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Farmers, consultant weigh in on CWB changes

And here are more thoughts from producers and one consultant about plans and
comments made regarding changes to the Canadian Wheat Board.

Gerald in Alberta writes:

 In your June 21 Blog regarding CWB and “the
tribe has spoken” you stated: “There should be a whole team of people
working for the board with expertise in marketing, price pooling, grain

quality, processing, production and weather”. Lee, who will pay for this
whole team of people? Farmers complain now about cost of board when the cost of
the CWB is spread across all wheat and barley marketed. And what about
marketing programs like branding Canadian wheat, which benefits all wheat
producers and is now entirely paid for by the CWB. Do you feel branding of
wheat should 1. end 2. continue and be paid by checkoff (by CWB or another
organization) from all wheat sold 3. continue and be paid only on wheat
marketed through CWB, or 4. be paid by government or some other organization
since benefits all farmers and all Canadians?”

Brian in Alberta writes:

Your article “the
tribe has spoken” hits the nail square on the head. It is time for the

directors of the CWB to remember they were elected to manage the business
affairs of the CWB and not let their personal agenda’s interfere with their
job.

Unfortunately, the
single desk supporters have always concentrated their efforts on preserving the
single desk whether it was offering value to farmers or not. What they don’t
understand is by delivering economic value to producers will ensure the
preservation of the CWB. However, the economic studies they have done are so
flawed that they have been mislead by their own data.

What we need is
leadership and courage from these directors to move out and build a business
plan that will bring economic value to those who choose to use them as their
marketing agent. Unfortunately, all they can do is spout “doom and gloom” about

what will happen when they are not there to protect us from the marketplace.
Someone should tell them, that I as a producer, did not ask them to protect me
from this environment. I do not feel threatened by the prospects of an open
market, or the “big, bad, grain companies”.

The CWB is there to
market grain, not advocate on my behalf or by lackers with my money without my
consent or artificially promote the port of Churchill whether it gives
financial benefit to all farmers in the designated are or not. The rhetoric we
seem to be hearing is about jobs in Winnipeg and the threat to the port of
Churchill. This is a Western Canadian issue, not confined to Manitoba. Every
part of the value chain in the grain industry will survive if it offers
economic value in a competitive and open market place. So if the Port of
Churchill or the people working in Winnipeg contribute to this new economic
model, these jobs will survive.

What everyone should
be concentrating on is the job creation that will happen in a open market and
an the positive atmosphere created that will attract investment. We will be
moving to a true transparent and competitive market place where producers can
finally manage their cash flow to meet their individual farm’s needs. This was
not allowed to happen under the present system. What the single desk supporters
don’t understand is that sometimes it is not about getting the highest price
for their grain but about being able to deliver grain to meet their financial
commitments. It is time for this Board (CWB) to show leadership and build a new
plan to conduct business on a new commercial basis.

Thanks for your
article Lee, it was refreshing.”

Jim in Alberta writes:

Lee…as one of the
Lethbridge Correctional Center (13 farmers) alumni I couldn’t help but smile at
your article “the tribe has spoken”. I am now a senior farmer that is
just as determined as ever to see intrusive government over-regulation ended.
It remains a mystery to me why the socialists insist on having a vote on
freedom.

Freedom to enjoy the
fruit of ones labor is a principle that is as old as the civilized world. Check
out this reference in the bible—Ecclesiastes 3;12 + 13,  5;18 +
19.  Keep up the good work.
 

(Editor’s Note: In case
your Bible was upstairs, I looked it up: E. 3:12: “I know that there is
nothing better for people than to be happy and to do good while they live. 13:
That each of them may eat and drink, and find satisfaction in all their
toil—this is the gift of God.
And
E. 5:18: This is what I have observed to be good: that it is appropriate
for a person to eat, to drink and to find satisfaction in their toilsome labor
under the sun during the few days of life God has given them—for this is their
lot. 19:  Moreover, when God gives
someone wealth and possessions, and the ability to enjoy them, to accept their
lot and be happy in their toil—this is a gift of God.”

Bob in Alberta writes:

“I read with interest
your blog on Grainews about the Canadian Wheat Board. You did present the two
sides from individuals who are in a position to either loose or gain from the
changes. I am a nearly retired small farmer from the Calgary area.  I
have a history to draw from and the CWB is in my opinion not a vehicle that
made me money, quite the opposite in fact. Let me give you a couple of facts of
what happened to me over my career.

One wet year we had a
frost toward the end of the season. When starting to market this crop it was
graded ergoty. Just after harvest no one would buy ergoty grain but the CWB and
they would but as ergoty offering $1.40 per bushel. My sharp pencil showed a
loss if sold this way through the board. I started my homework and found futures
better and decided to find a good basis from an elevator company and sell on
the open market. I set a price for a reasonable profit, signed the basis
contract and put the grain on the open market. My offer was picked up with the
condition I would deliver this grain in later summer of the next year. I now
had a profit set up but needed to fix my cash flow. My accountant said to apply
for an advance from the CWB. I looked over the contract as did my accountant
and found I qualified even though I would be selling all my feed grains outside
the board.

It took more than one
letter to get this advance and only on part of my crop. As I sold feed barley
to the local feeder I sent money to the Board to settle part of my advance. One
problem I overlooked was the date of the advance final payment. I needed the
money from my ergoty grain for final payment to be made to the Board four weeks
before that delivery.

My delivery date on
the wheat was four weeks after the end of the CWB year end. When realizing this
slip up and talking to the Wheat Board by phone, I offered to pay interest on
the advance for the four weeks extra I would need the money and until the wheat
was delivered.

