The federal Conservatives made no secret of their plans to end the Canadian Wheat Board’s monopoly if given a majority. Canadians, including the vast majority of Prairie farmers, gave them the mandate.
So no one should be surprised if they do what they said they would, despite the results of CWB director elections. You don’t vote for a government hoping itwon’tlive up to its election promises.
Some of the backroom strategists might well be wondering how the Conservative party will convince supporters to send cheques now that the Liberal party has been decimated, and once the hot-button issues of gun control and the CWB are no longer in play.
But the May 2 election means the philosophical debate over single-desk selling is done. The question now becomes a practical one of how to ease the organization out of the multi-faceted roles it has played in the western Canadian grain industry over the past 75 years.
Ending the board’s monopoly is as easy as changing the law. It’s the aftermath that gets messy.
How will a voluntary CWB be structured? It seems likely it will be turned into a farmer-owned brokerage, as the board cannot function as a grain company with no handling facilities of its own. It cannot expect government support in this transition or its continued operations. How does a government justify supporting the establishment of a company that directly competes with private enterprise?
Ditto for government guarantees on initial payments. A federal reserve fund could be established for any company that wished to engage in pooling. But that would likely create trade problems. Without a system of initial payments, or a reserve to handle deficits, how would pool accounts function? Would there even be pools?
Who pays the severance for employees cut loose in the inevitable downsizing?
When the Australian Wheat Board was privatized, one of the first pieces of the operation to disappear was its market intelligence and development functions. That infrastructure, which previously benefited all cereal growers in Australia, was no longer supportable or justifiable. The AWB lasted three years. It is now owned by Cargill.
There are key questions for farmers and the Canadian grain industry to address as they move to a free market.
Some believe getting the CWB out of the way will result in more private investment into new wheat varieties. Farmers, through the CWB are currently the largest private-sector supporters of such research. What happens to the Western Grains Research Foundation checkoff on wheat and barley, which raises about $6 million annually? How will that checkoff be collected in the future? Or will it?
The other significant private-sector interest in wheat research is by companies that want to sell genetically modified varieties, which eliminate farmers’ right to save and use their own seed.
While the Canadian International Grain Institute (CIGI) is unlikely to disappear, its mandate, structure and level of service will undergo radical changes. Seventy per cent of CIGI’s research, customer support and training programs are related to wheat, durum and barley.
CIGI provides targeted marketing and client service that has proven incredibly efficient at developing and maintaining customers and feeding market intelligence back to Canadian industry. It has helped brand Canadian wheat as the best in the world.
It is unique to Canada and its cost – at about half of one per cent of the board’s total sales – is far less than international cheerleading expeditions carried out by other commodity councils, which by the way are paid for by farmer checkoffs and taxpayer support.
Its $8-million annual budget is currently cost shared between industry and the federal government through various matching investment programs. The board contributes 30 per cent, so its absence will cut CIGI’s funding by 60 per cent.
An alternative grain-promotion agency supported by checkoffs, similar to U.S. Wheat Associates or the Canola Council of Canada, will be necessary. But it could take years to establish. Does CIGI simply close its doors in the interim?
Some are no doubt thinking Western Canada has no need of international market development with all the domestic processing that is going to emerge and the higher-priced U.S. spot market so close at hand. Well, good luck with that. The U.S. market represents one-tenth of Canada’s total sales. A flood of Canadian imports is sure to provoke trade retaliation.
The time for belligerence and posturing is over. Prairie farmers will soon be free of single-desk marketing. But it comes at a cost, one that is unlikely to be borne by a government that also campaigned on eliminating the deficit within two years.
While the Canadian Wheat Board may indeed survive in some form, many of the services it has provided to the industry as a whole will be gone. What will fill the gap? [email protected]