‘I Know I Can Do it Better’ Than the Wheat Board

Agriculture, Commentary, Frontier Centre, Marketing Boards, Rural, Worth A Look

A week after a court ruling blocked a move by Ottawa to eliminate the Canadian Wheat Board’s monopoly on barley sales, Chad Doerksen is still seething. Had the effort been successful, it would have given Prairie farmers such as Mr. Doerksen the power to sell their barley to whomever they choose, rather than being forced to go through the CWB, a quasigovernment body that critics say is a major hindrance to western agriculture.

“This is just so disappointing,” says Mr. Doerksen, speaking on a cellphone from his grain farm just north of Saskatoon where he was checking up on a field of canola. “How do they expect farmers to do business in a free market system when there is this monopoly that decides what you can do?”

Mr. Doerksen may yet see his wish for a freer market come true. Ever since it came to power, Stephen Harper’s Conservative government has been pushing to take away the wheat board’s power, in keeping with its position that such a monopoly has no place in a free market system. On Friday, speaking in Charlottetown, Mr. Harper insisted he remains committed to ending the monopoly both on barley and wheat despite the court decision. The government will make sure this is going to happen “one way or another,” he said.

Wheat board supporters argue that its monopoly gives it the clout in global markets — it is currently one of the world’s biggest grain marketers — to negotiate better prices for western growers than they could on their own.

However, with the advent of the Internet and easier access to market data, agrowing number of farmers believe the playing field has been levelled and that they now have the necessary tools to do better than the wheat board.

According to a recent plebiscite conducted by the federal government, more than 60% of western farmers supported the ideaof being given the right to sell their own grain.

In fact, observers say support for this idea would have been even stronger if the votes reflected the amount of production of individual farmers. “Nearly all large scale-farmers would say take away the monopoly,” says Gary Pike, a Calgary-based agricultural consultant whose clients include many of the country’s most successful growers. “There’s a fundamental belief [among the public] that the board is bringing abig premium for farmers, but fulltime farmers can pick off opportunities much better than the wheat board,” he said. “They can take their marketing into their own hands.”

Mr. Doerksen is a good example of what he’s talking about. Something of a rarity today, Mr. Doerksen is a prosperous farmer. At a time when more than half of prairie farmers are either losing money or barely breaking even, the 32 year-old university graduate has annual revenues in excess of $1-million and takes three holidays a year. Last winter, he took his family to Costa Rica.

He has a degree in agriculture and regards his farm as a business as opposed to a livelihood. He’s at home in the arcane world of agricultural futures, and he’s equally adept at building relationships with customers. He recently bought a fleet of trucks as a way to provide better service to the food companies that buy his lentils and other non-wheat board crops.

One of the fundamental problems with the wheat board, Mr. Doerksen says, is its inability to take on risk, especially at a time when grain markets are flirting with record highs. If given the opportunity he would sell while prices remain high and get top dollar for his crop. Instead, he will be forced to take what he is certain will be a lower price from the wheat board, reflecting its more cautious approach and bureaucratic cost structure.

“I have a risk management team working with me, I subscribe to 15 different Web sites supplying me with market data, and I run my farm as a business,” he said. “So its disappointing to see the wheat board interfering when I know I can do it better.”

As proof he cites the sudden drop in the price of barley last week, shortly after the court ruling maintaining the status quo on barley sales.

Mr. Doerksen is a large-scale producer, part of a tiny minority of farmers who account for the lion’s share of prairie grain production. According to the University of Guelph’s Institute of Agri-food Policy Innovation, about 16% of Saskatchewan farmers account form more than 55% of the province’s grain sales. Meanwhile, more than half the farms in Saskatchewan are either losing money or barely breaking even. A further 28% are operating on a scale that is not sustainable over the long term. The numbers are comparable for Manitoba and Alberta.

The only reason many of those operations are still in business is because their owners are actually part-time farmers whose primary source of income is off-farm jobs, typically in the oilpatch.

“They may not want to do the work of marketing their grain and for them the wheat board may do a reasonable job,” Mr. Pike said.