Canadian Wheat Board

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The Canadian Wheat Board was established by the Parliament of Canada in 1935 as a producer marketing system for wheat and barley. It is headquartered in Winnipeg, Manitoba, Canada. Note that although it is often incorrectly called a monopoly, it is actually instead a monopsony since it is the only buyer, not seller of wheat and barley.

It is governed by a 15-person Board of Directors. Ten of the directors are elected by grain farmers in the western Canadian provinces of Alberta, Saskatchewan, Manitoba and parts of British Columbia. Four of the directors are appointed by Governor in Council on the recommendation of the Minister responsible for the Canadian Wheat Board^[1]. The President of the Board is appointed by the Governor in Council, on the recommendation of the Minister responsible for the Canadian Wheat Board with certain restrictions including that the CWB must be consulted on the recommended candidate.^[2].

Purpose

The purpose of the Wheat Board, which was made compulsory in 1943 by the government of Canada via the War Measures Act, was to control all grain prices. The Board had statutory maximums on wheat, oats, barley, flax, and corn between December, 1941 until expiry after the war. In April, 1943 the Board was also authorized to buy rapeseed and sunflowers. In 1965, the Canadian Wheat Board Act, until then subject to expiry and requiring periodic amendments by Parliament to extend the Board’s duration, was amended without time limit, thereby creating a permanent Board. CWB control over inter-provincial shipments of feed grains became a public issue during the grains crisis in 1969 to 1972 and was removed. Only non-feed wheat and barley remain controlled by the CWB.^[3][4]

The farmers deliver their wheat and barley to grain elevators throughout the crop year. The Board acts as a single desk marketer of wheat and barley on behalf of prairie farmers. Upon delivery to an elevator, farmers receive an initial payment for their grain from the CWB that represents a percentage of the expected return for that grade from the pool account. After the end of the crop year, July 31, an interim payment and a final payment are paid to farmers, in addition to their initial payment so they will have received 100 percent of the return from the pool for the grain they delivered. The initial payments are guaranteed by the Government of Canada so that farmers will receive payment even if there is a deficit in the pool account. Initial payments are set with a risk factor built in to guard against the event that price expectations are not met. Farmers from Eastern Canada and most of British Columbia are not controlled by the Canadian Wheat Board and may market all their grain on the open market. The area of British Columbia known as The Peace River District falls under the jurisdiction of the Canadian Wheat Board.

From the standpoint of supporters of the board and labour unions, the board gives individual farmers increased marketing power in a world market which gets them a higher price than they would otherwise get, not only through the efficiencies of scale, but as well by exercising oligopolistic marketing power on the selling side, especially for Durum wheat. A study conducted in the mid 1990s suggested that farmers gained on average a premium of $13.35 a tonne on wheat as a result of the board's monopsony.^[5] Supporters of the board's monopsony fear that an end to would put farmers in a situation like that in the early part of the 20th century where farmers effectively competed with each other to sell their grain, a situation that effectively put them at the mercy of big agribusiness and the railroad monopolies and reduced farm incomes. The counter-argument is that producers of non-Board crops such as canola do not seem to have this problem.^[6]

Some CWB proponents have also pointed out that some farms have better yields then others, and have advocated a quota system or a pool that pays farmers per acre rather than by yield to ensure equality.

Opposition

Many farmers, as well as agribusiness in Western Canada support the government's plan to dismantle the wheat board monopsony. They believe that farmers should be allowed to opt out of the board. Others believe that they could get a better price for their grain than the board itself and would like to market their own grain. Also, farmers already have the ability to market all the crops save wheat and malt barley independently, showing that it is possible to succeed marketing grain without board oversight. For example, the total acres seeded to canola in western provinces has often exceeded that of wheat. Thus, the wheat board's control of wheat and malt barley is seen as a redundancy.

Another concern is that many organic farmers are forced to sell and buy back their grain from the Canadian Wheat Board, which lacks the resources to market organic wheat and barley. Being forced to sell and buyback wheat and malt barley also prevents the advantage that Canadian Farmers would have in adding value to those crops by developing businesses for milling and processing those crops.

A study by authors, Colin A. Carter and R. M. A. Loyns found that measurable costs of the single-desk to farmers exist, they vary and could be as high as $20 per tonne in any year for wheat. Taxpayer costs could be another $5 to $6 per tonne. For barley growers, the hidden costs of the Board are larger than $20 per tonne, and the taxpayer costs are approximately $9 per tonne.^[7]

Some opponents of the board's monopsony have suggested it to be replaced by a 'dual market' system. This is presented as a compromise where board supporters could continue to sell their wheat and barley through the board and board opponents could have the option to sell outside the board. From the standpoint of supporters of the board, however, this is not a real alternative as a dual market would effectively end the board's monopsony and any benefits that it may give to farmers.

Opponents argue that because farmers capitalize program benefits into the cost of land, elimination of the CWB monopsony will result in lower land prices. Lower land prices would make Canadian farmers more competitive but could also leave many owing more than the value of their reduced land. Retiring farmers selling their land could be faced with a much reduced retirement fund but new entrants into farming would be able to purchase land at lower cost.

Some CWB opponents have argued that much of the lower quality land is in close proximity to the US border and would be the first to realize the benefits of the US market.

