Wheat Board Monopoly Lost: Yet Grain Industry Will Prosper

Agriculture, Commentary, Milton Boyd (historic), Rural, Uncategorized

Even though the Manitoba government has expressed worry in a recent radio commercial that the 400 Wheat Board jobs and 2000 related jobs will be lost if the Board monopoly ends, farmers and the grain industry in Western Canada will continue to prosper, as world population and grain demand keep increasing.  

Many future scenarios resulting from these changes bring new opportunities and the creation of new jobs. First, a voluntary wheat board will replace the Wheat Board monopoly, according to Federal Agriculture Minister Gerry Ritz. It will absorb some jobs from the former Board monopoly. Second, farmers not doing business with the new voluntary board would often take their business to the existing private grain firms, creating more jobs there. Third, new private firms or cooperatives may enter the grain business if there is a void, creating additional jobs. Also, more deregulation, new investment, innovation, and value added processing may occur without the Wheat Board monopoly, and this would create more jobs.

 “Marketing choice” farmers, those favoring removal of the existing monopoly, argue that with its disappearance some new opportunities are likely to emerge in the wheat industry. There may be more deregulation of the wheat industry, bringing new investment and research, and creating jobs. This may occur through private sector investment in new wheat varieties that are higher yielding and lower protein, and which may be more profitable, similar to those mostly grown in the U.S. This is in contrast to the relatively fewer varieties, mostly higher in protein and lower yielding now favored by the Board.

Pro-Wheat Board farmers argue that the wheat industry in Western Canada is better off with the Board monopoly. However, “marketing choice” farmers argue that the canola industry with no monopoly has grown over the past 40 years from very small to having a production value greater than wheat in some years. They also argue that it has produced a more innovative and larger value added processing industry than wheat, and that wheat processing and value added industries would expand if the Board monopoly ended, creating jobs.

Just as various canola growers associations have arisen, they point out, a similar association would likely arise in place of the Wheat Board. It would ensure that the industry is prosperous, research focused, properly regulated, and competitive. Many agree that the exceptional job done by organizations such as the Canadian International Grains in promoting Canadian Wheat in the past, funded in part by the Wheat Board might become funded instead by a new wheat growers association, along with government support as in the past. It would likely stay in Winnipeg along with the Grain Commission and many other grain organizations. New specialty varieties of wheat may arise, and small specialty flour mills, and pasta plants may also emerge. A specialty flour mill requires a small investment and is relatively easier to start than a microbrewery or a canola crushing plant.

With the Wheat Board monopoly, farmers cannot sell their wheat or barley for human consumption directly to businesses or consumers, they may only sell it to the Board.  Similarly, flour millers and pasta makers must purchase wheat from the Board under specific rules, which some small processors have found difficult. Therefore, “marketing choice” farmers argue that the removal of the Board monopoly may make it considerably easier for pasta makers locating in North Dakota in the past, to start up in Canada instead. Pasta makers and flour milling firms could simply purchase wheat directly from the farmer of their choice at whatever price they could negotiate – as is the case with canola. This value added would create more jobs, and serve to offset those lost by removal of the Board monopoly.

Finally, the Intercontinental Exchange Futures Canada Exchange (formerly the Winnipeg Commodity Exchange) has mentioned adding a durum futures contract, as durum would no longer be under the Board monopoly. It may also try listing other grain contracts as well for grains that will be removed from the Board monopoly. This increased trading would create more jobs. More trading would not be surprising, since in the 1920’s before the Wheat Board was established, Winnipeg was the most important wheat trading market in the world.

The grain industry will continue to have some ups and downs. However, as the world population annually continues to grow, world grain demand will steadily increase. The grain industry will continue to prosper in Western Canada over the years ahead and will continue to provide jobs in the process.