Monday, January 08, 2007

What Happens if the CWB Is Shut Down?

Alberta's beef producers may be able to tell us! When multinational food giants dominate the market prices get manipulated to maximize profits for the buyers.

With the future of the Canadian Wheat Board in doubt, there are fears of diminished profits if U.S. grain buyers are left to do the same thing.

Canada's beef packing industry is dominated by two huge U.S.-based companies, Cargill and Tyson Foods, both with slaughterhouses in southern Alberta. Cargill also has one of the largest cattle herds in the country. The company buys from itself to guarantee a steady supply of beef.

Some say the fears are a throwback to a time when farmers were squeezed by grain barons hungry for profits in the days before the Canadian Wheat Board was established in 1935, he says. Times are different and framers more sophisticated now...or so they say!

Now, Canada is down to two major Canadian grain companies, Agricore and Saskatchewan Wheat Pool. Either one could be bought out and then the Canadian grain industry is really going to be dominated by international corporations.

A lot of grain producers want the freedom to sell their wheat and barley outside the wheat board's monopoly because they think they can get better prices by going direct to the buyers.

The claim is often made that the CWB is not getting the best price or fairly compensating the producers. Well, now that should be easily proven ... just open up the records!

If the wheat board has problems the proper thing to do is Fix The Problems....it seems that some people are more interested in Fixing The Blame on the CWB and demanding that the whole operation be shut down. Business experience tells one that if someone is blaming all their troubles on something other than their own management, then that someone has bigger problems than they are willing to admit!

The grain industry has rarely experienced the wild price swings that have occurred in the beef industry but given the same market situation could easily fall prey to the manipulations that other groups have had to endure. Profiteering in the beef industry has been widely publicized. Cattle ownership by Cargill and Tyson resulted in the firms getting $45-million of the $400-million in mad cow compensation from the Alberta government a few years ago.

Whatever the failings of the CWB the current situation can be fixed and managing the fix should be the issue! Like the public vs. private health care issue .... there's a place for both and the best solution involves the freedom to choose which way you want to go.

I'm hoping for the sake of our Canadian Grain industry that cooler heads will prevail before too much damage is done.

OMMAG



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8 Comments:

Blogger Fergy said...

I can't really speak strongly about Alberta beef or CWB (Plis I live in Ontario... No not Toranna!)

But I do know that FIRA is in the books and could have done something from allowing outside interest to own at least controlling stakes(steaks?) in Beef. That holds true in the Mining industry in Otario. I don't understand why the laws are in the books but are ignored.

1/08/2007 2:01 PM  
Blogger PGP said...

Why? IN the time frame you are talking about the answer is ...... Liberals (and I believe that FIRA is hollow)

That being said I fear that Chuck Strahl may be too gung-ho on the anti-CWB POV! We'll see...........

1/08/2007 2:56 PM  
Blogger Fergy said...

Maybe FIRA needs to be strengthened and CWB needs to be fixed.

One thing that stands in my mind that everyone seems to forget is that we are only talking about Barley right now.

If barley doesn't work out, I have a hard time seeing the conservatives dropping wheat as well, that's political suicide!

1/08/2007 7:22 PM  
Blogger Mac said...

I'm far from expert on this so maybe you can straighten me out on a few details..

Aren't grain producers in the east exempt from the CWB monopoly? For some reason, monopoly, regardless of application, means abuse of power. Is that the case here?

Why are farmers being arrested for trying to go around the CWB? Are they going around the CWB to sell for less money? That doesn't make any sense...

Some decades ago, I dated an egg farmer's daughter. I can vaguely remember her dad complaining about the egg marketing board's monopoly but, to be honest, I was more interested in his daughter than his eggs...

1/08/2007 9:49 PM  
Blogger PGP said...

MAc - I'm not an "expert" either......

I do have a number of folks who are grain farmers, friends and business men, who are mostly in favour of maintaining the CWB "single desk".

What I get from the long standing issue is this:
- The CWB is the single marketing desk for grain producers in Manitoba, Saskatchewan, Alberta and BC.
- It is governed under federal statute, membership is not optional, the board of directors consists regional representatives that are elected and government appointees

- It's function is to "Stabilize" grain market price fluctuations and to help ensure access to foreign markets
- CWB sells ahead of the market and contracts farmers grains for orders it manages

- The main arguments against the CWB are:
- Not democratic ( BS )
- Not voluntary ( True )
- Not accountable ( That's why the past chairman got fired..next step is making them accountable)
- Not paying farmers fairly ( not known but certainly provable )
- Not getting the best price for farmers ( again provable but not known )
- Farmers can get better prices on their own ( let them try )
- Farmers got arrested for selling grain directly (prairie farmers near the US border who transported or attempted to transport grain to the US were breaking the law because they had no license to export..only the CWB does)

There is much BS being bandied about and certainly the CWB needs a major review. The situation is not so dire that it requires precipitous action. The problems at the CWB are fixable. Just like many contentious issues there are highly polarized parties on either side that argue that no good comes from the situation and draconian measures must be taken or that any changes will result in destruction and loss of all benefits.

My point is that the rhetoric is all overblown and problems can be addressed effectively with some common sense. Cut through the bullshit!

1/10/2007 9:28 AM  
Blogger Mac said...

Don't you find it a bit disquieting that the four western provinces are tied to the CWB but the other provinces aren't?

I'm guessing the "not democratic" complaint is because of the monopoly aspect for western provinces and not the eastern provinces, rather than the election of reps on the wheat board.

I don't see access to foreign markets being an issue. We produce more than we can eat at a reasonable cost which means our profit margin should be decent, especially at times like this when the market for wheat is strong.

Anytime governments get involved, accountability becomes an issue; right, wrong or indifferent. Private industry deals with accountability differently than government bureaucrats who will happily do nothing whatsoever but provide a paper trail to prove what wonderful things they're not doing and how carefully they're shepherding the tax dollars entrusted to them.

Perhaps farmers should be given the option to "opt out" from the CWB. Those who do forgo participation in CWB contracts but gain the right to export & sell their resource to the highest bidder.

Like your comment: let them try. I know that's not what you meant but that's what I think should happen.

1/11/2007 12:03 AM  
Blogger PGP said...

I'm serious about the "Let them Try!"

comment...first I think they should have that option.
Second it will prove whether or not the anti-CWB bunch are actually able to do what they say!

I'm betting not..too many market forces outside their control.

1/12/2007 11:30 AM  
Blogger Mac said...

Grain, like oil, is a commodity on the world markets and prices are dependent on the supply. If one country doesn't buy our surplus grain, another country will.

Perhaps it's my experiences with bureaucrats that makes me so intolerant of their self-supporting arguments for monopolies like the CWB.

No-one should be jailed for selling the fruits of their labours. If a farmer wants to opt out of the CWB, he should be able to do so. That doesn't mean the CWB must be destroyed. It only means that farmers should have the right to choose their own destiny rather than being lorded over by a bureaucrat whose trump card is monopoly.

1/12/2007 11:54 PM  

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