Believe it or not, this post is about grain marketing systems: CWB vs. open market.
First, look at this fearsome tank:
Would you like to be driving that in combat? It’s the German Tiger I and it was one of the three best tanks produced in the Second World War. The Tiger II and the British Centurion – which was produced too late to see war service – are the other best two tanks. It was an example of everything the Germans did most effectively: fabulous engineering, complex systems, brutally effective, almost impossible to stop. A nasty bit of business.
How would you like to be driving this thing below:
That’s what we Canadian folks were using when we fought the Germans in Italy, Normandy and across northern western Europe. The Germans called them “Tommy cookers,” because Tommys like us would get cooked when fighting tanks like the Tiger. The gun was too weak on most versions of the Sherman to do any damage to a Tiger, and our shells would literally go DING!! off a Tiger’s armour, but a single shot from a Tiger would cripple a Sherman, rupture the gasoline tank and start the thing burning. Often Tigers would be able to knock out 10 Shermans for every Tiger killed. Not a bad ratio, if you’re the guy in the tank.
What does this have to do with grain marketing and the CWB vs. the open market debate, you ask? And well you ask it. Here’s where I see a similarity:
The CWB system is fabulously complex and highly engineered, within the overall sophisticated Canadian grain system. All sorts of grades and types of wheat are marketed by the board – far, far more than are common in the U.S. system. The board’s argument is that this system of complexity allows farmers to find homes for all sorts of mini-divisions of wheat and get various spread premiums for those divisions. In the U.S. the grain system isn’t interested in dealing with lots of complexity.
So in that way the CWB is like a Tiger and the U.S. system – the open market – more like a Sherman. So you might think you’d naturally want to be in the Tiger.
But – and there’s always a “but,” isn’t there – we wiped out the Germans, didn’t we? And some of the reason for that is to do with the virtues of the Sherman and the Soviet T-34. While the Tiger was an impressive individual specimen, it was so over-engineered that the Germans topped out their Tiger production at 104 per month in 1943, while the Russians were producing 1,300 T-34s per month at the same time and over the course of the war the western allies produced 50,000 Shermans. The entire production run of the Tiger I was 1,355. So, along with bombing Germany flat and overwhelming it with millions of Soviet proletariat and our own troops, we also smashed Nazi Germany down with tens of thousands of Shermans and T-34s while the Germans had trouble producing a few tanks a month.
So, which is the CWB to the farmer? Is it the fabulously engineered work of art like the Tiger that can beat and trash any opponent and give the farmer-driver a far higher chance of success than the poor sod stuck in the Sherman? Or is it the overly complex piece of machinery that leaves farmer-general robbed of the massive efficiency of the Sherman assembly line and the ability to overwhelm the opposing commander with sheer numbers of tanks?
As I’ve been covering the CWB issue in these past weeks, that issue has repeatedly come up with people I’ve interviewed, and they’re trying to sort out in their own minds whether the Canadian grain industry will get much simpler without the CWB and whether or not that will be a benefit or a cost to farmers. There’s no question the CWB was good at finding markets for all sorts of wheat grades and types that the U.S. and other open market systems wouldn’t bother with. Just like with beef, everything below sirloin often gets chucked into the grinding pile and gets turned into hamburger. That gets rid of premiums for various things, but boy is it easy to move and handle.
As a reporter at this newspaper all I care about is how that impacts the farmer, and it’s very unclear how the farmer will be affected by all these changes. But everyone seems to agree that the Canadian grain marketing system is going to be simplified and that’s going to make it less costly to operate. For a railway or grain company operator, having a simpler system is probably going to be like running the Sherman or T-34 assembly line: don’t worry about minor improvements in per-unit quality, just run the system as fast, efficiently and cheaply as possible and you win.
But for the farmer, is the situation one of being the general who has a big crop to move and wants a fast, efficient and cheap system to sell it through – with simplicity and ease the key virtues – or is it that of a tanker who is in a small local situation and desperately needs any edge he can have against his 100 metre away opponent?
I hope I haven’t loaded this discussion one way or the other, because I actually don’t have a set opinion on the issue. I know the CWB system is very complex and that has costs to the entire system (which the farmer inevitably pays for), but it does actually find unique homes for many types of wheat that would normally be treated like garbage or all be lumped together in an open market system. Is a farm’s profitability based on fast and efficient flow of large amounts of crop, with snags and snarls the danger, or is it based on squeezing every penny of premium out of every bushel, requiring intensive marketing management?
So I don’t know whether the farmer is more like the general or the tank’s crew – and that’s all the difference on the battlefield. There’s no much point in having a few Tigers to fight with if the other guy has 1,000 Shermans, but it’s no fun being in a Tommy Cooker facing a Tiger.