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Opinion: Price no reliable indicator

Without independent audits there’s no way to tell what grain sells for

Allan Dawson’s response to my article about grain movement (Putting a price tag on the grain backlog, Manitoba Co-operator, April 12) was provocative. In it he contends the price and basis doesn’t reflect the issue and trucking prevents farmers from being captive sellers.

While I agree that price is important, and with Prof. Richard Gray’s analysis that farmers lost about $6.5 billion without the CWB over just two years, without objective audits of private international grain sales how do we know what grain really sells for now? Since Gray’s study, just three giant grain companies have come to control over 70 per cent of the world grain market. So the old markers about prices and basis are no longer trustworthy. If the grain companies are blowing smoke on grain movement, what does that say about their credibility on prices and basis?

The most recent Canadian Grain Commission report is that, as of crop week 37 ending April 15/18, year-to-date wheat exports are up 16.5 per cent compared to last year and barley exports are up 80 per cent. In every month of the 2017-18 crop year substantially more wheat has been exported than in the same months in the previous crop year. Pulse exports are down 50 per cent because of the tariffs, while durum and canola exports are both down six per cent because the private trade has bungled quality assurance. However, overall grain exports to date are still greater than last year.

The grain companies can blame the railways all they want, but the fact as Allan Dawson rightly points out, is that Canada’s reputation as a reliable supplier of quality-assured grain has nose-dived since the private trade started managing marketing and logistics in spite of the fact record amounts of grain are being exported.

The ships collecting demurrage and unhappy customers demonstrate the private trade cannot manage the grain flow to meet customer needs. The Canadian Wheat Board ran the ports as one big virtual terminal and in its last 13 years of operation paid close to zero in demurrage and made millions for farmers in net despatch for loading the ships early. In the name of competition the private trade has broken up the ports into several smaller terminals. This has created chaos and offends customers while costing farmers money and delivery opportunities.

New grain-handling facilities on the Prairies will not make a difference at port. Claiming trucking between those delivery points somehow increases competition assumes trucking costs are minimal and don’t increase with distance.

The first new large Vancouver terminal in 50 years is being built by G3. It will increase West Coast storage capacity by only 15 per cent. Farmers, not grain company shareholders, will be the ones paying for any new terminal space no matter where it is built and it is shareholders, not farmers who will take the benefits.

In spite of what you may read in the business press, the year-to-date numbers from the Canadian Grain Commission show the railways are doing their job and more grain than ever is being exported. So farmers and their former customers are the ones being shortchanged in many ways by the grain companies. Without a single-desk marketer to manage logistics and quality assurance there is no way Prairie farmers will ever receive full value for their grain.

Ken Larsen is an Alberta farmer and member of the National Farmers Union, Region 7 (Alberta). He farms with his family near Red Deer, Alta.

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