Tories' quest to dismantle Wheat Board is part ideological – and part just baffling
Dec 21, 2006 04:30 AM
Thomas Walkom
National Affairs Columnist
When Stephen Harper's Conservative government finally sacked the head of the Canadian Wheat Board on Tuesday, the story was hardly front-page news in Eastern Canada.
To most Canadians east of Manitoba, the simmering wheat board controversy probably seemed an arcane and somewhat confusing dispute – one that was technical in nature and had something to do with Western farmers.
Both of which are true.
But the battle over the wheat board is also something else. It is a mythic Canadian story on a grand scale as the Harper government – for reasons that are in part ideological and in part just baffling – takes on one of the grand national institutions that has helped to define this country.
In the West, it is pitting farmer against farmer. On the one hand are those – apparently the overwhelming majority of Western grain farmers – who appreciate the security that the government-sanctioned marketing monopoly provides, as well as the handsome returns it wins them by selling their Canadian wheat and barley in Canada and around the world.
On the other are another group who want the monopoly abolished so they can sell their wheat and barley to whomever they wish at whatever price they can fetch.
Wheat board detractors call it a struggle between liberty and monopoly. Board supporters call it a battle between enlightened self-interest and self-deluded free-market ideologues. Both sides have a point.
Certainly, the world has taken notice. The wheat board's international customers, including China, have lined up to support it in its fight with Ottawa. Conversely, the board's main competitor, the United States, is quietly cheering Harper on.
In Washington, the U.S. government has said it is "encouraged" by the Prime Minister's attempts to dismantle an institution that the Americans have, so far unsuccessfully, tried to kill off through trade challenges.
Here at home, the opposition smells blood. Yesterday, Liberal Leader Stéphane Dion was in Winnipeg to meet the board's embattled directors and vow his support. If nothing else, this is good politics. In the last election, the Liberals were almost shut out of the Prairies.
The firing of wheat board president Adrian Measner is the culmination of months of struggle between the new government and the wheat board, a strange body – part Crown corporation, part co-operative – that is created by federal statute but answers to a board of directors dominated by elected farmers.
Certainly, the government has moved quickly. A year ago, Harper promised to gut the board. This fall, Agriculture Minister Chuck Strahl commissioned and almost immediately received a so-called task force report recommending the board's emasculation. To that end, Strahl says he wants to remove barley from the board's purview next year. And he has made no secret of his plan to eventually do the same for wheat.
Along the way, the Harper government imposed a gag order on the board, forbidding it from lauding its own virtues. The board, in turn, took the government to court, arguing its action was unconstitutional.
Throughout, Measner has been an uncompromising critic of Conservative plans. The government fumed at that. But when the wheat board chieftain appeared at a news conference this month alongside Liberal leader Dion, the Harperites were outraged.
This week, they fired him.
It was, perhaps, fitting. The wheat board has been fraught with controversy since its inception in 1919 during the economic hard times that followed World War I.
In 1920, then-Conservative prime minister Arthur Meighen abolished this early wheat board, calling it an affront to free enterprise. A year later, angry Western farmers took their revenge and sent his government down to defeat.
By 1935, the Tories had learned their lesson. That's when then-prime minister R.B. Bennett, over the fierce opposition of the Liberals, set up the modern version of the wheat board.
But once the Liberals took office, they too recognized the value of a politically popular institution.
Until 1943, as historian John Thompson writes, the board limped along as a voluntary organization. Farmers could sell their wheat to it but did not have to. The result, writes Thompson in his "Farmers, Government and the Canadian Wheat Board" was a situation that pleased no one.
When grain prices were high, farmers sold privately; when they were low they sold to the board.
The result was chaos. Because it could never depend on a reliable supply of grain, the board could never develop long-term customers. Yet when prices were bad, it became the buyer of last resort, accumulating surpluses it could not sell and costing the federal treasury millions.
The solution, demanded by Western farmers, was to make all producers sell all of their grain all of the time through the board. This monopoly came into play during World War II and was an immediate success.
