Airing Out the Wet Blanket

Commentary, Agriculture, Rolf Penner

The outdated monopoly power of the Canadian Wheat Board (CWB) sits like a wet blanket over the entire Prairie economy. From plant breeders through to the farm gate and on to our rural communities, into our cities and right to our ports, the dampening effect is widespread, pervasive and tangible. By keeping their election promise to give farmers marketing choice, the federal Conservatives could give that blanket a well-deserved airing.

A monopoly might have been appropriate in the days when the CWB negotiated five-year contracts for millions of tonnes sold to the Soviet Union – for many of which, incidentally, we are still waiting to be paid. It is not a necessary tool for negotiating small, single-lot sales into individual flour mills in niche markets. Yet that is what the Board’s own sales records show is the trend: selling more of less, that is, smaller amounts to more customers.

Equally important in this fast-moving environment is the fact that we are no longer the lowest-cost producer of grain in the world. We must compete instead on the basis of identity preservation of specific traits, tractability programs and precise quality standards for each shipment. The current CWB model was built for large, bulk exports. It is not able to compete as successfully in these new, specialty, high-end world markets.

Some fear that tinkering with the Board’s monopoly power would result in the loss of jobs. The truth is that under the current arrangement we have been bleeding jobs for decades. The grain industry is steadily consolidating because of the lack of access to these opportunities. We continue to lose farmers because they cannot pursue new markets, at home or abroad. And every unprocessed bushel we export is another lost possibility and another lost job.

Value-added processing – including flour mills, pasta plants, malting facilities or a wide range of specialty products – is currently being stifled. We should be exporting meat pies, not bulk wheat and live animals. And the development of new wheat and barley varieties, especially high-yielding ones for feeding livestock and new uses like nutraceuticals and bio-energy is currently hampered by a bias towards the grains the CWB sold in the good old days. All of these things will happen. But if we continue along the current monopoly path, they will occur elsewhere.

In Australia, farmer Doug Cush recently fulfilled a dream our producers would love to emulate. He opened his own flour mill, the final link in a chain that takes his farm’s durum wheat “from the farm gate to the gourmet dinner plate.” Due to his comparative advantage, he is successfully selling pasta into Italy, of all places, a feat that has been likened to taking coal to Newcastle. His Bellata Gold pasta is sold in more than 500 stores across Australia, as well as in Italy, America, the U.K., Dubai and Korea. He is not afraid of the multi-national bogeyman our National Farmers Union is wont to decry. He himself, a small farmer, is now a multi-national.

Many claim that a dual market in wheat and barley is a metaphysical impossibility, that it just won’t work, and would be the end of the CWB. They should look at the latest data coming out of the Ontario Wheat Board, whose farmers have been operating in a market-choice environment since 2003. The former single-desk seller has made a remarkable comeback, though it never really went away. For the 2005-06 crop year, it was back up to handling a third of the total wheat crop, and is expected to make further gains this year. Increased farmer confidence in its performance means a record number of acres planted, as well as record yields and record quality. A little choice and a little competition can improve things with amazing speed.

Two extreme positions dominate the current CWB debate. One holds that the forced collectivization of wheat and barley growers is for their own good. The other says that the federal government has no business being involved in the marketing of grain in any way whatsoever. To their credit, the Harper Conservatives have found a sensible, middle-of-the-road compromise between these two extremes, one that recognizes a simple fact. There is no “one right way” to sell wheat that works for everyone. They intend to let the farmers who want to sell their own crops do so, and at the same time let those who are more comfortable having a Crown corporation with a shared governance structure do their marketing, remain under the Board’s protective wing.

Unfortunately, opponents of modernizing the CWB are forcing the Board to remove itself from the technical discussions on its future structure. Instead of completely resisting change, its supporters should allow the CWB the freedom to help design its own future. That flexibility would be in the best interest of our farmers and it would promote rural development across the prairies by declaring to the world that the wet blanket is off and that Western Canada is now open for business.