Dear Editor:
When our grandfathers and great grandfathers pulled up on the scales of their local elevators in 1900 they had a team and wagon. They found themselves on a very uneven playing field.
The recently constructed monopoly railways controlled the only access route to Canadian and International grain markets. Consequently, the C.N. and C.P. were left to charge whatever freight rates they thought were appropriate. ‘No one wanted to kill the goose that laid the golden egg’ but otherwise there was no limit.
The railways needed to have elevators constructed at potential delivery points on the prairies. These elevators would collect, weigh, grade elevate and store the grain in preparation for shipping. One of the inducements to construct an elevator was a railway guarantee not to accept grain for shipping from any other source, not even the farmer himself.
Farmers now faced another monopoly with which they had to try to negotiate. The local grain buyers were in complete control of the weight, grades, dockage rates and elevation charges. They were employees of the elevator companies who gave them their marching orders. They too had a ceiling on their demands. They did not want to ‘kill the Golden Goose’ either. Other than that, the sky was the limit.
Those people, who moved onto the Canadian Prairies by the thousands from 1890 on, seemed a hardy lot. They certainly were not quitters. Hugh McKlennan described those prairie settlers thus, “You want to know how bad it was where they came from …look where they went.”
Farmers who were not satisfied with what was left for them, out of their load of grain could bite their tongue or head back home still loaded. A trip to Thunder Bay or Vancouver by team and wagon was not a realistic alternative. Those who spoke English well could at least let people know what they thought. Those who still did not had their questions greeted often with a tirade of obscenities and racial name calling.
By the early 1900’s it became apparent to farmers, and others, that this unfair distribution of power, costs, and benefits needed to be corrected. This could only happen if farmers evened the playing field by acting together. They could also use the democratic process and thus government to put some limits on the free market. The United Grain Growers (U.G.G.) was the first of the major farmer owned grain marketing cooperatives. U.G.G. and the three Prairie Pools quickly grew to be huge players in the prairie grains industry. At the same time, federal legislation was put in place to allow for third party involvement in the setting of freight rates, elevation charges, and minimum performance requirements. The Crow Rate was a federal government legislated fixed rate for the rail movement of grain to terminal. Producer car legislation was adopted which allowed producers to load their own cars and thus bi-pass the local elevator altogether if they wished.
The Canadian Grain Commission was established by legislation to provide for the overall supervision of the prairie grains industry. It was the Commission’s job to establish and police a standardized set of weights, grades, and dockage rates. Matters in dispute in these areas could be referred to the Commission to adjudicate. They also established minimum standards that foreign and domestic end users could expect of Western Canadian Grain.
The final intervention in the open market that many farmers felt they needed was a vehicle through which they could influence and maximize their returns from the international export market. Thus in 1935, the Canadian Wheat Board was created. It was set up as the single desk seller of Western Canadian wheat in both the international and domestic markets. In the end, this was controlled by a farmer elected board. There can be no argument about the fundamental purpose of the Canadian Wheat Board. They only argument was if the Board, as it functioned, was the best way to achieve that purpose.
The year now is 2015. Where do we stand after 115 years? The Crow Rate disappeared after a long hard fight. Monopoly rate setting powers were not returned to the railways, however, it was replaced by a transparent rate review process where increases in freight rates had to reflect real cost increases. Those who still remember ‘the Crow’ are now almost an endangered species themselves. The once powerful co-operative, farmer-owned, grain handling system on the prairies has withered on the vine. It disappeared with scarcely a whimper.
The supporters of the Wheat Board put up more of a fight. Nevertheless, it has been eviscerated, privatized and its assets sold to the highest bidder. The battle cry still rings in the ears of many ~ “Look out boys – the train is coming – you’re going to get run over. Let the free markets prevail.”
The question in 2015 is; “How many more of these hard won interventions in the free market can we afford to dispense with?” The Federal Government still has major legislated powers to intervene in the setting of freight rates and elevation charges. In addition, the government can and still does impose performance requirements from time to time. Let there be no doubt, government involvement in the rate setting process and n setting performance standards is a cumbersome and costly venture. The process has to be rational and transparent. It must be sold to the railways, Grain Companies, and producers. These are often competing interests. If government could excuse itself from this process and let free market forces prevail, these matters could be worked out in less time and at a much lower cost to the public treasury.
The Canadian Grain Commission’s role in setting and supervising standards at the local elevator and at terminals could probably also be privatized. These standards include weights and measures, grades, and dockage rates, etc. which both producers and international grain purchasers can rely on. It is also a very costly cumbersome and bureaucratic process. Surely there is a cheaper and more efficient way. Surely the Grain Commission could be privatized as well. The privatization process could be supervised by some high profile federal government appointee. Some champion of the free market. It seems that Mike Duffey will soon have some free time. He would have to buy another summer cottage though; perhaps this time somewhere on the prairies.
Whoa!!!! Let’s slow down for a moment. Private enterprise and free markets are great sources of creative energy and progress in our economy. None the less they require a bridle like any run-away horse. It takes some controls to ensure that those free markets serve the public interest and not just their own. An individual producer will have very little leverage when negotiating with a monopoly railway company, or a giant in the private grain trade, or a Chinese government grain trader. That will be true no matter how big a truck he has.
Our grandfathers learned a hard lesson with their teams and wagons. We should take care not to get too ‘big for our britches’ and forget those lessons. If we do, we will have to go back to 1900 and start all over again.
Doug Cowling
Yorkton, SK