By the '50s, the wheat board had become a major international player, selling Canadian grain around the world, and returning farmers a price that was, on average, more than they could get by selling privately.
Even better, as far as Ottawa was concerned, the new monopoly did not cost the federal treasury a cent.
But the board's strength – its ability to average prices for the benefit of most farmers – was also its Achilles heel. Average prices are just that. They allow many to earn more than they otherwise would have. But by definition, some must earn less.
In recent years, the losers tended to be farmers close to the U.S. border who could make more money trucking their wheat to private grain elevators across the international boundary.
A poll done for the wheat board earlier this year found Western farmers almost equally split on whether the board should continue as a monopoly buyer.
But the same poll showed that, if faced with a choice of board or no board, the overwhelming majority wanted the institution to stay.
As well, eight out of 10 farmers elected to the 15-member board (the other five are appointed by Ottawa) support a continuation of the monopoly.
In short, it seems that a good many farmers want to the board to continue as is. But that hasn't deterred Harper.
During last winter's election campaign, he deliberately walked into this swamp, promising to eliminate the wheat board monopoly.
True, some farmers, such as the roughly 1,000 members of the anti-monopoly Western Canadian Wheat Growers Association, lobbied for this. But the wheat board serves more than 85,000 farmers in Western Canada, many of whom are content with monopoly.
So why is Harper bothering? In a recent speech, Strahl explained the move not in terms of efficiency but principle.
"Canadian agricultural producers want and need the ... freedom to make their own choices on how they produce and market their crops," he said.
"We do not think they should be thrown in jail for that."
It is a bold rationale. In effect, the Harper government is saying: We're not doing this just to toady up to the Americans (although that is a side benefit). Nor are we doing this just to appease a few free-market diehards in Alberta or our corporate friends in the international grain cartel. Nor are we doing it because the system doesn't work. Rather, we are doing it because we think it the right thing to do. And if Western farmers don't like it, they can vote for another party.
Which, for a government hanging on by its fingernails, is an odd thing to do.
Thursday, December 21, 2006
Monday, June 12, 2006
Canadian Wheat Board
Last Updated Dec. 6, 2006
CBC News
(CBC)
The Canadian Wheat Board has a monopoly on the marketing of wheat and barley in Western Canada and is facing questions, both from within Canada and from abroad, about its relevance in an era of global trade.
The Canadian government created the wheat board in 1935 in response to plummeting grain prices during the Depression that threatened to destroy the industry.
The CWB followed in the footsteps of previous attempts to temporarily stabilize the grain market in Canada in times of crisis.
The Board of Grain Supervisors was appointed in 1917 to market grain during the First World War. Another board was created to deal with a post-war crash in grain prices, but the government, determined to let market forces determine the price of grain, disbanded it after a year.
In the 1920s, western farmers formed their own grain marketing co-operatives, first in Alberta and then in Manitoba and Saskatchewan.
The three wheat pools got together in 1924 and formed a central selling agency, the Canadian Co-operative Wheat Producers, but the fall in grain prices following the Depression nearly wiped out the pool system altogether.
The Canadian government stepped in with financial aid to save the pools and eventually replaced the selling co-operative with the CWB.
The board was originally a voluntary agency, given the mandate to market Canadian grain at a fair and stable price for all its members.
But since 1943, Canadian wheat farmers have been compelled by law to sell their crops only to the board.
Barley and oat farmers also came under the board's control in 1949. Oats were removed from the CWB's jurisdiction in 1989. The CWB now has control of all wheat and barley grown in the West that is destined either for human consumption in Canada or for export.
The board is based in Winnipeg and doesn't handle the grain itself, or own any rail cars or elevators. The CWB's 365 employees negotiate deals to sell the grain at a single fixed price it determines.
The law governing the CWB was changed in 1998, so that the board is no longer a Crown corporation. Instead of being run by a handful of government appointees, the board now has 15 directors, 10 of whom are elected by Western farmers and five of whom, including the president, are appointed by the government.
