It’s nothing personal, said Andy Schmitz.
Then he got personal.
“To put it bluntly, these people are out to lunch,” the well-known agricultural economist told a meeting last week.
Schmitz is a Saskatchewan-born agricultural economist from the University of California who co-authored a recent study into the performance of the Canadian Wheat Board in world barley markets.
The people who are out to lunch, in his view, are fellow economists Colin Carter from University of California and Al Loyns from University of Manitoba, who wrote a similar study last year.
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And the issue that had Schmitz not getting personal was their study’s conclusion that the CWB imposes massive costs on grain farmers, to the tune of $37 a tonne.
Based on that number, the Carter and Loyns report concluded the wheat board is a “handicap to farmers” and ending the board’s single-desk status would raise farm income and reduce “the burden on the Canadian taxpayer.”
Schmitz said that’s nonsense and none of the costs identified by Carter and Loyns can be ascribed solely to the wheat board. He’s worried those conclusions could be influencing how some vote in the barley plebiscite.
“If we’re making decisions on the basis of (the Carter-Loyns study) then we’re really misleading the public,” he said.
Schmitz made his comments at a public meeting in Saskatoon last week at which he and co-authors Richard Gray and Gary Storey of the University of Saskatchewan talked about their study, which concluded the board’s status as single-desk seller of barley puts an additional $72 million a year in farmers’ pockets.
He told the 30 or so people in attendance, all supporters of the wheat board, that no one can argue a monopoly seller can’t extract a higher price from the market.
“The only way to arrive at the conclusion that you’re better off without the wheat board is to argue on the basis of costs.”
Claims and counter claims
Here are some of the costs ascribed to the wheat board by Carter and Loyns, along with Schmitz’s comments:
- CWB administration, $1.75 per tonne. Schmitz said there is no evidence marketing and administration costs would be any lower with private grain companies than under the board. Also, private marketing involves a time and labor cost for farmers.
- Delays in developing new varieties, $4 a tonne. The wheat board does not control varietal registration, so it is unfair to ascribe any of the system’s costs to the board.
- