Nothing bugs me more than when facts and a good
counter-argument conflict with or confuse my views. Does that spoil a party or
what?
I’m not saying that after now reading Allen Oberg’s speech
on what’s ahead for the Canadian Wheat Board reverses my thoughts from a couple
days ago (i.e. June 20 blog – Canadian Wheat Board needs to realize the tribe
has spoken), but it does give me cause to think further. Maureen Fitzhenry,
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I might be better informed.
The whole speech can be found on the CWB website or by
clicking this link:
http://www.cwb.ca/public/en/newsroom/releases/2011/news_release.jsp?news=061611.jsp#speech
And following are some important statements by Oberg, within
that speech:
“Removing
the CWB’s single desk structure affects farmers more than anyone else. And the
repercussions will be huge.
That
is a fact. Let’s look at some more facts.
Fact:
The CWB is the single desk. It is a marketing structure. Its whole premise…
its whole value proposition… is built upon the concept that farmers benefit
from marketing our grain together, as one.
Fact:
Since the CWB is a 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.
Fact:
If the CWB were to continue its grain-marketing role in an open market, it
would need to operate as a grain company. A grain company that would need to
rely on competing grain companies in order to carry out its business. Companies
like Viterra, Cargill, Richardson, right now, are service providers or agents
to the CWB. In an open market, they become its competitors. And the CWB becomes
the new kid on the block… . a rather small kid, I might add – provided it
obtains any assets at all. You don’t need to be an agricultural economist to
see how this would play out in the long term.Let me put this another way: It
is August 1, 2012. You want to deliver grain to the CWB. How will you do it?
You will drive to your local elevator, which is now competing with the CWB.
This elevator is run by a company with no incentive and no requirement to
handle CWB grain. You won’t be able to deliver it to the CWB directly, because
it has no facilities.
Those
are some of the realities. Now, let’s look at some of the myths.
Myth
number one: “If the CWB is so good at what it does, it could compete and
survive.”
I
hear that one a lot. I hope you can see from the facts I’ve just shared, that
this comment doesn’t make much sense. It’s not a matter of being good at your
job. If you have no assets and no facilities… if you are reliant on your
competitors to stay in business… you’re not going to survive.
Myth
number two: “Farmers who support the CWB would stay with the CWB.”
I
assume this refers to participation in a voluntary pooling system. I don’t know
about you, but I’m in the business of farming to make money. I believe the
pools make me the most money over the long term. That’s why I like them. But I
also know that pools don’t work very well on a voluntary basis. Pools needs to
have reasonable certainty that they can source the grain needed to fulfill the
sales contracts they make. And, when markets are rising, not all farmers are
going to put their commitment to the pool ahead of taking a higher immediate
spot price. That makes risk-management tricky.
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