CWB sale (2)
To the Editor:
(Editor’s note: This copy of a letter to Alex Herle provides additional detail not included in the CWB letter on the same topic published Nov. 13.)
Dear Mr. Herle: We noticed your letter published October 30th in the Western Producer regarding a recent sale of Canadian wheat to Russia. There are a number of inaccuracies and misunderstandings in the conclusions contained in your letter which need to be corrected.
You are correct in stating that this was the first sale of Canadian wheat to Russia in a number of years.
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In fact, it was a sale to private end users in Russia through a joint effort between the Canadian Wheat Board and one of our Accredited Exporters (AEs).
The reason CWB wheat sales volume to Russia has not been significant the past several years is because we have often been able to sell elsewhere with less risk at better market value, all factors considered. However, we and our AE continue to work to develop a preference for quality by this customer for this business based on commercial parameters beneficial to Western farmers.
This particular wheat cargo was shipped from our West Coast in August ’97 to the port of Vladivostok in Far Eastern Russia. It is in fact cheaper to import wheat from North America at full commercial market prices, whether U.S.A. origin or Western Canadian, than to take Russian wheat from the wheat-producing areas of “European” Russia and rail it across Siberia to the East Coast.
In fact in the past when we sold directly to the Soviet Government (i.e. Exportkhleb), a lot of our wheat went from the Pacific to Far Eastern Russian ports.
As you know, geography does not change when governments and purchasing systems do.
Perhaps Russian buyers were looking for “the best deal,” or rather the best value, but please note they did not buy CWRS because they found it to be the “least expensive.”
This cargo was sold in competition with prevailing United States Pacific Northwest hard milling wheat values at the time. In fact, this particular buyer had recently taken a cargo of U.S. milling wheat from this same private trading company and through persistent efforts, the CWB was able to get this end user to switch to Canadian origin.
In terms of price, our West Coast price also reflected a premium to U.S. hard wheat values at the Gulf, part of which is a freight advantage.
We continue to work with this company and other companies to do more Russian business with private buyers.
Therefore, this was not a case of “subsidizing sales to Russia,” as this cash business was done at commercial market values. We hope this clarifies the situation.
This was a good wheat sale for Western farmers to an important developing customer.
If you have any further questions, please call us for clarification.
– W. W. Spafford, General Director,
Sales & Market Development,
The Canadian Wheat Board,
Winnipeg, Man.
Rail line
To the Editor:
If Canadian Pacific Railway pulls the service out of Mankota, here in southern Saskatchewan, a few people stand to lose. If this line goes, then we will be forced to load the big trucks and start shipping straight to the mainline. CPR expects to get all this grain because they have the monopoly in the south, but there is an option. Because CP Rail is giving up on us, we will look for an alternate rail company to deal with. That option exists at Moose Jaw where the new Cargill elevator is located on a CN line.
In the future with no line and our close proximity to the U.S., natural logic will dictate that we ship into the U.S. At this point, the CWB will receive greater and greater pressure from us southern farmers who have been quiet until now.
If doesn’t make sense to pull out this heavy line when farmers want to haul to our local elevator. We have a good SWP agent. Farmers don’t want to ship all our grain out and ruin our roads.
It is time we start looking at all costs of this so-called improvement in the Grain Handling System.
– Kevin Zerr, Mankota, Sask.
Alberta auditor
To the Editor:
This is in reference to an article published in your newspaper dated Oct. 2, 1997. My staff have received a number of telephone calls from your readers seeking further clarifications on this article. I am writing in response to the phone calls received and to fully inform your readers on the Auditor General’s report on the Farm Income Disaster Program.
The headline to the article “Farm support money dished out too readily, says Alberta Auditor” was misleading. There were 6,222 claims for $92.6 million received, of which 1,271 claims were denied payments and only 4,950 claims for $63.8 million were paid. Every single claim was thoroughly checked and reviewed before payment was made. A vast majority of payments under the program were correctly made to eligible applicants to meet the objectives of the program.
This has been confirmed by the Auditor General in his report that FIDP was largely successful in avoiding the serious administrative and accountability problems experienced when implementing earlier farm support programs.
The problem of payments for losses due to business decisions rather than factors beyond their control referred to by the Auditor General in his report is applicable only to a small number of claims. Moreover, the problem identified by the Auditor General related to the claims paid for the 1995 tax year, the first year of a new program. The issue was resolved for the 1996 tax year and beyond, as reported by the Auditor General, by amending the program guidelines and applying the beginning farmer margins wherever applicable particularly in cases where the type of operation has changed.
