[Newsbot]

Title: Harper philosophy collides with economic reality
Category: Political
Posted By: hurley_108
Date: 2009-03-02 08:40:40
Canadian

[Robair]

Um, old news. The farmers told the torys to take a hike a while ago, before the economic downturn.

But, bottom line, the Conservatives were told to take a hike re the Wheat Board... ...this guy is just spinning it to fit his article.

[Scape]

Yep, I don't think there have been a masive revolt in the west just because of this:

Quote:

After years of pushing for smaller government and market deregulation, Mr. Harper now presides over one of the most rapid government expansions in modern Canadian history. The Conservatives have extended welfare-state entitlements such as Employment Insurance, are spending money on training and funnelling cash into the auto sector.

The supporters are more then willing to give that a pass.

[Robair]

Ritz has been making noise lately, that's why the articles about the CWB are coming out. This one is a good read, shows Ritz for the idiot he is.

Quote:

Anti-CWB forces overlooking the facts
Ritz silent on record returns from the pools
By: Laura Rance

28/02/2009 1:00 AM |
Reporters are sometimes accused of never letting the facts get in the way of a good story. A similar adage applies to the federal Conservatives' vendetta against the Canadian Wheat Board: Never let the facts get in the way of a flawed ideology.

Much has been said lately about setting farmers free from the Canadian Wheat Board method of pooling grain sales over the course of the year and splitting the proceeds among those who delivered. By inference, 'smart' farmers can market their own grain and shouldn't be lumped in with the "tinfoil hat and decoder ring" crowd (federal Agriculture Minister Gerry Ritz's words) who are too lazy or stupid to do their own marketing.

The fact is, anyone who sold grain through the Canadian Wheat Board pool accounts last year looks like a marketing genius. Gross returns averaged $368 a tonne.

That's a much better return than received by producers who participated in the board programs that allow farmers to opt out of the pool in favour of a one-time upfront cash payment. These farmers picked the day and the price. Those sales averaged $273 a tonne, or 25 per cent less than the pool account.

Of course, this was because wheat markets were soaring during the time in question. The farmers in the Producer Payment Options programs were cashing out early at what were historically very good prices indeed. But because the pool account prices are based on the whole marketing year, they captured the gains that continued later.

Had the market been falling, the results could have been very different. Farmers locking in a price earlier might have outperformed the pool.

The federal response to this has been predictably creative.

In tabling the board's annual report in the House of Commons, Ritz had little to say about the record pool returns of $7.2 billion, but a lot to say about how the board allegedly mismanaged the $60-million contingency fund it set up in 2002 to help manage market risk in the Producer Payment Options programs.

Let's be clear. Without the Producer Payment Options, the board wouldn't need such a fund; the pooling system is in itself a low-cost hedging strategy.

That said, the board has been under pressure to give farmers more pricing options. So when it allows a farmer to cash out before the pooling period has ended, it has to protect itself like a grain company. When it buys cash grain from the farmer, it sells futures so that changes in the cash value between the time of purchase and time of resale are offset. In the board's case, it sells futures to protect the unsold portion of the pool account.

If your eyes are starting to glaze over, don't worry. Suffice to say, it all works pretty well -- until the markets go wonky as they did last year.

The impacts of global supply shortages were exacerbated by a sudden surge of speculative interest -- mainly investors looking to commodities as a safe haven from the subprime mortgage fiasco. The trendsetting Chicago wheat markets shot skyward, well beyond the capacity of normal market disciplines -- such as convergence between the futures and cash markets.

That left hedgers, the board included, exposed. Last year's events pushed some U.S. grain firms out of business. Even the big boys like Cargill got caught.

"With commodity prices in record territory all fiscal year, Cargill's debt usage increased substantially, as did working capital to buy and hedge the higher-priced inventories that support our supply chains for customers. In March, market instability forced us to make choices that made it more difficult for farm customers to hedge their price risk. We are reworking our grain marketing products to help them manage risk in today's more volatile environment," Cargill's 2008 annual report says.

We will never know how much Cargill's risk-management strategies lost. But it's right there in the CWB's annual report -- just short of $90 million, which was immediately pounced upon by its critics. The board offset part of that loss by transferring $18 million from interest accrued to the pool accounts with plans to return that money after the contingency fund is stabilized.

That's right -- the pool accounts subsidized the open-marketers.

