Canadian Wheat Board

madmax · June 27, 2008

Then why does the Ontario wheat board exist, the CWB does not have a monopoly over all Canadian grain, therefore Canadian grain is in a dual market situation.

The Ontario Wheat Board has become ineffectual. It was the farmers that voted and choose their decision. The Majority vote was accepted and the question was clear to all. There were those in opposition to the change and provided many arguments against the "dual Market" and they accepted their loss as the minority voice. The reports regarding the "success" of the Ontario decision all seem to be generated in Alberta Studies. There were problems with the OWB system, and there are problems with the new system.

The OWPMB will fade out to be just a webpage, list prices and promote Ontario Wheat around the globe.

Wheat growers in Ontario used to sell their grain under a single desk, similar to the marketing structure used by western Canadian wheat and barley growers through the CWB.
But that came to an end when Ontario wheat farmers decided to go it alone. Preliminary numbers indicate that the loss of the single desk has hit Ontario farmers hard.

Posted prices at southern Ontario mills are close to $1.00 per bushel lower than what Prairie wheat farmers are getting at the same locations. For example, the price for CWRS sold through the CWB to a southern Ontario destination was $6.77 per bushel on March 25, 2004. On the same day, cash prices available to Ontario farmers for Hard Red Spring wheat - roughly the equivalent grade - were under $6.00 per bushel.

The loss of Ontario single desk has meant the loss of the Ontario wheat growers' marketing clout, and with it, reduced returns.

Ontario farmers have the system they do because their farmer-elected board decided to take their organization in this direction. Prairie farmers have a farmer-controlled board of directors for their CWB. They have not taken the same direction, but could do so if they wanted.

Comparing Ontario and Western Canada is like comparing apples and oranges. Marketing wheat grown in Ontario and Western Canada requires two vastly different approaches. Farmers in Ontario grow about 1.65 million tonnes of mainly soft wheat that's sold to domestic mills for use in cookies, pastries and biscuits. Western Canadian farmers grow about 16.8 million tonnes of mainly hard red spring wheat for bread and the CWB exports it to more than 70 countries.

The OWPMB now handles an insignificant volume of the wheat grown in Ontario. In 2003-04 it marketed only 18 per cent (about 400 000 tonnes) of the wheat grown in Ontario. Only a third (126 274 tonnes) of that amount was pooled. Predictably, in the open market scenario, the OWPMB has had difficulty sourcing grain for some of the sales it has made. In one case, it even had to purchase wheat in order to meet a contract commitment.

Farmer-direct delivery to mills and markets like the United States has not materialized the way farmers envisioned under Ontario's system. Millers themselves say they see little or no benefit dealing directly with farmers when they can instead source grain through the many merchants and brokers.

Background

Prior to the 2000 crop year, the Ontario Wheat Producers' Marketing Board (OWPMB) was the sole marketer of wheat grown in Ontario. In this role, it acted on behalf of farmers to negotiate a price for sales of wheat to mills domestically and coordinated the export of a small amount of wheat from Ontario. Beginning in 2000, the farmer-controlled OWPMB board of directors decided to allow certain volumes of wheat to be marketed outside the single-desk (150 000 tonnes in 2000 and 2001; 200 000 tonnes in 2002). In 2003, the OWPMB board of directors decided to remove the cap on exemptions, effectively creating a fully open market. The OWPMB now competes with private traders in an open market for wheat.

There are always going to be people who want change, change the system, I can do better, etc.

I wouldn't use the Ontario Model as a reason to change how the CWB operates.

The members of the CWB must look at their own situation, and choose to remain the way they are or change.

The Ontario model couldn't be compared to the CWB when it operated in the same closed market system, and it shouldn't be compared to the CWB if the members votes for open markets.

The only thing that is true, is that you cannot have a dual market open and closed system. This is just a selling job and political spinning.

Farmers need to make the decision, and live with it.

blueblood · June 27, 2008

I doubt many farmers want to go that trouble.
I think the cake and eat it too is a bit of fantasy on the part of some on the right.