– Brian Manning,
Agriculture Financial
Services Corp.,
Lacombe, Alta.
Rail profits
To the Editor:
I suppose not too many grain producers actually saw the news item telling of the enormous profits the Railroads made hauling grain. You had it fairly well hidden, page 66 at the bottom of the page in the Oct. 30 edition.
It should have been in bold headlines on the front page: “Railways Post Huge Profits From Grain Hauling.”
We producers are continually bombarded with complaints and excuses of the railroads that grain hauling is causing them untold losses of revenue. They claim that weather conditions, track upkeep, equipment costs, mountainous snow build-ups, etc., are resulting in huge losses hauling grain to the terminals. Now it seems according to your news item “Railways post healthy returns,” they are making great profits doing exactly that: 52 percent for CN and 39 percent for CP over the previous year. No producer can make that boast. There is no doubt the grain producers are far from that category if even making a profit over the previous year.
It seems grain prices diminish on a yearly basis as do profits. Small wonder! Now we know where all the profit is going. It seems that ever since the Crowsnest freight rate was cancelled, the railroads have made extreme profits hauling grain. How can grain producers survive under the costs being heaped on them by greed of the Railroads when they boast of 52 percent and 39 percent annual profits?
– Alvin J. Levitt,
Wainwright, Alta.
Ministerial math
To the Editor:
I am amused by International Trade Minister Sergio Marchi’s opinion piece: “Canada needs investment treaty” (Nov. 20 WP). Mr. Marchi seems equally unskilled in mathematics and economics.
He claims that: “for every $1 billion worth of new investment, 45,000 new jobs are created over a five-year period.”
He goes on to say that “Canada has attracted an accumulated $180 billion in investment (double what we had in 1986).”
Now $180 billion divided by two is $90 billion. Thus, Mr. Marchi is claiming $90 billion in new investment in Canada since 1986. Now $90 billion times 45 thousand jobs per billion is 4.05 million. Thus, we would expect that there are 4.05 million more Canadians employed in 1996 than in 1986.
In fact, there were 11.5 million Canadians employed in 1986 and 14 million today; a change of 2.5 million. Even if we credit that total increase in employment to foreign investment and ignore small business and domestic investment (a ludicrous assumption), it still falls far short of the 4.05 million predicted by Marchi.
Minister Marchi does no better on economics. David Ricardo’s theory of competitive advantage states that each country should produce those products which it is best suited to produce and can produce most cheaply and trade with other countries to acquire the balance. In this way, each country will have a greater sum of produce than it could have produced itself and all countries will be better off. This is the argument that Marchi and company use to justify free trade.
Ricardo states, however, that the positive effects of trade will be realized only if capital is prevented from crossing borders.
If capital movement is unrestricted, the result will not be increased wealth due to comparative advantage but leveling down as wages and standards fall to the level of the lowest country. We see this today as companies attempt to employ where labor is cheapest (China at one or two dollars per day) or where environmental laws are the most lenient and to pay taxes where rates are the lowest.
Thus, the Multilateral Agreement, on Investment (the free movement of capital) coupled with NAFTA and the WTO (the free movement of goods and services) puts Canadian wages, environmental standards, tax rates, and health and safety standards into direct “competition” with those in China, Indonesia, and Mexico.
Free trade in goods plus free movement of capital yields economic integration – the end of economic borders.
Once our markets and labor pools are merged, how can we maintain differentials in wages, health standards, or environmental regulations?
The MAI, in effect and in intent, will destroy those differentials, and I think that Mr. Marchi knows this.
– Darrin Qualman,
Executive Secretary,
National Farmers Union
Demurrage
To the Editor:
In response to a letter in The Western Producer by ‘Ken Fordice’ of Galahad, Alta. Oct. 16th regarding “Demurrage charge.”
As he stated, once you receive your cheque at the elevator, it’s not your grain anymore but the farmer is still held for the demurrage charge.
In my book, he hit the nail right on the head. Why should farmers take up the tab?
Those that are responsible after that should take up the tab or maybe it should be all taxpayers take up the tab.
These federal Cadillac Jockeys care less what takes place in the farming issue.
– Bernard Schreiner,
Naicam, Sask.