Breaking the Board

Agriculture, Frontier Centre, Media Appearances, Uncategorized

A meeting between the federal agriculture minister and a bunch of farm groups to discuss the future of grain exports in Canada might not seem like a provocative act. But to the Canadian Wheat Board, it was likely considered an act of war when Chuck Strahl convened the discussion in Saskatoon on July 27 with more than 40 organizations. The topic at hand: what to do about the 63-year-old wheat monopoly. Strahl’s Conservative government had campaigned partially on a promise to give western Canadian producers the right to sell their grain outside of the CWB, meaning an end to the board’s lock on exports of wheat and barley.

“The government is dedicated to providing western Canadian farmers with marketing choices. It was a campaign promise and something that many of us were elected on,” explained Agriculture and Agri-foods Minister Chuck Strahl after the meeting. But Strahl had deliberately and noticeably neglected to invite to the powwow certain groups that are pro-CWB, such as the National Farmers Union and the Canadian Federation of Agriculture. Now, the feds are free to consult with whomever they choose about the future of the board; they control it, after all, retaining the ability to pass legislation concerning the board, and to pass regulations through orders-in-council. But after decades of protection from successive federal governments – despite demands of some western farmers to be able to sell their grain where they choose (some have even spent time in prison for defying the board) the CWB seems unable to accept any prospect of its demise. Instead, it’s begun to turn on its masters, girding for a fight for survival. “They’re going to war. They’re ready to fight this thing until somebody blinks,” says Rolf Penner, agricultural fellow at the Winnipeg-based Frontier Centre for Public Policy and a grain producer near Morris, Man. “The whole power relationship is inverted.”

The CWB’s first act of rebellion against the new Conservative government came just days after the July meeting. An August 1 report issued by the agency outlined the CWB’s plans to break away from Ottawa’s authority. Titled “Harvesting Opportunity,” the manifesto called for the board to convert into a non-profit corporation, operating in the private sector, free to own assets and enter private strategic partnerships. Ottawa would also lose the ability to appoint a portion of CWB directors. But the plan made it clear that there’s one thing the board’s definitely not open to, and it happens to be the very thing that has made it so unpopular amongst a vocal contingent of farmers: it plans to keep its monopoly on marketing all wheat and barley for export.

Given that resistance and the Conservatives’ election pledge, it’s hard to see how the Tories could back such a plan – especially since the board also wants a $1.5-billion handout to set up a capital base, as a trade-off for ending government price guarantees and federal interest-free loans. At a news conference hours after the plan’s release, CWB chairman Ken Ritter reassured reporters that, despite the timing of the study, its purpose wasn’t meant to be political. Rather, it was a necessary blueprint for survival in the 21st century, with the best interests of wheat and barley producers a top priority, naturally. “Our board is open to any resolution that provides for a farmer-controlled, Canadian-owned grain industry that ensures farmers get a fair price for their grain,” Ritter said.

Can the new CWB strategy neutralize the Tories’ plans for deregulation? Penner doesn’t think so, noting that he can’t “even see a Liberal government going for this.” Cherilyn Jolly-Nagel, a Saskatchewan wheat grower and president of the Western Canadian Wheat Growers Association, says she considers the report little more than a tactic meant to stall Ottawa’s inevitable deregulation, while drumming up support among diehard CWB advocates. “I can’t understand how on the one hand they want to be completely independent from government but on the other hand they’re saying to government, don’t touch the monopoly,” she says.

The Tories certainly don’t sound terribly moved by CWB’s pre-emptive strike, either. Strahl responded by insisting that his government’s “position remains the same . . . Western grain farmers should be able to participate voluntarily in the Canadian Wheat Board.” And of the wide variety of ideas batted around in the closed-door meeting about the future of the wheat board, all had one thing in common: an end to the mandatory, single-desk marketing system.