The CWB has consulted, reviewed and changed its risk management for these programs. It also offered to open its books to the auditor general for review -- even before Ritz demanded it do so.

If the AG's job is to ensure responsible fiscal management, one of the questions that needs asking is whether the board should be forced into playing the markets simply to appease a vocal anti-pooling minority.

link

[Proculation]

Instead of totally abolish it, they can at least let the people sell their grains to who they want. Every monopoly is evil, private or public.

[Robair]

Ah good. More philosophy.

Proculation wrote:

Instead of totally abolish it, they can at least let the people sell their grains to who they want. Every monopoly is evil, private or public.

You are obivously well informed on the topic.

[hurley_108]

Proculation wrote:

Instead of totally abolish it, they can at least let the people sell their grains to who they want. Every monopoly is evil, private or public.

No.

[Proculation]

Robair wrote:

Ah good. More philosophy.

Proculation wrote:

Instead of totally abolish it, they can at least let the people sell their grains to who they want. Every monopoly is evil, private or public.

You are obivously well informed on the topic.

No I'm not well informed since it does not apply in Quebec. But anyway, any monopoly is bad. If I want to produce barley and sell it in Japan or Panama, the state have nothing to say to that.

[hurley_108]

Proculation wrote:

No I'm not well informed since it does not apply in Quebec. But anyway, any monopoly is bad. If I want to produce barley and sell it in Japan or Panama, the state have nothing to say to that.

And if you choose to enter into a collective to do the selling for you, is the state allowed to unilaterally, against your wishes, shut down that collective?

[stokes]

hurley_108 wrote:

Proculation wrote:

No I'm not well informed since it does not apply in Quebec. But anyway, any monopoly is bad. If I want to produce barley and sell it in Japan or Panama, the state have nothing to say to that.

And if you choose to enter into a collective to do the selling for you, is the state allowed to unilaterally, against your wishes, shut down that collective?

Only if the collective begins to feed itself more than the individuals that belong to it, kind of like the big unions...big bad monsters that must be crushed before they ruin everything

[Proculation]

As I said, INSTEAD of abolishing it. The collective can stay there but I can choose to not be part of it. I guess it's good for the small producers to gather together.

[hurley_108]

stokes wrote:

hurley_108 wrote:

Proculation wrote:

No I'm not well informed since it does not apply in Quebec. But anyway, any monopoly is bad. If I want to produce barley and sell it in Japan or Panama, the state have nothing to say to that.

And if you choose to enter into a collective to do the selling for you, is the state allowed to unilaterally, against your wishes, shut down that collective?

Only if the collective begins to feed itself more than the individuals that belong to it, kind of like the big unions...big bad monsters that must be crushed before they ruin everything

Any evidence that's what the CWB is doing?

[Robair]

Proculation wrote:

As I said, INSTEAD of abolishing it. The collective can stay there but I can choose to not be part of it. I guess it's good for the small producers to gather together.

You either have an open market or a single desk. There is no in between.

The single desk has a price garauntee. The single desk only applies to wheat and barley. If you don't need a garauntee on any of your grains and like to play the market, all you have to do is not grow wheat or barley. Grow canola, peas etc etc.

Producers do have a choice, their choice was to keep the single desk system despite their governments best attempts at promoting the other choice and fixing farmer elections.

Did you read (and understand) the article I posted above? Because you certainly didn't refute it.

[Proculation]

There is certainly of cost of operation. Wikipedia tells it's around 29$/ton for barley. The current market price is around 140$/ton. That's a big % but I don't have any other operation cost to compare so I can't say if it's in the average.

[Proculation]

Robair wrote:

Proculation wrote:

As I said, INSTEAD of abolishing it. The collective can stay there but I can choose to not be part of it. I guess it's good for the small producers to gather together.

You either have an open market or a single desk. There is no in between.

The single desk has a price garauntee. The single desk only applies to wheat and barley. If you don't need a garauntee on any of your grains and like to play the market, all you have to do is not grow wheat or barley. Grow canola, peas etc etc.

Producers do have a choice, their choice was to keep the single desk system despite their governments best attempts at promoting the other choice and fixing farmer elections.

Did you read (and understand) the article I posted above? Because you certainly didn't refute it.

I don't want to refute anything. I'm just expressing my opinion. Having a collective (or more) and other players would be best IMO.