Farmers collectively exercising control over their own destinies is an appealing concept.
However, there are many reasons to be sceptical of Farmers of North America’s proposal to take over a privatized CWB.
Not long ago, farmer-owned grain companies dominated the landscape of Western Canada. The tangled tale of mergers, takeovers and fancy financing deals is all wrapped up in the history of Viterra, which is now owned by the multinational firm Glencore.
A few inland terminals remain that are at least 50 percent farmer owned, but several have been bought by main line companies in recent years and a couple have been bought by CWB. Farmer shareholders decided to accept good returns on their initial investments and leave the grain handling business.
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Producer car loading facilities, which are often associated with short-line rail operations, are another example of farmers bypassing the main line companies, but they collectively handle only a small percentage of prairie grain.
CWB, with assets it has bought and with the terminals it is building, will have something that resembles a prairie-wide network. That should provide more clout in the marketplace, but most potential farmer-investors won’t have a nearby delivery option.
It’s one thing to invest in a facility that’s in your local area. It’s quite another to invest in a network where the nearest delivery point may be impractical because of distance.
And how much control would individual producers have? The FNA proposal doesn’t seem to say much about governance.
There’s a general sense fuelled by the FNA campaign that grain companies are making large profits at the expense of farmers, and that a farmer-owned competitor would mean more money in the pockets of producers.
That’s a valid theory, but the marketplace always adjusts to competition.
If a privatized CWB can actually offer farmers superior prices, it won’t be long before the other grain companies narrow the gap.
Farmers would benefit whether or not they invested. While that may not be fair, it tends to be how the marketplace works.
There’s also the question of whether new terminals are needed.
The system needs more railway co-ordination and more locomotives, rail cars and people.
Arguments can also be made for more railway double tracking and perhaps more port capacity. More inland terminals will do little or nothing to improve logistics.
CWB isn’t saying much about its privatization plan, which makes the FNA proposal rather vague.
The FNA has held lots of farmer meetings, but attendance appears to have been sparse.
This can be partially blamed on the need to have meetings during harvest, but empty meeting rooms don’t signal a wave of farmer support.
The CWB expansion has apparently been funded by some combination of government transition money and money that was accumulated in contingency funds.
Either way, isn’t that money from and for farmers?
Why should farmers have to invest their hard-earned money to buy a controlling interest in a privatized CWB, when CWB’s resources should belong to farmers in the first place?
Overall, there are many reasons for producers not to be excited by the FNA proposal.