The Wheat Board would simply cease to exist because even as a state marketing board, it would be illegal. It might break down to provincial boards but I don't farmers have ever been asked if that is what they want in their "dual market."

What I was suggesting is an entirely possible hypothetical situation. Just because it is a possibility doesn't mean it will happen.

The cake and eat it too has been the cheap food policy of Canada for the past 30 years. The left has been just as guilty.

Im speculating that the board might not even market grain in the first place. I think it would keep its name and just be a regulatory body of provincial marketing boards. Setting policy is not marketing. A lot of CWB jobs would be lost though due to the massive restructuring in order to conform to the WTO rules. So in a sense you are correct that it would cease to exist in it's present form, but for political reasons the name would remain.

blueblood · June 27, 2008

The Ontario Wheat Board has become ineffectual. It was the farmers that voted and choose their decision. The Majority vote was accepted and the question was clear to all. There were those in opposition to the change and provided many arguments against the "dual Market" and they accepted their loss as the minority voice. The reports regarding the "success" of the Ontario decision all seem to be generated in Alberta Studies. There were problems with the OWB system, and there are problems with the new system.
The OWPMB will fade out to be just a webpage, list prices and promote Ontario Wheat around the globe.

There are always going to be people who want change, change the system, I can do better, etc.

I wouldn't use the Ontario Model as a reason to change how the CWB operates.

The members of the CWB must look at their own situation, and choose to remain the way they are or change.

The Ontario model couldn't be compared to the CWB when it operated in the same closed market system, and it shouldn't be compared to the CWB if the members votes for open markets.

The only thing that is true, is that you cannot have a dual market open and closed system. This is just a selling job and political spinning.

Farmers need to make the decision, and live with it.

Sounds like the OWB is conducting bad business then. Controlling 18% of the market share, they should have an easier time securing contracts over a single farmer who has a fraction of a percent of the market share.

I can assure you in 2004, I was not getting 6.77 a bushell for my #1 CWRS with 15% protein. I'd be lucky to get 4 due to CWB overhead. The farmer from Ontario is doing better. It's also of note that HRS is no where near in the same ball park as #1 CWRS, the OWB admits that.

jdobbin · June 27, 2008

What I was suggesting is an entirely possible hypothetical situation. Just because it is a possibility doesn't mean it will happen.

It is up to the government to be straight forward. Too many times we only get half the story such as the GST will be revenue neutral when it has been anything but.

The cake and eat it too has been the cheap food policy of Canada for the past 30 years. The left has been just as guilty.

Neither the right or the left in Canada has been responsible for the ag war between the Europeans and the U.S. and you know it. It wasn't a cheap food policy. It was getting caught in the middle.

The Wheat Board pays market rates and tries to get the best price. If farmers thought they could do even better in the 1990s, I defy them to show how when farmers world-wide got caught up in the subsidy wars.

Im speculating that the board might not even market grain in the first place. I think it would keep its name and just be a regulatory body of provincial marketing boards. Setting policy is not marketing. A lot of CWB jobs would be lost though due to the massive restructuring in order to conform to the WTO rules. So in a sense you are correct that it would cease to exist in it's present form, but for political reasons the name would remain.

There are less than 500 Wheat Board employees now. My thinking is there would be none after losing the monopoly and I don't see the name existing at all. I don't even know in provincial wheat boards would take its place.

It would just be Cargill, Richardson and Paterson and Viterra and some others left for marketing.

blueblood · June 28, 2008

It is up to the government to be straight forward. Too many times we only get half the story such as the GST will be revenue neutral when it has been anything but.
Neither the right or the left in Canada has been responsible for the ag war between the Europeans and the U.S. and you know it. It wasn't a cheap food policy. It was getting caught in the middle.

The Wheat Board pays market rates and tries to get the best price. If farmers thought they could do even better in the 1990s, I defy them to show how when farmers world-wide got caught up in the subsidy wars.

