The Canadian Wheat Board’s new policy on tendering is being described by some industry analysts as a major milestone in determining the future shape of the grain handling and transportation system.
The board is slashing the proportion of its sales shipped under commercial tenders to 20 percent in 2003-04, down from 50 percent last year.
“This could be a significant turning point in the way the system evolves,” said Cam Dahl, executive director of Grain Growers of Canada.
The new policy has the support of 24 of the board’s 26 handling agents but was opposed by Canada’s two biggest grain companies, Saskatchewan Wheat Pool and Agricore United.
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Some also say the new rules are at odds with the federal government’s policy goal of a less regulated, more market-driven transportation environment.
The fact the board went ahead with the changes anyway is seen by some academics and farm leaders as a signal that the agency has solidified its position as the most powerful and influential player in the handling system.
“I think there has been a power struggle going on within the industry, and the board certainly seems to have played a stronger card,” said University of Manitoba agricultural economist Ed Tyrchniewicz.
National Farmers Union president Stewart Wells also sees elements of a power struggle, but prefers to describe the new policy differently.
“It is a rebalancing of the system in favour of what farmers want to do,” he said.
Smaller grain companies say the big firms were making aggressive and uneconomic bids on tenders to buy market share. They say they couldn’t get cars to ship grain, and farmers were being denied the right to deliver to the elevator of their choice.
Now the bulk of the board’s sales will be shipped under a car awards system, under which rail cars will essentially go where farmers take their business.
A board official was reluctant to describe the new policy in terms of a power struggle between the board and the big grain companies.
Instead, said CWB director Ian McCreary, it is a common sense response to a variety of operational problems.
“I see it as a pragmatic response to a particular situation,” he said, adding it’s hardly a power struggle when 24 of the board’s 26 handling agents are on side.
He also rejected suggestions that the new policy is a step back from a commercial handling and transportation system. In fact, he said, tendering prevented the commercial market in the countryside from functioning by preventing farmers from doing business with the company of their choice.
As late as May, the board heard from some farmers that they had been unable to deliver any grain to their preferred elevator because that facility couldn’t get cars under the tendering system.
“That was a commercial process that just didn’t make any sense,” said McCreary.
Meanwhile, the federal grain monitor has rejected a request from GGC to launch an investigation into the effect of the new tendering policy on farmers’ incomes and system efficiencies.
Mark Hemmes, president of Quorum Corp., said while those are important questions, the monitor’s role is to be a neutral observer and analyze historical data and information, not make policy recommendations.
Dahl said farmers have been told that tendering was generating significant savings and was the cornerstone of the federal government’s transportation policy reforms of 2000.
“This is definitely not a step forward,” he said.
“There are serious questions that need some answers.”
