20 Questions

Background:

Adrian Measner, CEO of the Canadian Wheat Board, was quoted in the Winnipeg Free Press as saying that,  ".......no one has been fired because of the  miscalculation".    The CWB employs 584 people.  15 of them are farm business reps.   The Globe and Mail reported that the cuts will amount to,  "135 positions, with the job reductions scheduled to be completed by July".   There are rumors that the CWB will contract out the work normally done by these laid-off employees.  If the same people making the  miscalculations end up doing the same work for the CWB, it will cost farmers a lot of  money.

Background:

Polls have indicated that Canadians trust farmers,  and farmers have earned that trust by efficiently producing large quantities of high quality wheat.  The CWB's job  has been to market that wheat, and yet they run marketing deficits.  Farmers cannot afford to have a government marketing agency that deflects  taxpayers' resentment  and distrust, and negativity,  upon farmers.

Background:

Farmers must abide by Part I, Section VII(1) of the CWB Act.  It uses the words reasonable.  Maximize and reasonable are very different in a court of law.  The CWB often tells farmers that they maximize returns to  farmers, but 2004 is a perfect example where the CWB obviously hasn't  maximized returns.   For example, if  farmers were to sue the CWB for incompetent marketing because they withdrew from  the market during the peak,   the farmers would lose in court, because the CWB 's legislation does not require them to get the best price, or even a good price; only what the Board itself thinks is reasonable.  If the Government of Canada ordered the Board to sell wheat  for under market price, the CWB would have to follow orders.

Background:

Everyone associates  the term 'cherry-picking'  with the CWB .  The CWB  claim they get the best price for the best quality in the best markets.   The CWB stated, " the total volume of  No. 1 and No.2 CWRS was only 3.2 million tonnes,  the lowest level ever on record".  When there is a shortage of good quality wheat, the price goes up, but  in this case, the CWB did not get a  premium  return for Canadian farmers.   Other countries did.

Background:

The Board must have approved a decision such as this, and farmers should  be demanding answers from their particular  CWB Board member to see if they approved and voted for  this item.

Background

For example, in November 2002, the CWB's estimated one organic producer's buy-back costs at app. $0.53 per bushel. But in December, 2003,  they sent him an invoice for an additional $6060 for his 2659 bushels.  That was an additional buy-back cost of $2.28 per bushel.  In the Western Producer, the CWB blamed the farmer for mismanagement!  Farmers should be asking their director how anyone on staff in the marketing department could miscalculate to this extent, and what has your director done to address this issue?

Background

Wheat prices peaked in October 2002 at over $8.00/bus.  The Wheat Board
had already been out of the market since early August, and this
reportedly cost producers $500M.  Did your director vote to withdraw
from the market when the prices were high?

Background

This is what is known as churning.  The CWB generates income by lending money at high interest rates to poorer countries that have to rely on credit.   If these countries make their interest payments, the spread is put into the "Net Interest Earnings Acc."  If that country defaults on their principal payments, the CWB sends the bill to the Federal government to add to the $7Billion already owed and payable by the taxpayer.  Farmers need to know if some of this  interest is propping up the pooling accounts, and how much.  That way, farmers can calculate what the CWB actually got in the marketplace, and farmers will know if they are doing their job.

Background

This was the point in time when overall, wheat prices were falling,  yet the CWB remained seemingly oblivious.  But the CWB Director elections were held at that time.  Ask your Director if he was really in favor of the inflated initial price.

Background

The CWB does not have to grow the grain. The CWB does not have to buy the grain from another country. The CWB does not have to competitively source grain.  The CWB merely has to market the grain.  Designated Area farmers create $4.5 Billion dollars worth of wheat and barley annually.  The CWB have all this wealth at their sole disposal, with no detailed accountability to farmers, no consequences to the staff or directors, and no legal mandate to maximize returns to the farmers.  In 20 years, the CWB has created enough debt to completely absorb two entire crops. Enron and Air Canada exhibited similar patterns.   Farmers need to be concerned  with what is taking place.

Background

In the fall of 2002, The CWB stopped selling, because they claimed they didn't know what  was available.   On the other hand, each farmer knew what he had; those that had grain could have sold into the very lucrative market if given the opportunity.  For example, organic farmers sold into a hot market, but the astute marketing premiums realized by organic farmers,  were neutralized by the CWB's cash-sucking pooling mechanism.  Because the organic farmers'  PDS's itemized losses reflected the Board incompetence, organic farmers could actually see where their losses lie; unfortunately, conventional farmers never even got to examine their losses.

In the 1990's, the CWB tried to single out an insistent group of  farmers who began to question the CWB's accounting and marketing practices.  The CWB tried to humiliate them in order to quash the dissension and the hard questions  being asked.  Bob Rohle described the farmers to the media as, "a kind of radical fringe", and Brian White  sarcastically said, "They're like those Freemen in Montana."   Both CWB employees  were trying to humiliate the very farmers who paid their salaries.  The CWB's most recent tactic in dealing with questions in the newspapers or at meetings that they don't want to address or cannot answer,  is to ignore them.

Background

The CWB must have chosen  not to hedge, even though they report they lost $12.25/tonne.   The CWB 's lack of hedging goes against commonly applied marketing practices, particularly because,  as the Board states, "CWB sales are priced against the U.S markets"   They were obviously prepared to lose farmers' money, but knowing that the are markets are volatile , even the CWB must have have identified an uncomfortable loss-range. How much were they prepared to lose?  When was enough, enough?   Have they learned their lesson with farmers' money?  Who resigned or was fired for the making decision not to hedge?