There are less than 500 Wheat Board employees now. My thinking is there would be none after losing the monopoly and I don't see the name existing at all. I don't even know in provincial wheat boards would take its place.

It would just be Cargill, Richardson and Paterson and Viterra and some others left for marketing.

Subsidized grain is cheap food policy, Canada didn't get caught in the middle; some people benefitted from that. The ag war is basically over now.

Madmax has pointed out that a farmer in Ontario got 6 bucks for wheat in 2004. If I was able to get 6 bucks then, I'd have my bins empty in two days. They would have been able to do better in the 90's due to the trucking runs that were attempted to the U.S. The benefit of the wheat board is accountability and that comes at a price.

That is why I think provincial marketing boards and the CWB is gutted to a figurehead would come to be, there is still significant support left for that type of marketing, it is around 50-50 according to the Western Producer. Accountability is a nice luxury when grain prices were in the tank, that is why the board enjoyed support in the 90's and is a hot debate topic in ag circles.

Look at it this way, a country is paying X dollars for a boat load of grain, I can sell it through the provincial marketing board which is a non profit organizatin for X-Y dollars, and have the accountability of the profits going back to farmers, or I can go to an elevator and get a little bit better price and the elevator makes a killing off me, or I can try and sell it on Ebay and have a shipping nightmare. I'd go with the marketing board, and so would half the other producers out there. If the elevator company offered a significantly better price than the board, I'd go with the elevator. The board holding such a large quantity of grain is too big a whale for the elevator companies to pass up, 25% of grain produced is a large quantity and the elevators would compete fiercely for it.

jdobbin · June 28, 2008

Subsidized grain is cheap food policy, Canada didn't get caught in the middle; some people benefitted from that. The ag war is basically over now.

It wasn't Canada's policy to get into a subsidy war. Is that what you are trying to say that the Canadian government made it a policy to be involved in the subsidy war?

Madmax has pointed out that a farmer in Ontario got 6 bucks for wheat in 2004. If I was able to get 6 bucks then, I'd have my bins empty in two days. They would have been able to do better in the 90's due to the trucking runs that were attempted to the U.S. The benefit of the wheat board is accountability and that comes at a price.
That is why I think provincial marketing boards and the CWB is gutted to a figurehead would come to be, there is still significant support left for that type of marketing, it is around 50-50 according to the Western Producer. Accountability is a nice luxury when grain prices were in the tank, that is why the board enjoyed support in the 90's and is a hot debate topic in ag circles.

Look at it this way, a country is paying X dollars for a boat load of grain, I can sell it through the provincial marketing board which is a non profit organizatin for X-Y dollars, and have the accountability of the profits going back to farmers, or I can go to an elevator and get a little bit better price and the elevator makes a killing off me, or I can try and sell it on Ebay and have a shipping nightmare. I'd go with the marketing board, and so would half the other producers out there. If the elevator company offered a significantly better price than the board, I'd go with the elevator. The board holding such a large quantity of grain is too big a whale for the elevator companies to pass up, 25% of grain produced is a large quantity and the elevators would compete fiercely for it.

I have no problems if farmers want to go to provincial marketing boards. I have never seen evidence of that yet.

I just keep hearing that the Wheat Board will be able to offer dual marketing alongside the open market. It can't happen under the rules that Canada has signed. Any attempt would see penalties on products other than grain that would make Canada capitulate just as the U.S. did on steel.

blueblood · June 29, 2008

It wasn't Canada's policy to get into a subsidy war. Is that what you are trying to say that the Canadian government made it a policy to be involved in the subsidy war?
I have no problems if farmers want to go to provincial marketing boards. I have never seen evidence of that yet.

I just keep hearing that the Wheat Board will be able to offer dual marketing alongside the open market. It can't happen under the rules that Canada has signed. Any attempt would see penalties on products other than grain that would make Canada capitulate just as the U.S. did on steel.

It's to Eastern Canada's short term benefit we didn't get into the subsidy war. They get cheap food produced at below cost and didn't have to pay for the cost of production. Why bother getting into a subsidy war if you don't have to?

