Has post-CWB marketing freedom been good for farmers?

Has the Canadian Wheat Board monopoly really been gone five years?


For such a revolutionary change in western Canadian wheat marketing, the Aug. 1 “marketing freedom” five-year anniversary passed relatively quietly. Farmers and marketing advisers, whether fierce partisans or neutral stakeholders, looked back on the massive changes to western Canadian wheat and barley marketing wrought in 2012 and agreed on a few things:


  • Access to the U.S. market has become a significant factor for farmers near the border but not for those far away.

  • Farmers exist in local wheat markets now, driven by regional dynamics, rather than inside a prairie-wide market as in the CWB days.

  • It’s unfortunate that a liquid Canadian futures market for wheat and barley has not evolved.

  • Grain companies appear to have evolved a functioning wheat pricing and delivery system, at least in terms of clearing the crop.

  • Rail transportation woes were not cured by the end of the CWB monopoly.

  • The decline of wheat as a competitive option versus other crops did not end with the CWB monopoly.


To Brian Voth, a marketing adviser with IntelliFARM in Ste. Agathe, Man., the most important bottom-line conclusion is that farmers need to take marketing wheat and barley seriously.


“Marketing wheat is not easy,” said Voth, who advised farmers both before and since the CWB monopoly ended. “It’s a lot more work.”


That work has been worth it for many of his clients because they have many local elevators, plus the United States is just down the road, providing many ways to find the right buyer.


While marketing wheat and barley in the post-CWB world is more challenging, analyst Chuck Penner of LeftField Commodity Research said the transition has gone better than many expected, even with the hellish transportation woes of 2013-14.


“It was a lot less difficult than some thought it would be,” said Penner.


The transition from CWB to free market occurred in the midst of a maelstrom of factors that make its net impact for farmers extremely difficult to assess. 


The U.S. Midwest drought of 2012-13 created high prices and strong demand for the free market’s first year, and the huge Canadian crop and nightmare winter of 2013-14 created a glutted elevator system and broken down rail system for year two. 


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Big crop years created more stability, but now this drought-hit summer is likely to throw its own monkey wrenches into calculations about the true marketing impact for farmers.


For farmers of fierce pro- and anti-monopoly sentiments in 2012, nothing in the past five years has affected their view of whether the change was good for farmer returns.


“I think it’s all been good,” said central Alberta farmer Jeff Nielsen, a former CWB director who is now president of free-market-oriented Grain Growers of Canada.


He said farmers can now manage their farms better with the same control over their wheat marketing as with all their other crops, and they can take advantage of opportunities denied to them inside the bureaucratic and policy-dominated confines of the monopoly.


Bill Gehl, the southern Saskatchewan farmer who is chair of the Saskatchewan Wheat Development Commission, couldn’t see things more differently.


“The grain companies, they’re the winners in this,” said Gehl.


“The premiums for quality wheat have all but disappeared.”


When Nielsen looks at his local market, he sees new grain elevators offering him aggressive new buyers for the crops he grows, following more than a decade of grain industry stagnation in the CWB’s last decade.


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Now, not only has new concrete been poured near his farm, but lots more concrete is being poured for export terminal expansion and new builds on the West Coast.


That has and should lead to growing demand for quality wheat and barley from buyers who want to source and move it.


When Gehl looks around him, he sees a complete lack of the dynamism that monopoly opponents promised.


“How about all the new pasta plants built in Saskatchewan?” Gehl said with a rueful chuckle about the non-existent processing plants that monopoly opponents often promised.


He not only sees little new investment but also signs of fat margins for the monopoly-like grain companies and railways that have taken over the post-CWB grain marketing world.


Where Nielsen sees a transportation system free of the CWB’s costly interference, Gehl sees a system robbed of an important farmer advocate.


Nielsen sees new opportunities and values in supplying the specific types of wheat and barley to the specific buyers who want it; Gehl sees Canada’s traditional quality and consistency premiums disappearing.


While they don’t agree about much on the CWB, they agreed on two issues: more needs to be done to make wheat an attractive option for farmers, and the grain transportation system needs to operate in a way that allows farmers to benefit from the value of the crops they grow.


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  • ed

    With the at the farm gate price of wheat hovering around the 50-60% of the port price it truly is a no brainer as to whether farmers are better off with or without a CWB single desk monopoly marketing agency delivering the best price for their wheat until it is released from the farmers ownership at a foeighn terminal in another country with guaranteed financial vehicles in place and foeighn currencies locked in months in advance to bullet proof the sale. Their (the CWB’s) long term track record of returning 89-93% of the port price to Western farmers at their farm gate was quite incredible, and as Brian mentions and it is obviously without any wonder that he has identified that wheat acres are in decline. If you are a grain company it is fantastic as shown by their $4 billion dollars of extra profit annually upon the demise of the CWB. For marketing agencies it has been good as well as they have been able to get in on a cut of the tattered remaining wheat value left behind by those companies. And their are some farmers that like to see their neighbors in peril, believing that in tough times they will remain standing and finally get their hands on some weaker farmers land, maybe some 50 cents on the buck machinery and perhaps their sons or daughters as some excellent labour to run those conglomerates while they are in Arizona for the winter. It is not hard to see why some disaster capitalists wanted the CWB gone. Hopefully their new hired hands sons or daughters can fill our the far end of the bench at the hockey arena, so there is still community, right. The $12.64 at the farm gate #2 15.5 protein RSW prices of the 07/08 crop year seems to be missing in this lazy market and adjusted for inflation should probably be over $16 now. There truly is no debate unless you are trying to deceive.

  • Dayton

    we have 5 terminals within 50 km’s of our farm and a computer to access dozens more. Do we need the CWB monopoly? Not at all…..

    • ed

      If you don’t mind selling to thieving middlemen rather than to an actual customer at a far higher price, you may be right, however most farmers would rather have the extra money.

      • Dayton

        The CWB was the largest of all thieves.

        • ed

          The CWB was sort of like a Robin hood you might say. They robbed from the rich grain corporations and did give to the poor price taking farmer. If you want to be charitable and right what you think is unjust about that, and have the farmer share more with these corps please be honest about it. Just state the obvious. You want to share much more with them and feel that all farmers should be made to do like wise as you know best. Just say it. Maybe you or someone you know works for them or is a grain marketing guru or you are looking for more land. It “is” ok to admit that.