Western Canada’s Issue: What’s Up With the CWB II?
So what do you think of CWB II? What you say? For those of you east of the Manitoba/Ontario border that stands for Canadian Wheat Board Two. Still confused? Ok, believe me if you are a DTN reader in Western Canada you know what I’m talking about. The fabled Canadian Wheat Board so vilified by some in the west is about to be transformed. How, when and if it gets there will surely play out in the next few weeks and months.
So this week I want to hear from you, all of you. Yes that means guys with names like Greg, Roy and Travis, all of you from western Canada. Over a period of 13 years you have written me about various issues in Western Canada. I’ve given them the best justice I could do. However, what issue could be bigger in western Canada than western grains controlled by “our” wheat board.
Forgive me. Yes, I said forgive me. That’s what I want all of you west of Steinbach Manitoba to do. Being one of Dtn’s only Canadian guys, for the last 13 years, I’ve never engaged you in the debate about the Canadian Board. How could I, being from southwestern Ontario?
Clearly though, we’ve all changed over that period of time. As many of you know I write quite a bit of corn market commentary in Ontario. However, I’ve done my fair share on wheat too. Earlier this year I discovered that a group of Alberta government researchers were citing some of my work here in Ontario. It had to do with how the “Ontario Wheat Producers Marketing Board” offers “marketing choice” to Ontario producers. The Alberta government researchers were citing my work as a precursor report on how that might work in Alberta. Unlike me in Ontario, producers in Alberta must market their wheat and barley through the Canadian Wheat Board. So I feel a bit empowered to comment on the CWB.
When the Conservatives were elected last January, they pledged to change the Canadian Wheat Board. With their strength rooted in rural Alberta anti-CWB sentiment permeates part of the Conservative party. Chuck Strahl is steering that debate. Last week he was reacting to a task force report, which effectively ends the CWB’s monopoly power over western wheat and barley. You can read the whole report by clicking on http://www.agr.gc.ca/cb/ip/pdf/final_251006_e.pdf.
The following are the first three paragraphs from the executive summary in that report.
“The Task Force was established to address technical and transition issues for the Canadian grain industry related to the change to an environment where farmers will be able to sell wheat and barley to any domestic or foreign buyer, including a transformed CWB (CWB II).
The Task Force envisages a thriving and competitive Canadian grain industry, in which innovation, entrepreneurship, investment, market responsiveness and individual initiative are encouraged.
A CWB II that is owned by farmers can create value for them by buying and selling their grain, serving its customers and reducing supply chain costs. The Task Force recommends that the CWB prepare a business plan for marketing choice as soon as possible.”
It is all so lofty. Chuck Strahl says it’s about “marketing choice.” Many other western producers do too. However there are critics of this plan. Plebiscites are being planned in some people’s minds but not necessarily Strahl’s. The task force recommends the CWB’s monopoly be set to end on January 31, 2008 and wheat on July 31, 2008. That will give the many activists on both sides of the debate time to state their case.
So let me give you my Ontario perspective. Here in Ontario we can market wheat any which way. Ditto for soybeans, corn, oats, barley etc. It does foster an atmosphere where everybody tries to push the marketing envelope. Ontario’s burgeoning ethanol complex is a result of that. However, it also fosters an atmosphere where the big American grain companies can pick us off, one by one. They do it very well. Right now cheap American corn is flooding (barging) into Ontario.
“Marketing Choice” in Ontario is the way it’s always been. (Except for supply management) Yes, at one time all wheat was sold under a “single desk”. However that all changed as growers pressured their own board to change and it did. We did not have the long hand of government within the “Ontario board” unlike the CWB.
How much did a 65/75cent loonie have to do with all this “marketing choice?” I say a lot. When the loonie was this low, niche markets for grain opened up all along the US border. Producers in Lethbridge, Taber, Chaplin, Estavan and Steinbach saw opportunities. My question is did producers in Peace River, Prince Albert and Northern Manitoba see those opportunities too? Or were they too far from the US border to make it worth their while. Does the monopoly power of the CWB help those producers more than those closer to the border? Has the 88/89-cent loonie cooled the debate?
There is much to talk about. Keep in mind; the old CWB might live to see many more days. That’s because their will be a federal election soon. The Conservatives don’t have a majority government and need opposition backing to transform CWB. Liberal Ag critic Wayne Easter said this last week concern the task force report.
“This report is driven by the Conservative ideological agenda without any economic basis whatsoever.” (Wayne Easter Liberal Ag Critic)
I know the debate about this will be burning up curling bonspiels this winter in the west. There are “eastern implications” too. However, that is for another day and time. “Marketing Choice” may be coming to the new CWB. When and if it gets here will largely depend on how the political winter winds blow.