We'll have to see what the tories cook up with as far as that is concerned. Maybe it will end up working maybe it won't, that's the chance that they are going to have to take.

jdobbin · June 29, 2008

It's to Eastern Canada's short term benefit we didn't get into the subsidy war. They get cheap food produced at below cost and didn't have to pay for the cost of production. Why bother getting into a subsidy war if you don't have to?

I can see this is going to be a western versus eastern Canada feud. I'm sorry if I'm not buying it.

It was never the policy of the Canadian government to get in a war with deep pocketed U.S and European governments. Canada advocated for the end of the subsidies which was to the benefit of the farmers.

We'll have to see what the tories cook up with as far as that is concerned. Maybe it will end up working maybe it won't, that's the chance that they are going to have to take.

An honest debate about outcomes would be welcome. Trying to bypass the rules of the Wheat Board Act by doing through the back door and to use an illegal gag on those who would respond is not the way to do it.

blueblood · June 29, 2008

I can see this is going to be a western versus eastern Canada feud. I'm sorry if I'm not buying it.
It was never the policy of the Canadian government to get in a war with deep pocketed U.S and European governments. Canada advocated for the end of the subsidies which was to the benefit of the farmers.

An honest debate about outcomes would be welcome. Trying to bypass the rules of the Wheat Board Act by doing through the back door and to use an illegal gag on those who would respond is not the way to do it.

It's not beneficial, if one side is doing it and one side isn't. That's called getting caught with your pants down and a good way to get forced out of business. How does it benefit me when a producer from France can get X amt. of dollars an acre and flood the market? The big subsidies still exist but aren't much of an issue anymore.

The only thing that has really happened was a few tariffs got removed or lowered in Asia.

blueblood · June 30, 2008

Reading in the Western Producer, the CWB debate is heating up. Harper has unleashed even stronger rhetoric against it. Then there is the chair of the wheat board directors stirring up fear about dual marketing. What is interesting of note is that there has been no mention of trade retaliation by the WTO on dual marketing if the monopoly is lifted, even by the chair of the CWB board of directors.

I'm starting to think he's full of it, the CWB has the port of Churchill and the railway line leading up to it, pretty much under their control, if the CWB didn't use Churchill the line and port are history.

But then again the CWB is selling almost a million tonnes of grain to Iran for 333/tonne. Meanwhile grain around the world is fetching a higher price. Cripes no wonder that chair is worried about a dual market, if they market grain like that they will go out of business.

Here's the prices

link

Wheat at the Minneapolis grain exchange is going for 10

jdobbin · June 30, 2008

Reading in the Western Producer, the CWB debate is heating up. Harper has unleashed even stronger rhetoric against it. Then there is the chair of the wheat board directors stirring up fear about dual marketing. What is interesting of note is that there has been no mention of trade retaliation by the WTO on dual marketing if the monopoly is lifted, even by the chair of the CWB board of directors.

The WTO rules are clear. If a state trading enterprise continues to operate in a dual market, it can be subject to trade retaliation. The only way it can operate is as a marketing board at the provincial level but then it cannot receive federal loan guarantees.

A new marketing board would also have no assets to speak of.

Essentially, ending the monopoly means the end of the Board and if anyone can show otherwise, I'd like to see it.

blueblood · June 30, 2008

The WTO rules are clear. If a state trading enterprise continues to operate in a dual market, it can be subject to trade retaliation. The only way it can operate is as a marketing board at the provincial level but then it cannot receive federal loan guarantees.
A new marketing board would also have no assets to speak of.

Essentially, ending the monopoly means the end of the Board and if anyone can show otherwise, I'd like to see it.

I know that you have a point in that, and it's a good one. What I'm confused about is why the CWB brass isn't trumpeting this point. So I'm wondering if a loophole has been found or somebody is missing the boat. It's a fair point and should be in the mainstream debate in the newspapers.

Bryan · July 1, 2008

I know that you have a point in that, and it's a good one. What I'm confused about is why the CWB brass isn't trumpeting this point. So I'm wondering if a loophole has been found or somebody is missing the boat. It's a fair point and should be in the mainstream debate in the newspapers.

