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New CWB Will Have To Prove Its Value

While it is clear the newly elected majority Conservative federal government is proceeding with plans to revamp the Canadian Wheat Board, western farmers contacted for this month’s Farmer Panel are just waiting to see what unfolds.

Agriculture minister Gerry Ritz, who was reappointed to that post by Prime Minister Steven Harper following the early May election, says he plans to introduce legislation later this year that will end the board’s 76-year monopoly on marketing wheat and barley in time for the start of the 2012-13 crop year.

Ritz has also gone on record saying he does not plan to hold a farmer plebiscite on the issue, but does plan “farmer consultation” in the process.

While news of plans to end the CWB marketing monopoly is regarded as good news by farmers who championed “choice” or an open market for years, supporters of the board’s monopoly are concerned about how effectively the board can compete against private grain companies, since it owns no storage and handling facilities.

Here is what this month’s Farmer Panel had to say about proposed Canadian Wheat Board reform:

FRED GREIG RESTON, MAN.

As a farmer who has “generally supported” the principle of the Canadian Wheat Board, Fred Greig says he isn’t opposed to change as long as it is change for the better and “not just change for change sake.”

Greig who crops about 4,500 acres on his Avondale Seed Farm at Reston, in southwest Manitoba says the CWB has changed in recent years, but there is room for improvement.

“The Canadian Wheat Board has held a monopoly for many years, but there are many and perhaps most businesses that strive to have a monopoly position,” he says. “Having said that the board should be able to realize

premiums for producers and the world certainly has changed since the CWB was created.

“Dual marketing is an interesting approach, in that it will put the board in a position of where farmers will be saying ‘if you want my business, you will have to work for it’ and that is how we run our business here. I have always said that no one takes a customer away from me, I have to lose them… and on our farm we are only as good as our last deal.”

Greig says the board has changed and become more flexible in marketing options it offers, “but it would be good to see more price transparency and have more options. We have a number of options when it comes to marketing canola, for example, why can’t we have that with wheat?

“It is easy for me to sit on the tractor seat and say I see no reason why the CWB can’t survive under the new system,” he says. “And I think, too, the board maybe selling itself short if it thinks it can’t compete. I think it does have a lot to offer even under a new system.”

MATT WALLINGTON TISDALE, SASK.

While Matt Wallington has had no major objections to the Canadian Wheat Board marketing monopoly, he says an open market will put the effectiveness of the CWB to the test.

“I hope they are good in a open market,” says Wallington who crops about 5,500 acres with family members near Tisdale. “If the wheat board is providing the value to producers that it says it does, then that should be obvious in an open market.

“I think the theory of a monopoly is good, but when it is something that is controlled by the government and we don’t have the transparency we’d like I have to question whether I am getting the full value for my crop, or I am paying for administrative and bureaucratic overhead.”

Wallington has used the fixed priced contracting options offered by the CWB and he also follows prices on the Minneapolis Commodity Exchange.

“I suspect under an open marketing system there will be more volatility in the price of wheat if the wheat board doesn’t have the same marketing control,” he says. “And that means there may be more risk, and it also means there may be more opportunity, which makes wheat no different than commodities that are marketed outside the board now, and really I am fine with that situation.”

LEO MEYER WOKING, ALTA.

Alberta Peace River region farmer, Leo Meyer says he is pleased to see a majority Conservative government with plans to reform the Canadian Wheat Board, but says the board will have to change significantly to survive in an open market.

“I don’t know what the final outcome will be, but if the board is to survive it will have to change much further,” says Meyer. “The board just can’t operate the way it has once the monopoly is gone. It won’t survive. But I think there is a sentiment out there that if the board is as good as it says it was, here is their chance to prove it.”

Meyer says while he welcomes the prospect of an open market, this is not a time to gloat. “There have been some who have advocated change who now say, ‘we won, we won, we won,’ says Meyer. “But quiet honestly the board has made significant reforms. The Canadian Wheat Board we see today, is not the same board we saw a few years ago. It has made significant changes.

“And we have to be mindful and respectful that there are many good people at the Canadian Wheat Board who have worked hard for farmers and worked hard to introduce change. However, that doesn’t change the fact that it was a monopoly and I am not of the mindset that a monopoly gives us any premiums as producers.”

In marketing commodities in a global market, Meyer says there are private companies which have done an excellent job in marketing canola, oats and peas, for example, “so really what is the difference in marketing wheat,” he says. “These companies have vast networks and service offerings now and I really don’t see a problem whether they are selling wheat or canola.”

While the Canadian Wheat Board does not have “the bricks and mortar” infrastructure like private companies for handling grain, says he believes it can find a role. “It is hard to say what services a new Canadian Wheat Board can provide,” says Meyer. “Perhaps rather than just wheat, they can provide a price pooling service for canola and other commodities which will still be of value to those who prefer to deal with the board.”

Looking at the federal election as a whole, Meyer is pleased to see a Conservative majority government, and pleased to see the separatists defeat in Quebec, but he isn’t impressed with some members of parliament elected in Quebec who appear to treat the whole election process as somewhat of a joke.

“Some of these people weren’t even residents of their ridings or were on holidays during the election,” he says. “I think the lack of sincerity takes away from the role of the House of Commons. It is a concern. You can say it isn’t an agricultural issue, but it does affect agriculture because when you have a debate over issues like the Canadian Wheat Board it would be good to hear from all those who have some understanding and interest in agriculture, who takes matters seriously.”

LeeHartisafieldeditorforGrainewsin Calgary,Contacthimat403-592-1964orby emailat [email protected]

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If the wheat board is providing the value to producers that it says it does, then that should be obvious in an open market

About the author

Field Editor

Lee Hart

Lee Hart is editor of Cattleman’s Corner based in Calgary.

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