.

There is going to be increased pressure on any government to end the single-desk
marketing monopoly. The past government took the first step toward that by
agreeing to allow it on the table at World Trade Organization talks. Greater
farmer participation in value-chain relationships does not bode well for the
monopoly. A voluntary marketing agency may well have more life expectancy
than a single-desk CWB.

An excellent question. Would the die-hard supporters of the monopoly rather have a voluntary CWB, or no CWB at all? A lot of the same people who are fighting to maintain the monopoly fought to keep the Crow Rate subsidy. When the subsidy was eliminated in the early 'nineties, farmers received only a fraction of earlier, more generous, buy-out offers.

I believe that a voluntary CWB has an excellent chance at success, and is the best option for farmers in the designated area. Hopefully this vision comes to fruition before the CWB simply ceases to exist.

Can anyone read French?

Last Thursday, I attended a breakfast seminar put on by the Frontier Centre for Public Policy that featured John De Pape, who spoke about the CWB and its role in marketing barley. It was a very informative and very reasoned analysis. The Frontier Centre usually puts audio or video of these things online, so as soon as it gets put up, I'll post a link and you can see it for yourselves.

At the breakfast, I sat at the same table as Gord Kurbis, Director of Corporate Policy with the CWB. He disputed the now somewhat infamous news story out of Algeria, quoting an Algerian official who said that the CWB was selling wheat to the Algerian state trading agency at a discount of tens of dollars per tonne. Mr. Kurbis said that the English translation that made its way to Canada was inaccurate. So, I dug up the Algerian article, if you are inclined to read the French. The key quote comes two-thirds of way into the first paragraph:

"Les prix de vente à l'Algérie de 400 000 à 500 000 tonnes de blé annuellement sont bien étudiés puisque ce sont des prix préférentiels. Ces derniers font gagner à l'Algérie plusieurs dizaines de dollars sur la tonne achetée."

My own French skills being what they are, I plugged the quote into an online translator. Intrigued by this, I double checked it with a friend who speaks fluent French. Translation: It is well known that the sale prices to Algeria on 400,000 to 500,000 tonnes of wheat annually are preferential prices. They save Algeria tens of dollars per purchased tonne.

I have a difficult time understanding how there could be any confusion about the meaning. I just don't know why some farmers continue to fall for the CWB party line. The CWB claims that it can price discriminate, charging different prices to different markets to maximize returns. I don't understand where undercutting our competitors by tens of dollars per tonne qualifies as maximizing returns.

UPDATE: (Feb 12, 2007) Check out this exchange between the CWB and US Wheat Associates for more info on translation-gate, or whatever we might call this misunderstanding. (Scroll down to item number three.)