The CWB (and the media) are not trumpetting that point because they know that complex trade agreements are never as black and white as Dobbin is trying to make them out to be.

jdobbin · July 1, 2008

The CWB (and the media) are not trumpetting that point because they know that complex trade agreements are never as black and white as Dobbin is trying to make them out to be.

The WTO has specific rules on state trading enterprises whether you want to believe it or not.

Bryan · July 1, 2008

The WTO has specific rules on state trading enterprises whether you want to believe it or not.

WTO agreements do get renegotiated as situations change. What someone agreed to last year may simply no longer be possible. Besides, the wording of most areas of such agreements usually have enough wiggle room built in to them to allow for situations to change without needing WTO rulings every time.

Perhaps you can point us to the exact clause of the WTO that distinctly says the CWB will cease to exist in any form the moment farmers are allowed any degree of market freedom.

jdobbin · July 2, 2008

WTO agreements do get renegotiated as situations change. What someone agreed to last year may simply no longer be possible. Besides, the wording of most areas of such agreements usually have enough wiggle room built in to them to allow for situations to change without needing WTO rulings every time.
Perhaps you can point us to the exact clause of the WTO that distinctly says the CWB will cease to exist in any form the moment farmers are allowed any degree of market freedom.

There are none that say specifically that the Wheat Board won't exist. There are examples of other state trading enterprises being dissolved as soon as the market opens up because penalties would come if they continued to operate.

What the WTO has said is why the present Wheat Board is not subject to penalties under its present rules.

I doubt very much that the WTO is going to allow the Canadian government to keep the Wheat Board and open the market without going after the Board if it continues to allow loan guarantees and the like. It just isn't in the cards.

Any on the right wing who say that farmers can have the Board and an open market is lying. The Board will be gone as soon as wheat is sold on the open market.

Bryan · July 2, 2008

I doubt very much that the WTO is going to allow the Canadian government to keep the Wheat Board and open the market without going after the Board if it continues to allow loan guarantees and the like. It just isn't in the cards.

That is a substantially softer stance than what you were promoting earlier in this thead.

If the CWB was worried that the WTO would hammer them in the event of farmers being allowed freedom of their own property, they'd be saying so. LOUDLY. Do you think you know more about what the WTO means to the CWB than the CWB itself?

jdobbin · July 2, 2008

That is a substantially softer stance than what you were promoting earlier in this thead.
If the CWB was worried that the WTO would hammer them in the event of farmers being allowed freedom of their own property, they'd be saying so. LOUDLY. Do you think you know more about what the WTO means to the CWB than the CWB itself?

The Boards was gagged from responding to the possible outcome of ending the single desk. CWB now has a president appointed by Harper committed to ending the Board. I have never heard that Harper intends to keep the Board at the end of the day.

It seems clear that many farmers, even in the polling done by the government, believe that the Board will still remain an option.

It won't. In 1989, oats was removed from the Board. It was a small part of the trade and became part of the the open market. The WTO made it clear though that any attempt to continue trade in oats while an open market existed for it would result in trade retaliation.

The 2004 ruling by the WTO cleared the CWB of unfair trade practices but also set up a framework for an end of subsidies (presumably loan guarantees) and supply management. The Wheat Board has won 10 times when challenged by the U.S. for unfair trade because it has a single desk. It would not survive a challenge without one.

While many farmers might want to option of selling in the open market, the WTO clearly doesn't provide for a state trading enterprise to exist in that framework. In every poll, the farmers believe that the Board will survive as an option and want that option. The example of oats shows that once it is gone, it is gone forever.

The right wing keeps promoting a dual market without saying how that is possible under rules of the WTO and NAFTA. Instead, Harper gags the Board from indicating what the outcome is likely to be.

Bryan · July 3, 2008

It seems clear that many farmers, even in the polling done by the government, believe that the Board will still remain an option.

