Pulling Off a Band-Aid

Agriculture, Frontier Centre, Media Appearances, Public Sector, Regulation, Rural, Uncategorized

Lost in the rhetorical battle between free-marketing and the Canadian Wheat Board’s single-desk marketing is the unusual fact that wheat prices are creeping up to near-record levels. Thanks to the misfortunes of farmers in the Ukraine, the U.S. and drought-devastated Australia, high quality Canada Western Red Spring wheat was up 80 cents a bushel, hitting $5.89 at the Vancouver port. So, beleaguered Canadian grain growers may make money this year. “You could sort of describe it as the perfect storm for wheat prices,” says Winnipeg-based Glenn Lennox, an Agriculture and Agri-Food Canada wheat analyst. “The only major wheat producer in the world that didn’t have a disaster is Canada.”

Yet the wheat board battle drags on. The Tories (especially the Westerners who cut their teeth in the Reform or Canadian Alliance) are fully committed to giving western farmers the right to sell their own wheat and barley, a freedom enjoyed by Ontario and Quebec producers. The Tories have censured the board for trying to defend its monopoly, sacked dissenting Liberal-appointed directors, and mapped out the program since taking power in February. Still, entrepreneurial farmers say only rhetoric is being volleyed across the Commons’ floor, and that isn’t helping their chance to turn a profit.

A government-appointed task force drafted to “address” the technical and transitional issues of a free market grain industry released its findings on Oct. 30. It recommended an extended timetable for liberalizing wheat marketing in July 2008–eliciting jeers from growers who believe the Tories could end the board monopoly tomorrow. And there was further head-scratching at Agriculture Minister Chuck Strahl’s announcement, Nov. 3, that barley producers would be allowed to vote on their fate within the CWB: “I think we need to [open the barley market] first, and then we’ll engage at a later date sometime, perhaps, on wheat,” Strahl told an audience of 250 at a Manitoba Chamber of Commerce event.

Yet any sign that the board’s fate would be left to a Prairie plebiscite was omitted from the task force recommendations. “My overall impression is that they’re pulling off this Band-Aid as slowly as they possible can,” says Manitoba grain grower Rolf Penner, a senior agriculture policy fellow with the Winnipeg-based Frontier Centre for Public Policy. Penner questions why the Tories don’t just pass an order-in-council to allow the free sale of grain. “In the long run, changing the act would be the best way to do it, but for a quick solution, pulling the buyback would be the way to go,” says Penner.

As the Conservatives delay, farmers remember similarities in 1996: “We had exactly the same situation; there was all of a sudden this shortage of wheat in the world,” explains retired University of Manitoba agriculture economist and producer Al Loyns. The average price on the Minneapolis grain exchange then was seven or eight dollars a bushel, while the board’s Manitoba average was less than five dollars. “The wheat board definitely undersold that market in advance,” he says. “In other words, they were speculating on the market, not on their account, because they don’t have an account, but on the producers’ account.”

Today, the board has other opportunities, including a cash-out option, based on the U.S. price, for delivery within two weeks. Nevertheless, producers are still skeptical whether the board is getting them the best price. Alberta farmer Brian Otto priced out his winter wheat in Montana and learned he could get $40 a tonne more than the board paid.

The Tory intention to scrap the monopoly faces board defenders in the Liberals, NDP and Bloc–which means granting western Canadian farmers the same liberty as their eastern counterparts may be moot, if the Conservatives lose power. A November Decima Research poll showed the leaderless Liberals ahead of the Conservatives in every province except Alberta. “So we’re sitting here, listening to this bullshit, ‘Well, we’re going to have a vote, and then we’re going to consult with different farm groups.’ By 2008, who knows if they’re even going to be in power?” asks Saskatchewan producer Art Mainil. With 25-year-high prices, political rhetoric means little to farmers like Mainil, who see the opportunity for a livelihood free from taxpayer support being squashed by government delay.