Farmers without a Country

Further to what I posted earlier: If cows can have SARS, then it is also possible for farmers to be without a country. Yes, apparently some farmers are less Canadian than others. I know it is old news, but the quote bears repeating:

To strip the Canadian Wheat Board of its monopoly powers and let farmers market their own grain "is as wrong as it is un-Canadian," the board's president says.

And if the quote bears repeating, I believe my own admonishment bears repeating; Agriculture is a business, not a political plaything. The Wheat Board monopoly makes it political and for that reason, we need marketing choice. A vote for choice is a vote that gives you the privilege not to have to hear speeches like this one.

Cows with SARS

Textbook example of why I believe that agriculture should be treated as business, not politics.

Market signals, again

Maybe this should be a recurring series of posts as well. I'll say it again, the manner in which the CWB pays farmers for grain is about the most muddled signal that farmers receive. The TV signals we got on the farm in the days before satellite were stronger.

If you have your price signal antennae up (the bunny ears, if you will) you may have noticed that the board put out its initial payments for feed barley. This value represents the money farmers would receive up front for feed barley delivered into the board. The price they posted was $110.50 per tonne or $2.41 per bushel. The signal to the farmer: we really don't want your grain. If our lowball PRO price wasn't enough of a signal, the initial payment should be. In this case, we are lucky that we don't have to use the board. In the case of other grains, we are not so lucky.

There is a definite cost to the payment system used by the CWB and it means that the prices quoted in the Pool Return Outlook are higher than the farmer can expect to receive. The reason is that the farmer bears the interest cost, the cost of financing the foregone cash, for grain that he has delivered but not yet paid for. Waiting sixteen months to receive final payments from the CWB is a cost to farmers.

Your three options: A continuing series

I would like the option to market my barley to the Canadian Wheat Board or any other domestic or foreign buyer.

So reads the second option of the upcoming barley plebiscite. The CWB calls it intellectually dishonest. Any editorial in favour of the single desk suggests that it should be struck from the ballot because a dual market cannot exist. A dual market is simply a rhetorical device that is right-wing conspiracy code for the destruction of the CWB. Sounds pretty scary.

It made me wonder: What has happened when other government agencies have transitioned from single desk powers to independent competitors in an open market? Did they fold like a cheap lawn chair?

The single desk for pork marketing was removed in the mid 1990's, but Manitoba Pork Marketing still has a website, so I thought I would check it out. The history page is really interesting:

Changes to the Natural Products Marketing Act resulted in the end of the single-desk status, effective July 1, 1996. Today, Manitoba Pork Marketing is a member-owned co-operative, governed by an elected board of directors that are hog producers.Manitoba Pork Marketing continues to be the marketer of choice for the majority of Manitoba's independent hog producers.

Manitoba Pork Marketing is the provinces premier marketing agency.
Working on behalf of approximately 900 producer members that produce 1.5 million hogs annually, we represent the single largest volume of hogs in the province.

"The marketer of choice." They are operating in a dual market and by their own admission, they are not only surviving, but thriving. It makes you wonder what the CWB is afraid of.

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.