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Why the Canadian Wheat Board Still Matters

From the Calgary Herald

Essentially, grain growers in the Prairies (not the rest of Canada), are obligated to sell their wheat and barley destined for export, domestic milling or malting to the CWB. The board in turn sells those grains, and pools the final price back to grain farmers. Those grains destined for livestock feed in Canada are exempt from CWB control.

Overall, the CWB has usually been successful in selling grain at the highest price. The CWB is known as a legendary and fearsome international competitor, even out foxing the Americans in their own market. Not unexpectedly, the free trade Americans reacted by launching nine trade actions against Canadian wheat imports, all of which were defeated by the CWB.

However, some entrepreneurial grain growers noticed that there were times that their American counterparts were receiving higher prices from U.S. free market grain buyers. They blamed the CWB for not being able to pay such higher prices. Those growers were convinced that if they had the freedom to sell to anyone besides just the CWB, they could access those higher-priced markets. It was also felt that the CWB stifled the development of value-added processing like pasta production.

Of course prices are higher now.  The markets that the CWB found during the tough times of the 80s and 90s are forgotten and I think the author is right, the CWB did hurt a lot of local value added processing like pasta production.  One of the things I am concerned with is the loss of foreign markets.  Can a non-monopolistic entity meet some of the massive orders from China and from around the world the CWB did?

The privatization of the Australian Wheat Board has set a bad precedent of what might happen once monopoly powers are removed. That marketing entity couldn’t compete, was subsequently sold to private companies and has disappeared. Most anticipate a similar fate will face the CWB once its monopoly powers are removed.

Time will tell if eliminating the CWB monopoly will put an extra dollar in a grain grower’s pocket. Those located far from the U.S. border and seaports will find their grain shipping costs dramatically increased. And as with so many surplus farm commodities, producers may well find themselves competing for the lowest price. At least the CWB was able to mitigate and average out that all too usual practice.

Many farmers are going to lose out if the Canadian Wheat Board disappears.  This seems based more on a politics/ideology than it does on good policy.  At the same time there needs to be some flexibility for local value added efforts and initiatives.

One Comment

  1. Hello Jordon – First off, absolutely the grain trade will have the capacity to deal with countries. They did much of the trading and handling for the CWB before. It was not just a few farmers who wanted the higher price, around 50 percent think about how the wheat board confiscated their wheat and barley at harvest. This is about property rights and managing their own farms. Grain companies handle at least two dozen other crops for farmers, quite well, too may I add. So, bring it on my friend… this is a new era for rural western Canada and for grain farmers.

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