It’s worth pausing to take stock of the long and storied history of this institution. Will the change bring a breath of fresh air or the hot, withering gales of a Prairie scorcher?
Prairie farmers first seized on the idea of collective grain marketing in the early 1900s, when they had little economic clout. The grain trade was organized and financed by large private interests such as banks, railways and Winnipeg grain merchants. When it came to selling grain, farmers were at the mercy of local elevator agents and grain merchants. In the fall, when there was a glut of grain on the market, buyers offered low prices in order to take advantage of the farmers’ need to sell. Early farmers’ organizations pressed for “orderly marketing” as an antidote to this problem. By selling their grain collectively through a single agent, they would have both greater marketing discipline – to even out price fluctuations – and more negotiating power.
It wasn’t until immediately after the First World War, however, that the idea was first put into practice. During the war, the government had taken control of many aspects of the grain trade in order to meet its wartime obligations to Britain. In the aftermath of the war, the private grain trade failed and the government stepped in to create the first wheat board. The board collected all Prairie grain deliveries and sold the crop on behalf of farmers. Farmers responded positively to the experiment, but the government considered the wheat board a temporary arrangement and soon dismantled it. Farmers agitated for its reinstatement, igniting a long struggle.
In the 1920s, when it became clear the government would not restore the wheat board, farmers settled for the next best thing, which was to create voluntary, co-operative grain marketing agencies. This worked reasonably well for a few years, but the farmer-owned “pools” collapsed shortly after the onset of the Great Depression.
Again, the government stepped in to save the wheat economy from the collapse of the private trade. From 1935 to 1943, the reincarnated Canadian Wheat Board accepted deliveries on a voluntary basis, providing farmers with a guaranteed minimum price. This proved problematic because farmers tended only to deliver to the board when the open-market price was lower than the guaranteed price, triggering large deficits covered by the federal government. During the Second World War, the mixed system also interfered with the government’s ability to co-ordinate grain sales to its allies. The government finally re-established the single-desk system in 1943. This policy had the support of all political parties and was cheered by Prairie farmers.
Over the next seven decades, the wheat board evolved with changing commercial and political circumstances but retained its core mandate – to maximize returns for Prairie farmers. In 1998, amid political controversy over the single-desk system, the Liberal government handed control of the agency to farmers. Henceforth, all changes to the board’s mandate would be subject to a farmer plebiscite and the approval of a farmer-controlled board of directors. Ignoring these requirements, the Conservative government has unilaterally stripped the board of its single-desk powers.
The Conservatives have argued that their policy of “marketing freedom” provides the best of both worlds. Farmers will be free to sell to any buyer, including a deregulated Canadian Wheat Board. The lesson of the 1930s, however, is that a voluntary wheat board doesn’t work. In the new environment, the CWB will be just another grain company – a very small one at that. And yet, little has changed in the world grain trade, which is more concentrated than ever.
The winners will therefore be grain companies such as Cargill and Viterra (soon to be sold to Swiss giant Glencore), which stand to benefit from the end of the single-desk system by increasing their sales, and food processors, which will pay less for Canadian grain as multiple sellers compete to make the sale. Farmers, meanwhile, will have lost an important tool of economic co-operation.
Original Article
Source: the globe and mail
Author: André Magnan
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