Background

Most CEO's guiding this kind of financial wreck, would have resigned. 

Background

It was widely rumoured that the Canadian Wheat Board pre-sold a considerable quantity of wheat prior to the July and August wheat rally, but how much?   Confirmation of these transactions are unavailable to farmers due to the secrecy surrounding Board operations.  If true, however, these pre-season-garage sales,  made on farmers' behalf, by the CWB, would act as another catalyst that precipitated the disastrous snowballing $0.00 final payment.  While the CWB tried to pin the the blame on short production (which attracts high prices),  harvest conditions and the feed-grained-Soviets, not once have they admitted responsibility for their dismal  performance.  Farmers deserve an apology, at the least.

Background

The question of "Why did the Board sell to the country Guitsuparia?' can be answered in different ways.  Governments might respond  that they sometimes like  to send a little cheap grain to a country they have a vested interest in, or they may say  the transaction  will  nurture some pending sale for other more important players.  The CWB might answer that they must cater to their legal boss.... the Government.... but  they will continue to get paid no matter what.

But from the farmer's point of view, CWB customers must be prepared to pay  in the ballpark of what the market demands, or there is little point in keeping the customer.  Prices bid for the grain may be very competitive one day , but are woefully inadequate the nex; in the open market, price is allowed to ration supplies, and all customers are given free and equal access to the product and the best price gets the grain.  No customer is left slighted because they all know they had equal opportunity to procure needed supplies if they show farmers the money.

CWB spokespersons suggest,  not only that the CWB vacated the market in 02, but that they adopted a policy of protecting supplies for selected customers.  This approach to rationing tight supplies poses hazards to the seller (the CWB) and ultimately to farmers.   When targeted buyers feel assured of supply, their need to bid aggressively is greatly diminished.  Customers who know that grain has been set aside on their behalf,  realize that they need not bid aggressively to secure supply, and that there is no one else waiting outside the door prepared to offer more for it.  This puts the buyer in an almost no-lose situation and the seller, which in this case is the Canadian Wheat Board, in a no win situation.   So much for the merit of the single desk.

Can the Canadian Wheat Board give farmers assurance that future sales to preferred customers will be made at the highest possible price?  Have the long-term ramifications of unilaterally deciding which customers will be favoured, and which will not, been considered?   Why was a "CWB pet' endorsed on the list of buyers?  Was it a sale to a country where a Paul Martin CSL ship was already loaded for the home haul?  Was the sale to a country where the Federal Government committed food aid at $25.00/bushel , accessing  grain captured  from the Prairie farmer for $3.00/bushel?  Farmers are in a no-win situation  when buyers do not have to compete.

Background:

Farmers pay for the polling that the CWB commissions; therefore,  farmers should have have access to the results of the polling.  Results  flowing from the CWB's multi-million dollar farmer-funded CWB Communications Department should be made readily available to farmers, on  the CWB website, in a timely  fashion.

Background:

Members of the CWB Board of Directors insist that CWB marketing and pooling is good for  Designated Area farmers, but  in the same breath, they allow the big corporate feed mills to bypass Board marketing and Board  pooling.   Ask why  the CWB stopped marketing the grain that the feed mills now buy directly from the farmer, and ask why the CWB quit pooling those profits. And then ask why the CWB insists on marketing and pooling the same grain  if the farmer wants to export it himself.  What is good for corporate feed mills should also be good for farmers.  The  CWB Directors are, immediately, able to instruct the CWB's licensing department to grant licenses to Prairie farmer applicants,  affording them  the same privileges as both Eastern Canada and  the feed mills enjoy. Ask  your director if he will put Western farmers on a level paying field with the East.

Background:

Tricycle Asset  managers  say they have a full range of experience with derivatives.  But the CWB is partnering  with a company with less than four years of experience, with the Canadian taxpayer ultimately responsible for the debt.  Farmers are more mindful of the Parmalat, Enron, WORLDCOM, and Barings Bank derivatives/trading fiascos over the last decade, particularly in a year  where the CWB incurred such a large deficit in  farmers' pooling accounts,  Ask your director what will happen to farmer confidence in the CWB if Tricycle declares bankruptcy, and what impact it would have upon the Canadian taxpayers' confidence in farmers.

"Nicholas William Lesson… wiped out the 233 year old Baring investment Bank, who proudly counted the Queen as a client. The $1.3 billion dollars worth of liabilities he had run up was more than the entire capital and reserves of the bank.  Investors saw their savings wiped out, and some 1,200 of Leeson's fellow employees lost their jobs. Dutch bank ING agreed to assume nearly all of Barings' debt and acquired the bank for the princely sum of £1.    (http://www.bbc.co.uk/crime/caseclosed/nickleeson.shtml)

Background:

The CWB has hired an organic marketing expert even though the CWB does not market organic grain.  This no-marketing-expert has full access to all organic farmers'  sales/prices/buyers/contacts.     On January 31, 2004, CWB Director Rod Flaman made his  response very clear to a grass-roots organic producer organization's (OSPG) concerns.   Flaman warned,  "I guess the CWB must start marketing organic grain in order to deflect this type of criticism", and in so doing,  he ignores an entire organization of organic farmers across the Prairies  who years ago, formed  OSPG,  with their ONLY  mandate stated as  not having the CWB market organic grain.  Recently, the high buybacks quoted by the CWB  have  halted organic wheat/barley sales, and traditional organic buyers are sourcing alternate countries.

Background:

Ask if the marketing experts at the CWB did a realistic job of estimating the PRO.  Ask when the CWB election was held.  Ask if a high PRO would make the CWB look better during an election.

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