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Sell Or Wind Down The CWB

Rhetoric is “language designed to have a persuasive or impressive effect on its audience, but is often regarded as lacking in sincerity or meaningful content.”

There’s been lots of it in the Canadian Wheat Board (CWB) debate. But push came to shove with the election of a majority Conservative government May 2. The government says the CWB’s legislated monopoly over the export of western Canadian wheat and barley and sales destined for domestic human consumption will end Aug. 1, 2012.

There’s a year to prepare. It’s time to drop the rhetoric and focus on a smooth transition. So instead of trying to convert the Canadian Wheat Board (CWB) into a grain company nobody wants, the federal government should either sell it and distribute the net revenues to farmers on a pro-rated basis, or wind it down in an orderly way.

To do otherwise puts farmers, CWB staff and potentially the federal government and therefore taxpayers, at too much financial risk.

It’s a waste of time and money trying to keep the CWB when it’s unlikely to survive. The notion that the CWB could or should exist in an open market was a rhetorical attempt to convince farmers to give up single-desk selling. That debate is over. It’s time for pragmatism.

DEBATE OVER

It’s the loss of the single desk that single-desk supporters oppose.

The CWB might carry on in name, but without the single desk, it’s not the CWB.

Farmers already market crops in an open market. They don’t need a weak, upstart grain company, with no other purpose than to make open-market supporters feel magnanimous, to hold their hands.

Here’s the thing.

Farmers who say the CWB can operate in an open market also say the CWB fails to get the best prices, despite having the single desk. Those farmers won’t use the CWB, but they don’t want to stop others from doing so.

But farmers who believe that the CWB does get the best returns, contend it’s only because of the single desk. They see no advantage without it.

So if open-market farmers aren’t going to patronize the CWB and CWB supporters aren’t either, who will?

Nobody.

A task force struck by the Harper government in 2006 to study the CWB’s transition to an open market concluded it wouldn’t be easy.

“If the CWB II is not well prepared to enter into the new, competitive environment, there is a significant risk of its failure,” the task force report says.

SIGNIFICANT RISK

Agriculture Minister Gerry Ritz has said if the CWB fails it’s because farmers and/or the CWB let it happen. In other words, when the inevitable occurs, just as it did to the Australian Wheat Board, it’s not Ritz’s fault.

Trying to pound a round peg into a square hole just eats up time and resources. The grain industry needs both to figure out how other important options, such as producer cars, can work without the single desk.

Ritz, who has said he wants the CWB to continue, should appoint a panel of grain industry statesmen to investigate. When the panel inevitably concludes the CWB is redundant, the minister is off the hook. And so are farmers.

The panel could also explore how to fill the void the CWB will leave in areas beyond marketing. A Canadian Wheat Council (CWC), modelled after the Canola Council of Canada, is an option.

Every rational farmer would market through the CWB if it offered the best prices. But in a functioning open market, prices tend to be nearly the same among competitors, if not every day over time. Companies that can’t match their competitors don’t survive.

But how competitive can the CWB be, even if it retains its key sales staff, some of whom presumably are already being head-hunted by grain companies?

FINANCING OPERATIONS

How would the CWB finance its operations? Other than its Winnipeg office and some hopper cars, it has no hard assets for collateral.

The Western Grain Elevator Association doesn’t want the CWB to get special government treatment or subsidies and rightfully so.

Without elevators and port terminals the CWB is at a disadvantage having to rely on competitors to handle its grain. Even if it could buy those services at a reasonable price, or form a strategic alliance with a smaller grain company or a group of inland terminals, it would handle only a fraction of the grain it does now. Forced to cut services and staff, farmers would be on the hook for CWB severances and pensions.

JUSTIFIED

If the CWB is terminated the government could justify covering those one-time liabilities. If sold, those liabilities would be transferred to the new owners.

Farmers once owned their own grain companies, the Prairie Pools. But a decade ago, after dominating the West’s grain industry for more than 80 years, they lost them and much of their equity.

Still, three large grain companies and four smaller ones operate across Western Canada. There are many smaller local firms and dozens of brokers. Marketing choice abounds.

There’s no point in having the Canadian Wheat Board if the Canadian Wheat Board has no point. [email protected]

About the author

Reporter

Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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