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Milton Boyd

New voluntary wheat board may struggle

In Bill C-18, the federal government plans a new voluntary wheat board to replace the current Canadian Wheat Board (CWB) monopoly in Western Canada. This new board would compete with the private grain companies, and farmers would be free to sell their wheat as they wish. The voluntary board, beginning in August 2012, would receive government financial assistance including guaranteed borrowing and annual guarantees for initial grain price payments to farmers, for a period of about five years.However, the voluntary board may struggle and face many challenges, especially after the financial assistance ends, as there would be few advantages for a farmer to sell wheat to a voluntary board rather than to a private grain company. While a number of farmers prefer a CWB monopoly, others believe they can market their wheat better without either a monopoly or voluntary board, just as they do for canola and other crops, as long as regulators ensure sufficient competition and regulation in the grain industry and grain transportation system.A first challenge facing a voluntary board is that it might struggle to maintain enough farmer customers, resulting in high costs and considerable downsizing over time. A voluntary board may not receive strong support from farmers who prefer the CWB monopoly or even from those who oppose it, as many farmers may prefer dealing with private grain firms.Second, the current CWB monopoly is reluctant to evolve into a voluntary board, and some of its directors are considering legal actions to maintain the monopoly. CWB argues that a voluntary board is inferior to a monopoly and that the government is unwilling to provide enough preferential treatment needed for a voluntary board to succeed. The government counters that providing preferential treatment would be unfair to the private grain companies.A third challenge is that a voluntary board may… Read More

Why the Wheat Board monopoly is being removed

The Canadian Wheat Board’s (CWB) recent $1.4-million ads showing a 12-ton steamroller rolling over a farmer’s field hope to stop the Conservatives’ Bill C-18 from eliminating the CWB monopoly. But this is unlikely to happen. The Conservatives have a majority in Parliament, and they swept the rural vote in Western Canada while promising to remove the Board monopoly by August 2012.  In addition, “marketing choice farmers” (those wanting CWB monopoly removed) believe they have many convincing arguments.  Their first argument is that a monopoly violates their basic freedom of choice, a right that improves their quality of life regardless of any monetary gains.Further, they hold that the Board monopoly has often gotten the farmer lower prices and has missed important market opportunities. They cite that the Board’s share of the world wheat export market is now only about 15%, too small to have monopoly power and get farmers higher prices. “Marketing choice” farmers also argue that they make up most of the large commercial full-time grain farmers, and produce over half the wheat, so their wish to end the monopoly should be respected.Many value the freedom to make their own grain marketing decisions, and think they can do better than the Board monopoly.  They point out that over 70 years ago when the Board was formed farmers had limited grain market information, no television, less than half had telephones, and many were isolated without modern roads and timely communications. But farmers today are much fewer, and many have 3000 acres rather than 300 acres as in the 1930s. They have large trucks and are no longer driving a horse and wagon of grain to an elevator where they could be held captive to price. Many of today’s farmers are very sophisticated, well educated, highly competent, internet savvy, and entrepreneurial.“Marketing choice” farmers… Read More