Some readers may remember the Western Grain Stabilization Administration (WGSA), a Prairie grain support program that ran from 1976 to 1989. Farmers could contribute up two per cent of net grain sales, matched two to one by the federal government. It was a pretty good deal, so most farmers participated.
The payout mechanism was simple — probably too simple. Money would be triggered when Prairie grain income fell below a running five-year average. It was possible that farmers in one area could have a drought and not get a payout because farmers in other areas had a bumper. Conversely, farmers with good crops might get a payment they didn’t need.
The WGSA proved inadequate to handle the combination of drought and a grain price war during the 1980s, so it was replaced by ad hoc payments and a series of different programs with four-letter acronyms.
The WGSA was cheap and easy to run with a small but dedicated and helpful staff. Hundreds of farmers with questions about their account were on a first-name basis with Omar Bilokury, the genial guy with all the answers, who passed away recently.
The other reason it was easy to run was that it worked in tandem with the wheat board permit book system — all board and non-board deliveries to licensed facilities had to be recorded. Most farmers wanted to be in the program, so if other facilities such as feed mills wanted their grain, they needed to submit sales to WGSA. As a result, there was public information on the overall prices farmers received.
Today we don’t have that. That’s in contrast to the U.S., where USDA publishes a monthly list of actual prices received by farmers for products ranging from fruits and vegetables through nuts, livestock, grains and hay.
Buyers report these prices to the USDA. For example, the most recent report says that in May, farmers in North Dakota received US$5.75 per bushel for spring wheat, $4.41 for malting barley, $3.35 for feed barley and $9.25 for canola. The USDA does withhold some information to ensure commercial confidentiality — for example if there is only one sunflower buyer in a state the source is obvious — but most is available.
It’s been six years since the end of the wheat board, which was supposed to mean that we’d have an open market like the one in the U.S., where the USDA also publishes export prices and other information such as vessels waiting in port.
Canadian farmers are still waiting for similar information. The last Conservative government did finance the Alberta Wheat Commission’s PDQ system, which reports regional cash prices for wheat, canola and peas, based on reports from the elevator companies.
However, for wheat they use a voodoo system of subtracting their Canadian dollar cash price minus the U.S. futures in U.S. dollars — which is a positive number — and calling that the basis. Last week the companies were telling you they were paying $40 more than the Minneapolis futures. It’s hard to imagine that any farmers pay attention to this. (The weekly cash price report on our markets page converts the currencies to provide a more realistic figure.)
One way or another, these prices are just quotes, not what the companies actually pay. The real basis is the difference between the price on the driveway and the export price at ports, which only the exporters know, but they’re not telling. It would be unreasonable to require them to disclose individual sale prices, but they could report prices in such a way as to provide a realistic average.
There’s no technical reason why in Canada we can’t have the same information as in the U.S. We had it during WGSA, which was not quite pre-computers, but it was when they were as big as shipping containers and sales in small truckloads had to be reported from 3,000-plus elevators, not the 300 or so we have today.
As for export grain prices, AAFC already has market analysis staff who would be happy to collect them if they were given the authority.
If we could do it in the 1970s, we could do it now. The only thing missing is a government requirement to provide the information.
That would settle once and for all the question of whether elevator companies are paying fair prices, or making out like bandits.