American complaints

Although the Board was reformed to meet free market conditions under the North American Free Trade Agreement and the World Trade Organization Treaty, American producers continually complain. Despite numerous challenges and much posturing by the United States, the World Trade Organization ruled in 2003 that the Wheat Board was a producer marketing body and not a system for government subsidy although the decision has since been overturned. In fact, Canadian producers have almost no government subsidy while their American and European Union counterparts are heavily subsidized.^{[8][9][9][10]} The attacks on the Wheat Board are one of the major irritants in bilateral relations between Canada and the United States.

Western alienation

The fact that the Wheat Board primarily markets crops produced in Western Canada has become a source of Western alienation and even Alberta separatism for many Western Canadian farmers. Farmers in Eastern Canada (east of Manitoba) and most of British Columbia (non-Peace River) are exempt from the monopsony control of non-feed wheat and barley. Wheat and barley farmers from the East have their own marketing boards but they are not compulsory. The Wheat Board has attempted to offer producers more options in recent years - for example, farmers can now purchase binding futures contracts from the Wheat Board that attempt to pay them the same price that they would get for their grain in the U.S. Although the new options created by the CWB allow farmers more ability to play the market, this does not go far enough in many farmers' eyes^{[citation needed]} when it comes to the ability to get the best possible price for their commodities.

Abolition

In recent years, there have been calls by many groups to abolish the Wheat Board. Many of these groups have taken their fight to the internet to spread their message and gain support for their cause. While many are focused on the Canadian Wheat Board, the movement had taken a turn towards international Wheat Board abolition, the other primary target being the Australian Wheat Board, before the AWB itself converted to a private firm, leaving the CWB as the only significant agricultural State Trading Enterprise (STE) exporter worldwide. At the moment the movement is in a grassroots stage, and it is uncertain as to whether or not it will gain widespread support. On 7 December, 2008, western Canadian farmers voted in favour of maintaining the wheat board by electing four pro-board candidates with one marketing choice candidate being elected. Stewart Wells, president of the National Farmers Union, said " The message can't be any clearer".^[11]. Others argue that the voter's list, which is based on CWB permit book holders, was flawed, as it includes many small or part-time producers who may not even deliver to the Board, as well as non-producers such as landowners who's livelihood does not rely on farming.^[12] In December 2008, the draft modalities text of the Doha Development Round was revised such that upon signing in its revised form, the CWB would lose statutory privileges such as the single desk within 5 years of the signing.^[13]

Recent history

One of the aims of the Conservative government since coming to power in January 2006 was to end the monopsony on the selling of Western Canadian wheat and barley. The Conservatives have been unable to get this change approved by Parliament because they have only a minority of the seats and all of the opposition parties support the monopsony.^[14][15]

Since the Conservatives took power in Canada, Chuck Strahl, the minister of Agriculture has actively worked towards the end the Wheat Board's monopsony, including the replacement of government appointees to the board of directors in favor of individuals who oppose the board's monopsony, a gag order on wheat board staff, the firing of the pro-board President of the Board, and intervention in the election of farmer elected members of the board of directors.^[16][17]

• December 2006 CWB board of directors election. Only one of five farmer elected seats goes to opponents of the Canadian Wheat Board's monopsony on the selling of Canadian wheat and barley internationally. Since there is only one incumbent farmer elected board member opposed to the monopsony, only two out of ten farmer elected directors are opposed to the monopsony. Nonetheless, the government appoints five members to the board so supporters of the board's monopsony have only an eight to seven majority. Doubts have also been cast on the results because Strahl, the minister of Agriculture removed upwards of 20,000 farmers from the voters list in the midst of the election. These farmers were disqualified for such reasons as not having delivered any grain to the Wheat Board in the past two years or having produced enough wheat or malt barley to have generated significant enough income from which to live off.^[18]
• December 19, 2006: Chuck Strahl dismisses CWB president Adrian Measner, an outspoken supporter of the monopsony. This was done by Strahl with the statement "It's a position that [he] serves at [the] pleasure [of the Minister/Government]. And that position was no longer his."^[16] It was suggested that Measner had gone too far for refusing to remove pro-CWB documents from the Board website and also appearing at press conferences with opposition leader Stéphane Dion.^[19] The majority of the CWB's board of directors opposed the firing of Measner.^[20]
• Conservative government loses court battle over unilaterally dismantling the CWB because it was contrary to the Canadian Wheat Board Act.^[21] In the aftermath, Harper and Strahl stated their intent to continue removing the traditional role of the CWB particularly in regards to barley (which is generally a more corporate crop^[22]), perhaps through Parliament.^[23]
• March 28, 2007: Barley Plebiscite. 62% of farmers choose marketing choice for barley. Legislation to amend the act dies on order paper when the September 2008 election is called.^[24]
• December 7, 2008: Board of Directors elections. Four of five candidates elected support the single-desk marketing agency.^[25]

See also

• William Craig McNamara - President of the Canadian Wheat Board until 1970.

References

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External links

• Canadian Wheat Board
• Description of the Canadian Wheat Board's archives at the University of Manitoba Archives & Special Collections
• Maple Leaf Web: Examining the Canadian Wheat Board