I was threatened with
being charged for interest on all the payment regardless of what had been paid
off and all for a complete year and was told they expected the wheat to be sold
through the CWB and the money in their hands at their set date.  (Such
friendly bureaucrats who serve the farmer).

Nothing in the
contract that the I saw said marketing must be through the CWB. I took this
story and the CWB threatening letter to the local elevator company who came to
my rescue and let me deliver on the contract one month early, paying me for the
grain and allowing me the cash flow to pay off the CWB advance at their date.

I now trust the large
elevator line companies a hell of a lot more than the CWB. This line company
saved me credit line charges among other things. You know, these are the big
bad elevator companies NDPers can`t trust.

The CWB is bureaucracy
and treat farmers the way that The Canada revenue agency does. They are not
only sometimes threatening but with rules that do not help the farmer. 
These rules rather perpetuates the CWB bureaucracy.

 My father went form a grain farmer to a
mixed farm. This allowed him to make a small profit from two vertical steps in
his operation. He grew feed grain for a small profit and this feed grain then
went to his own small feedlot where he made a profit from feeding cattle.
Vertical integration is how I rationalized his management model.

When I came back to
the farm after my father was too ill to continue, I knew that my allergies (or
hay fever) Ì had as a kid would act up if I had cattle and worked with their
feed.  I decided to try marketing my own wheat through a small mill,
selling the milled products into a niche market that was local (farmer`s
markets).

I found to set up my
own mill I would need to sell the wheat to the CWB and buy it back from the CWB
even thought the wheat never left the farm. Also CWB purchase price was much
lower that CWB selling price.  The difference was a transport charge as
well as a pooling charge. This worked completely against my model and the
profits I was trying to generate.

The CWB did not help
me the farmer it so often claims it serves. This model of on-farm milling has
been done successfully on a farm west of Bozeman, Montana. I was there in 2010
and it has expanded to mill the wheat from the neighbouring farms as well. This
Montana mill also now has a bakery and coffee shop and lots of customers. My
wife and I had to stand in line for a table to have a coffee and munchie. This
is in a State that has a lower density of population than Alberta. Why is this
so? They are in the USA and we are in Canada. Pity. Without that hopeful mill
operation I have been forced to keep an off farm job for my whole career.

The CWB has to go
from its present form to a form that supports the farmer. Pooling is not the
answer unless you are socialist farmer who feels he will gain from his
neighbours through pooling. You know, the kind of people who infer “I want and
you pay for it“.

The CWB only focuses
on exports of wheat and malt barley. I made more money from peas as a crop and
they were exported through the open market. This also means all people who work
for the CWB in a management position are steeped in bureaucracy and must be
fired for the board to thrive.”

And marketing consultant Ron Frost of Calgary writes:

“The
topic of the CWB monopoly is very polarized with some believing the CWB adds
value with a monopoly marketing structure, while others like myself grew
varieties of wheat and barley in the 1980’s to avoid the bureaucratic anchor
they represent where pooled, “average” prices just didn’t seem to be an
acceptably high target. Years later I am not involved in production first hand,
but I still strive to assist producers achieve above average prices whether it
be canola or the PRO’s through the Board that are truly a poor alternative to a
true open market mechanism that many desire.  

In
Mr. Oberg’s comments he seems to be of the opinion that there is no way for the
CWB to survive in a dual marketing structure, yet the government of Canada in
the 1935 CWB Act created a structure that was voluntary, not mandatory. In 1943
without a farmer vote (point) that structure was changed to mandatory, it was
legislated by the federal government of Canada. It literally took the dire
situation of WWII to force the Canadian government to remove the farmers’
rights and freedoms to market their grain to whomever they chose in the 1940’s.
The return of those rights and freedoms through legislation is long overdue.
 

He
stated in his speech at the Western Canadian Farm progress show, “Since the CWB
is the marketing structure for farmers – not a grain company – it has no
assets. Under the CWB act it is not allowed to own real assets. It has no grain
handling infrastructure, no capital base for borrowing money or financing its
operations. It exists by virtue of legislation and by the existence of
government financial guarantees.” Let’s stop right there, so what in the world
is he as a director for the CWB doing going out and buying ships? Further
before he gets too high and mighty it’s all up to farmers what about the
hundreds of millions of dollars the Canadian taxpayer have footed over past
years to cover initial price deficits. Doesn’t that kind of make it every
Canadian taxpayers business and as the representative of every Canadian
taxpayer the government of Canada has the right to change the laws that govern
the CWB as it has done on many occasions over the past decades.   

The
CWB existed from the mid-1930s to 1943 in a voluntary structure, so his fear
mongering that it cannot exist in any format other than a monopoly has zero
basis. In today’s business environment the telecommunications industry is a
prime example where a few companies own the infrastructure, while many “agents”
provide services through that network alongside the infrastructure owners. They
not only survive, many of these companies are thriving without the burden of
bricks and mortar, so why is it that he can’t see a useful and valuable role
for the CWB in a similar situation. You are correct the debate of the CWB role
after single desk will also be a topic of heated debates as everyone offers
diverse views.

In
my opinion what must change is that the CWB will require individuals at the
helm that are entrepreneurial thinkers that seek out opportunities and
solutions as they carve out their niche within the new environment and given
Mr. Oberg’s comments he may not be the best person for that position. J
ust
my 2 cents worth.”

www.thefrostforecast.com

Lee Hart is a field editor for
Grainews in Calgary, Contact him at 403-592-1964 or by email at
[email protected]

 

 

 

About the author

Field Editor

Lee Hart

Lee Hart is editor of Cattleman’s Corner based in Calgary.

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