That’s not to say we’ll see an end to the board, entirely. Strahl, after all, has been careful to refer to the CWB as “necessary” – likely, to avoid alarming the large segment of western Canada’s 85,000 wheat and barley farmers who still strongly back the western institution. Insiders at the Saskatoon meeting say there were a number of different possibilities raised for the future of the CWB. One scenario has the board being transformed into an advisory council that would lobby Ottawa on behalf of farmers, while handing out research grants. Another plan would see the CWB retain exclusive control over lucrative, boutique export markets, such as Japan and England, while letting entrepreneurial farmers take advantage of the one market they’ve coveted since the early 1990s – the United States. Less drastic ideas have the CWB morphing into a co-op, allowing those farmers who still love the old institution to put their money where their heart is. “Everybody at the roundtable agreed that the Canadian Wheat Board is necessary, but that farmers need more choice on how to market their product,” says Strahl.

The government has yet to signal where it plans to take the CWB. Of course, if they were so inclined, says Penner, the Tories could begin dismantling the Wheat Board tomorrow (presuming they could negotiate away any political pushback from the pro-CWB NDP or the Liberals over what is strictly a Prairie issue). The free market infrastructure – from the Winnipeg Commodity Exchange to the transportation and elevator companies – is already in place.

But such extreme measures probably aren’t on the Tory table. A poll last year by Ipsos-Reid showed that while roughly half of western farmers favour a dual-marketing system – a choice between going it alone or staying with the board – only 6 per cent of wheat growers and 10 per cent of barley growers would choose a completely free market, with no CWB at all.

Besides, there’s every reason to believe the CWB could thrive alongside a parallel system of private export. In 2003, the Ontario Wheat Producers’ Marketing Board completed a three-year transition from a single-desk into a dual-marketing system. “The [OWPMB] is still operational here in Ontario as a participant in the marketplace, but there are a lot of other grain companies that are more involved in the market to pick up the slack in areas where producers choose to go non-board,” says Ian Carter, an Ontario producer and president of London Agricultural Commodities. He says that producers seem relatively pleased with how things have gone.

The CWB’s latest gambit might have the effect of galvanizing support among a minority of western farmers devoted to the exclusively communal system. But the mutinous government agency is facing long odds against a government that’s uninterested in any future for the board that doesn’t significantly liberalize export markets. Fight as it might, this is one board that’s going to be broken.

THE WHEAT VS. THE CHAFF:

The Canadian Wheat Board isn’t just one of the world’s biggest exporters of wheat and barley. It also has a reputation for flogging misinformation, as a way of deflecting criticism of its monopolistic and undemocratic nature. Here are just a few of the nose-stretchers the board has cultivated over the years:

Myth: The CWB claims it was excluded from the roundtable discussion about its future convened in July by the feds, and that only attendees bent on ending the board’s monopoly were allowed in.

Fact: Two CWB directors – Alberta’s Jim Chatenay and Saskatchewan’s Dwayne Anderson – were present at the meeting and at least one of the groups, the Agricultural Producers Association of Saskatchewan, confirmed its only agenda is to ensure its members have a say in any decisions. “We have producers on both sides of the issue,” says Ken McBride, president of APSA. “The position of our organization is that there should be a plebiscite. We’re not pro-wheat board, we’re not anti-wheat board.”

Myth: The Canadian Wheat Board is controlled by farmers and is therefore a democratic organization.

Fact: Farmers who hold CWB permit books are allowed to elect 10 CWB board directors, but the other five are Ottawa-appointed, including the CEO.

Myth: The CWB claims that the majority of western Canadian farmers support the single-desk marketing system.

Fact: According to Saskatchewan MP David Anderson, parliamentary secretary to the minister of agriculture and for the Canadian Wheat Board, the board’s conducted two polls on the issue. A 1999 survey showed less than one-third of farmers supporting the single-desk system (it was never released to the public, but the results were corroborated by former CWB president Greg Arason at a United Grain Growers meeting). The results of the second poll have never been released.

Myth: The price of Canadian wheat would plummet in an open market as farmers, forced to compete with each other, raced to the bottom.

Fact: That may have been true sometime early last century, when there were few elevators to purchase grain from a surfeit of growers, claims Anderson. Today, farmers have the option of selling to a wide variety of buyers, stabilizing prices, while cutting out the middleman. Central Canadian farmers who have switched away from the Ontario Wheat Producers’ Marketing Board certainly aren’t complaining about prices.