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Reinvesting In The Future Necessary

Bill Gates showed us all how to get rich when he built Microsoft. According to Bill, the way to be successful in the corporate world is not to compete, but to create your own monopoly.

He did that by creating a computer system with built-in obsolescence that ran with proprietary equipment. If you want to run a PC with Windows, then you just helped to build his empire and make Mr. Gates a very rich man. The business world has learned from the rise of Microsoft, and globally we have corporate interests each attempting to duplicate the monopolized market that will propel them to success.

Western Canadian wheat farmers have their own monopoly in the Canadian Wheat Board. Controlled by farmer-elected and government-appointed directors, it is the biggest single exporter of wheat and barley in the world. You would think that we would be proud of our accomplishment, but sadly the board’s biggest critics seem to be here in Canada. The case in point would be the recent announcement of the CWB’s intent to purchase two laker vessels.

SOMETHING IS WRONG

Everyone involved with Canada’s grain transportation system, outside of the two railroads that control it, seem to be in agreement that something is seriously wrong. Despite the rationalization of our rail lines, the move to fewer high-throughput elevators, and escalating freight costs, shipping performance has not improved in the last 25 years.

Add to this that our laker fleet is aging and needs upgrading. Any performance issues on the Great Lakes will mean that more eastbound grain will end up being railed to Montreal at a higher cost to farmers. That increased cost shows up on every grain ticket issued by the CWB and is itemized out as FAF or Freight Adjustment Factor.

Board detractors will tell you that this purchase is an act of contempt, an out-of-control board that is playing with your money. What they fail to mention is that this is a sound business decision designed to lower your costs.

Every bushel of grain shipped eastward, board and non-board grains alike are subject to freight expenses. CWB tickets just do a better job of itemizing those costs out. A strong laker fleet will add capacity to eastward movement for all grains and increase the competition between the lakers and the railroad. Not only are the ships being purchased larger than the old lakers they replace, but they are more fuel efficient as well. It is a win-win situation for all farmers.

COST OF WINNING

Winning, however, does come at a cost. In the past, the CWB has been forced to deal with bottlenecks in the transportation system through the purchase of hopper cars as well. Over the years, some 3,400 rail cars have been bought to replace the obsolete boxcars that preceded them. Some argue that retiring farmers shouldn’t have to see their money reinvested in the future, and they should be able to walk away from this deal. I am sure that there were farmers retiring in the 1980s as well, but I don’t think anyone would look back and say the move away from boxcars was a mistake. The fact is that people retire every year, but that can’t stop us from constantly reinvesting in a competitive and vibrant grain trade.

Some would call that speculating. But it isn’t. It is reinvestment, and it is that reinvestment that has given us the largest single wheat and barley exporting entity in the world. You don’t get there by sticking your head in the sand and hoping the sky won’t fall around you. You don’t get there by constantly removing the underpinnings of a vital and competitive organization. Whether we are buying hopper cars, lake vessels, or technology, the only way to keep from going backwards is to move forward.

ONLY WAY FORWARD

If the people unhappy with the CWB purchasing lake vessels are also the ones who expect the board to be able to become a voluntary entity in the marketplace, then they haven’t been paying attention to that entity’s future needs. Repeatedly, the board has pointed out that it doesn’t have terminal facilities, it doesn’t have local elevators, and it is subject to a noncompetitive rail system that has failed to deliver performance improvements. If you didn’t like the board investing your money in lakers, then brace yourself for the investment that will be required to actually change this into a competitive voluntary organization with elevators, terminals and shipping capability.

RUNNING RIGHTS

Ins tead of complaining about the board’s investment in the transportation system, these people need to start asking how we can get our grain to port more efficiently if any commercial venture in the Canadian grain sector is going to grow and succeed. If CN and CP can’t improve on car turnaround times, then maybe it’s time we opened the door to running rights on those lines so that short-line railroads could compete to move grain to port. If paying more freight and streamlining local operations hasn’t given us the result we want, then we need to look for new solutions.

Western Canadian farmers have a unique marketing tool that is envied by many. In most parts of the world, the majority of the grain trade is controlled by four companies, each striving to create its own little monopolies. If the CWB were ever to fall, each one of those companies would be trying to replicate what we already have, but for their own profit, not ours.

To allow that to happen would be the biggest political fiasco since the cancellation of the Avro Arrow. It’s time Canadians recognized when they already have something that is the best in the world. We didn’t need Bill Gates to create the Canadian Wheat Board.

Les McEwan farms near Altamont.

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Ifyoudidn’tliketheboardinvestingyourmoney inlakers,thenbraceyourselffortheinvestment thatwillberequiredtoactuallychangethis intoacompetitivevoluntaryorganizationwith elevators,terminalsandshippingcapability.

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