However, the federal government still guarantees to cover any losses the Wheat Board suffers. Since 1943, Ottawa has spent $1.3 billion covering the board's deficits. Most of that money was spent in 1991, when the board lost $673.4 million after a U.S. export program drove down wheat prices. In 2003, the CWB reported an $85.4-million loss, mainly caused by a surging Canadian dollar, the board said.
Monopoly, open market or mixed?
Some farmers say the board has outlived its usefulness, that selling grain through one government agency - the "single desk," they call it - no longer works.
Defenders of the CWB say that without it the price of grain would fluctuate day-to-day and farmers themselves would have to negotiate their own price.
Opponents of the board say that's exactly what they want. These farmers say that, with the internet, they can monitor the price of their crops as they change, and negotiate accordingly. These farmers say they could sometimes get a higher price than the one negotiated by the CWB.
Somewhere in the middle are farmers who believe that pooling wheat and negotiating a common price might be a good idea for some farmers, but that they shouldn't be forced by law to sell their grain only to the CWB. These farmers support a dual market system in which farmers could sell their crops either to the board or on the open market.
In 1997, a referendum of barley producers found that nearly 63 per cent of the farmers support retaining the CWB's monopoly. Critics of the referendum, however, pointed out that the dual market system wasn't an option on the referendum.
In a plebiscite of Alberta farmers in 1996, 66 per cent were in favour of the dual market system.
The board also survived a court challenge in 1997. A group of Alberta farmers argued that the Canadian Wheat Board Act infringed on their freedom of association and the right to earn a living. A federal judge ruled that the monopoly was legal and a reasonable infringement on the farmers' freedoms.
Pressures from abroad
The CWB has also faced pressure from south of the border. The U.S. market represents about 10 per cent of the Canadian Wheat Board's sales, or about $400 million a year.
In 1993, Canada exported 2.8 million tonnes of wheat to the U.S. The record flood of Canadian wheat into the U.S. market had American farmers and senators from farm belt states crying foul.
Canada agreed to a temporary cap of 1.5 million tonnes on wheat exports for one year, from September 1994 to September 1995. After the cap expired, Canada again faced pressure to curb wheat exports to the U.S. The Canadian government resisted.
U.S. agriculture officials argued that the practices of the CWB constitute unfair trading practices and give Canadian farmers an advantage. Canadian officials responded that the CWB passed an initial audit in 1993 and a dispute settlement panel of the North American Free Trade Agreement.
The Bush administration issued a report in February 2003 that claimed the board enjoys advantages such as low-interest loans and use of government-owned rail cars, and that its monopoly status protects it against market risks. Canadian grain trade organizations replied that the WTO allows for bodies such as the CWB, as long as they comply with commercial business practices.
In February 2004, the World Trade Organization cleared the CWB of American accusations of unfair trade practices. The CWB called it a victory for western farmers. The WTO ruling was the 10th time in 14 years that trade rulings have backed the CWB.
In August 2004, however, the WTO approved a plan to cut subsidies and to require state bodies to stop practices that distort trade. Trade Minister Jim Peterson said the ruling could jeopardize the CWB, as well as government supply management of egg, dairy and other producers.
CBC News
(CBC)
The Canadian Wheat Board has a monopoly on the marketing of wheat and barley in Western Canada and is facing questions, both from within Canada and from abroad, about its relevance in an era of global trade.
The Canadian government created the wheat board in 1935 in response to plummeting grain prices during the Depression that threatened to destroy the industry.
The CWB followed in the footsteps of previous attempts to temporarily stabilize the grain market in Canada in times of crisis.
The Board of Grain Supervisors was appointed in 1917 to market grain during the First World War. Another board was created to deal with a post-war crash in grain prices, but the government, determined to let market forces determine the price of grain, disbanded it after a year.
In the 1920s, western farmers formed their own grain marketing co-operatives, first in Alberta and then in Manitoba and Saskatchewan.
The three wheat pools got together in 1924 and formed a central selling agency, the Canadian Co-operative Wheat Producers, but the fall in grain prices following the Depression nearly wiped out the pool system altogether.
