The Alberta government has some new ammunition in its fight to dismantle the Canadian Wheat Board’s export monopoly.
A provincial government-funded study released last week presents a damning indictment of the role played by the board in selling barley into both feed and malting markets.
The 112-page report by the consulting firm Sparks Companies Inc. describes the board as an ineffective barley marketer that consistently gets low prices and is an impediment to the development of a strong malting and brewing industry in Canada.
It concludes the board system can’t be fixed and the only solution is to establish a dual or open market for barley.
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“The CWB does not bring value to the barley sector,” the report said. “Rather it exacts a significant cost in lost opportunities, high administrative costs and poor marketing results.”
A spokesperson for the Alberta government said the Sparks report will be used in the province’s ongoing campaign to provide “marketing choice” for barley and wheat growers.
“It clearly provides some solid evidence of why there’s a need to have substantive change to the marketing system,” said Brenda Brindle, general manager of the Alberta Grain Commission.
However officials with the CWB dismissed the study as rife with factual errors, inconsistencies, unsubstantiated allegations and unfair comparisons.
“It reads more like a work of fiction than an academic undertaking,” said CWB spokesperson Louise Waldman, describing the analysis as shoddy and superficial.
Among the main conclusions of the report, entitled The Canadian Barley Industry in Transition:
- The CWB’s average sales price for feed and malting barley tends to be below the average market price for the crop year.
- The existence of the CWB puts Canadian maltsters and brewers at a disadvantage to U.S. competitors.
- The board’s inventory management policies reduce pool returns.
- Farmers receive poor price signals from the board’s pool return outlook at seeding time, especially for malting barley.
Waldman said the board has not yet decided whether to issue a formal critique of the Sparks report, saying it doesn’t add anything different to the ongoing debate over the future of single desk marketing.
“As far as we’re concerned it’s really just more of the same from the Alberta government,” she said.
John DePape, who oversaw production of the report for Sparks, rejected any suggestion the report was tailored to satisfy the Alberta government.
“I’m not going to make up numbers, that’s for sure,” he said. “We have our integrity as a company to think of.”
He said Sparks insisted on two conditions before agreeing to take on the project. Those were that the report would be based on facts, data and evidence, not philosophy or politics, and that it would be published regardless of its conclusions.
Some of the report’s main conclusions – such as the claim that the board sells large quantities of malting barley at sizable discounts to world prices – are based on information provided by unnamed industry sources and assumptions.
DePape said many sources insisted on anonymity for commercial reasons, adding he stands behind the accuracy of everything in the report.
“I think it’s quite a rigorous analysis that hasn’t been done before,” he said.
