Monday, October 18, 2010

More on Feed Barley Exports

I know I’ve been here before but there’s just so much of this that’s just not right. For instance, one thing I didn’t mention before is that the way the CWB operates in the export feed barley market may actually limit how much volume it does.  The CWB first tenders to grain companies for supply.  Only when the barley is “in the showcase” does it sell the barley.  In the time lag between originating the barley and offering it for sale, the market price can drop and that’s why the CWB goes to the farmer with a discounted price.
Talk in the trade suggests the CWB may have missed sales because of this approach.  By the time the tenders go out, the grain companies respond, and the CWB tries to sell, the buying interest may have been satisfied from other sources.
Let me summarize the situation (I have mentioned some of this before):
  • The CWB is the only one that can sell feed barley for export.
  • It may miss business because of the way it operates.
  • It shows farmers only a portion of the price – as much as $50/tonne is missing.
  • It won’t guarantee that farmers who sold barley will get any of the rest of the sale value.  (Did you know that this is the third consecutive year that the CWB has had this kind of cash program on feed barley?  And did you know that farmers never received the full sales value in the previous years?)
  • The CWB buys barley through company-specific tenders with a specific sign-up window. These contracts are not well promoted or widely publicized so many farmers don’t know about them or even have access to them.
  • Because the export price is not transmitted to the country, domestic prices for feed barley and even feed wheat are artificially held down. 
The loss to the western prairie economy is well into the hundreds of millions.  Even Jim Flaherty should sit up and take notice.
I can accept losing business because you didn’t have the right price, the right quality or couldn’t execute in the required shipping period.  That’s the nature of the business.  But to lose business simply because of the way you choose to operate is unacceptable, especially when you won’t let anyone else try.  Combine this with keeping a portion of the value from farmers and the loss in real revenue at the farm gate on all feed barley and feed wheat and this becomes downright mind boggling. 
Anyone who either defends or deflects criticism of this program is blinded by ideology.  Make no mistake - the single desk has cost farmers millions here and has been a drain on the western economy.  I can only hope that those that defend the single desk will see this for what it is and will now engage in a more meaningful debate.
Even if you’re a staunch CWB supporter, it’s OK to be madder than hell about this.  Now that there’s a CWB directors’ election going on, farmers should demand from candidates what they would do to improve this situation for farmers – all farmers. 

No comments:

Post a Comment