The Canadian government stepped in with financial aid to save the pools and eventually replaced the selling co-operative with the CWB.
The board was originally a voluntary agency, given the mandate to market Canadian grain at a fair and stable price for all its members.
But since 1943, Canadian wheat farmers have been compelled by law to sell their crops only to the board.
Barley and oat farmers also came under the board's control in 1949. Oats were removed from the CWB's jurisdiction in 1989. The CWB now has control of all wheat and barley grown in the West that is destined either for human consumption in Canada or for export.
The board is based in Winnipeg and doesn't handle the grain itself, or own any rail cars or elevators. The CWB's 365 employees negotiate deals to sell the grain at a single fixed price it determines.
The law governing the CWB was changed in 1998, so that the board is no longer a Crown corporation. Instead of being run by a handful of government appointees, the board now has 15 directors, 10 of whom are elected by Western farmers and five of whom, including the president, are appointed by the government.
However, the federal government still guarantees to cover any losses the Wheat Board suffers. Since 1943, Ottawa has spent $1.3 billion covering the board's deficits. Most of that money was spent in 1991, when the board lost $673.4 million after a U.S. export program drove down wheat prices. In 2003, the CWB reported an $85.4-million loss, mainly caused by a surging Canadian dollar, the board said.
Monopoly, open market or mixed?
Some farmers say the board has outlived its usefulness, that selling grain through one government agency - the "single desk," they call it - no longer works.
Defenders of the CWB say that without it the price of grain would fluctuate day-to-day and farmers themselves would have to negotiate their own price.
Opponents of the board say that's exactly what they want. These farmers say that, with the internet, they can monitor the price of their crops as they change, and negotiate accordingly. These farmers say they could sometimes get a higher price than the one negotiated by the CWB.
Somewhere in the middle are farmers who believe that pooling wheat and negotiating a common price might be a good idea for some farmers, but that they shouldn't be forced by law to sell their grain only to the CWB. These farmers support a dual market system in which farmers could sell their crops either to the board or on the open market.
In 1997, a referendum of barley producers found that nearly 63 per cent of the farmers support retaining the CWB's monopoly. Critics of the referendum, however, pointed out that the dual market system wasn't an option on the referendum.
In a plebiscite of Alberta farmers in 1996, 66 per cent were in favour of the dual market system.
The board also survived a court challenge in 1997. A group of Alberta farmers argued that the Canadian Wheat Board Act infringed on their freedom of association and the right to earn a living. A federal judge ruled that the monopoly was legal and a reasonable infringement on the farmers' freedoms.
Pressures from abroad
The CWB has also faced pressure from south of the border. The U.S. market represents about 10 per cent of the Canadian Wheat Board's sales, or about $400 million a year.
In 1993, Canada exported 2.8 million tonnes of wheat to the U.S. The record flood of Canadian wheat into the U.S. market had American farmers and senators from farm belt states crying foul.
Canada agreed to a temporary cap of 1.5 million tonnes on wheat exports for one year, from September 1994 to September 1995. After the cap expired, Canada again faced pressure to curb wheat exports to the U.S. The Canadian government resisted.
U.S. agriculture officials argued that the practices of the CWB constitute unfair trading practices and give Canadian farmers an advantage. Canadian officials responded that the CWB passed an initial audit in 1993 and a dispute settlement panel of the North American Free Trade Agreement.
The Bush administration issued a report in February 2003 that claimed the board enjoys advantages such as low-interest loans and use of government-owned rail cars, and that its monopoly status protects it against market risks. Canadian grain trade organizations replied that the WTO allows for bodies such as the CWB, as long as they comply with commercial business practices.
In February 2004, the World Trade Organization cleared the CWB of American accusations of unfair trade practices. The CWB called it a victory for western farmers. The WTO ruling was the 10th time in 14 years that trade rulings have backed the CWB.
In August 2004, however, the WTO approved a plan to cut subsidies and to require state bodies to stop practices that distort trade. Trade Minister Jim Peterson said the ruling could jeopardize the CWB, as well as government supply management of egg, dairy and other producers.
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