Canada’s transition to open market won’t follow Australia’s example: traders

Canada isn’t Australia.

That’s the message senior Canadian grain trade players have for foreign customers who are worried about the end of the CWB’s monopoly.

“We don’t see huge issues quality wise or consistency wise in Canada going forward,” said Keith Bruch, vice-president of operations with Paterson GlobalFoods.

“I think the transition has been very smooth. Business is transacting. Buyers are buying. Farmers are selling. Product’s getting executed and delivered.”

Earl Geddes, executive director of the Canadian International Grains Institute, said many foreign grain customers saw Australia’s grain quality and consistency slump once its export monopoly was broken, and they fear the same will happen here.

“We’re not Australia. That’s what we tell them,” he said.

“When the Australian Wheat Board fell apart, or was dismantled, all of the other pieces (of the quality system) disappeared.… That’s not true of Canada.”

Geddes said CIGI heard concerns about the future of Canada’s grain quality and has organized special courses, such as a recent one for the Mexican grain trade, to explain to customers how the Canadian grain system works.

As well, senior Japanese milling officials recently attended a regular course in Winnipeg to discuss the situation and express their concerns.

The in-person contact seems to have calmed anxious buyers.

“The Canadian Grain Commission’s still in place. CIGI’s still in place. Variety registration’s still in place. The grading system is still in place. The only thing that’s really different is how they buy grain and how farmers sell grain,” said Geddes.

“Canada’s still able to deliver them the kind of quality of grain that they want to buy from the farmers here in Western Canada.”

Mexican grain trade players interviewed during the CIGI course seemed reassured and confident about Canada’s grain quality system. However, they all admitted they had been worried before arriving in Winnipeg.

They met with Canadian grain company officials, executives from Canadian Pacific Railway and officials from grain industry regulators and institutions.

“This moment is very important for farmers here and also for customers abroad,” said Valdemar de la Garza Arredondo.

“It’s an opportunity.”

Bruch said the prairie grain trade had been concerned about how the transition to an open market would affect grain quality, but “so far, so good.”

He thinks any concerns will quickly evaporate once the open market settles out.

Australia’s problems were mainly the result of its grain infrastructure, said Bruch.

“The core difference is that the assets in Australia, although they are owned by individual companies, any company has access to buy and sell grain through those assets, and so we see a huge amount of delivery at harvest time into those assets, which creates commingled delivery, and we see a large number of people pulling out of that inventory to end users. There isn’t a direct relationship between who’s selling the grain and who is actually touching it and controlling it.”

Bruch said the wheat board was an lynchpin in the Australian system to enforce quality and consistency, and it wasn’t immediately replaced.

The Canadian industry didn’t rely on the CWB for quality.

“In Canada, you have in essence private ownership of assets and the only parties trading through those assets are the owners,” said Bruch.

“You have very tight quality control trading through there because you can. You own the grain. You touch it. You load it in a rail car. You have control of that product all the way through the system. In Australia you didn’t.”

Geddes said explaining the differences is a key role for CIGI in the open market because almost no one outside Canada seems to know how different the two systems are.

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