That's because it can if they want it to. Yes, policy changes will be required, but there is no reason to believe anyone who claims it must end. It's simply not a credible claim.

Wild Bill · July 3, 2008

That's because it can if they want it to. Yes, policy changes will be required, but there is no reason to believe anyone who claims it must end. It's simply not a credible claim.

Exactly! Tell it to the French!

jdobbin · July 3, 2008

That's because it can if they want it to. Yes, policy changes will be required, but there is no reason to believe anyone who claims it must end. It's simply not a credible claim.

The claim that the Board will remain should be backed up by Harper. When farmers say they want a dual market, it is with the thinking that the Board will remain an option. The Wheat Board has clearly said that if barley is opened up, it will be removed from the Board entirely just as oats was. They are not saying that to be vengeful in regards to the Fed policy but based on economics and world rules regarding state trading enterprises.

Be honest about outcomes and debate them should be the aim of Parliament. If Harper believes the Board will remain an option, say so and explain in what context.

blueblood · July 4, 2008

The Boards was gagged from responding to the possible outcome of ending the single desk. CWB now has a president appointed by Harper committed to ending the Board. I have never heard that Harper intends to keep the Board at the end of the day.
It seems clear that many farmers, even in the polling done by the government, believe that the Board will still remain an option.

It won't. In 1989, oats was removed from the Board. It was a small part of the trade and became part of the the open market. The WTO made it clear though that any attempt to continue trade in oats while an open market existed for it would result in trade retaliation.

The 2004 ruling by the WTO cleared the CWB of unfair trade practices but also set up a framework for an end of subsidies (presumably loan guarantees) and supply management. The Wheat Board has won 10 times when challenged by the U.S. for unfair trade because it has a single desk. It would not survive a challenge without one.

While many farmers might want to option of selling in the open market, the WTO clearly doesn't provide for a state trading enterprise to exist in that framework. In every poll, the farmers believe that the Board will survive as an option and want that option. The example of oats shows that once it is gone, it is gone forever.

The right wing keeps promoting a dual market without saying how that is possible under rules of the WTO and NAFTA. Instead, Harper gags the Board from indicating what the outcome is likely to be.

Harper hasn't exactly "gagged" the board. They can't spend farmer's money in launching ad campaigns. They are and were free to write editorials in newspapers and magazines until hell freezes over.

jdobbin · July 4, 2008

Harper hasn't exactly "gagged" the board. They can't spend farmer's money in launching ad campaigns. They are and were free to write editorials in newspapers and magazines until hell freezes over.

The directors were free to say as they wished since they were elected. The staff was not free and were fired if they did say something that Harper didn't approve it.

blueblood · July 5, 2008

The directors were free to say as they wished since they were elected. The staff was not free and were fired if they did say something that Harper didn't approve it.

Not officially fired for saying something, they'd be fired for "incompetance". Still not much of a gag order if the directors are beating the drum every week in the newspapers.

jdobbin · July 5, 2008

Not officially fired for saying something, they'd be fired for "incompetance". Still not much of a gag order if the directors are beating the drum every week in the newspapers.

Baloney on the incompetence. The President and the communications director were fired for not towing the like.

As for the gag order, the federal judge compared it to Robert Mugabe in Zimbabwe.

http://www.winnipegfreepress.com/subscribe...p-4783356c.html

The Harper government's efforts to kill the Canadian Wheat Board's single desk have been struck down by the Canadian judiciary not once, not twice, but three times since 2006.
In the latest ruling June 20, Federal Court Justice Roger Hughes determined the federal government could not order the board, as it did in 2006, to stay on the sidelines in the debate over whether to continue single desk marketing for barley.

Hughes ruled the so-called gag order not only infringed on the duty of the farmer-controlled board of directors to manage the organization, it contravenes Canada's Charter of Rights and Freedoms. He found no evidence that there was any misuse of farmers' funds. Rather, he said the cabinet order amounted to over-zealousness on the part of the government and a blatant attempt to silence debate.

Edited July 6, 2008 by jdobbin