To the Editor:
Recent election-style ads placed by the Canadian Wheat Board Alliance (Alliance) in Western Canadian rural papers use misinformation and factual errors to make political points. It’s clear that the CWB Alliance does not support Prime Minister Harper and the Conservatives, and that’s their prerogative. But it is totally unacceptable to misguide others to get support for their political position.
The Alliance suggests that since Prime Minister Harper ended the CWB Single Desk monopoly, the cost to ship grain to the West Coast is higher than it was with the CWB. According to the Alliance, analysis conducted by University of Saskatchewan professor, Dr. Richard Gray shows that the difference between farm gate prices and export prices is wider – and therefore costlier to farmers – than under the CWB.
However, the Alliance fails to mention that Dr. Gray found that in the first year without the CWB Single Desk, the cost was actually less than under the CWB. We can only assume that they don’t mention this because it doesn’t support their argument.
The truth is that the difference between farm-gate and port prices is a function of shipping capacity and the demand for that capacity. In years with a smaller crop, the difference will narrow. In years like 2013-14, where there is more demand for shipping than capacity, the spread will widen. The Alliance thinks the system under the CWB was better, when the spread was essentially fixed by tariff. But in years with smaller crops, the spread would have been smaller, saving farmers money. For years, farmers never saw the benefit of that. For years, the CWB system cost farmers more to ship grain to the West Coast.
We had no way of knowing how much the CWB truly cost prairie farmers – but what we can decipher, it was huge.
Now, with a more open system, we know what is costing farmers money – our system inefficiencies and a lack of capacity, both existing under the CWB but harder to see, are the problem now. And it’s because of this clarity of knowing what the system needs as we produce larger and larger crops, that we are now making progress with an industry-wide dialogue of how to improve capacity and logistics. Progress is a good thing, and will save farmers money when we get it fixed.
It is totally misleading to compare today’s economics with a partial view of the past. If the Alliance truly wants to assess the impact of the removal of the Single Desk, they need to look at more than just the cost to get grain to the port. They need to look at all losses incurred by the CWB on behalf of farmers. Such as grade losses (shipping #1 wheat against a sale of #2), shipping mistakes (shipping wheat from Montreal then back to Vancouver, as just one example), storage payments made to grain companies, interest costs (forcing farmers to store grain with no compensation), and so on. The Alliance likes to praise the CWB for earning dispatch – “earning extra money for timely loading of vessels”, however they have it exactly wrong. Clearly understood by all shippers, dispatch costs the shipper money; in the case of the old monopoly CWB, this came out of farmers pockets through a lower pool account.
If they truly want to see if farmers lost money in the final year of the single desk (2011-12) as they indicate with their lawsuit, then they should be willing to consider all the unnecessary losses incurred by the CWB in the years before that.
Losses like close to $200 million in “discretionary trading” losses in 2008-09.
The Western Canadian grain sector is in transition from a 70-year long oppressive and costly regime. There will be adjustments that won’t happen overnight. But with all the advances and efforts being made by the leadership of various new farmer-run Commissions and Councils, the railway grain Transportation Review, the enhancement of important information by organizations like the Ag Transport Coalition and the Alberta Wheat Commission’s “pdq” Price Transparency initiative, we are clearly on the right path.
On top or that, just as predicted, the increase in shipping capacity and competition that is coming on stream, will have a material impact on the cost farmers bear in moving grain to port.
Clearly, the Alliance would like to take this industry back into an era of oppressive control. Even more clearly, the rest of the industry is looking forward – because that’s the direction we are going. Farmers are looking forward into the future, not over their shoulders into the past like the Alliance. The future of grain agriculture is bright now that farmers can sell their own grain to whomever, whenever they choose. We have the Harper Conservatives to thank for that freedom.
Doug Robertson is President of Western Barley Growers Association
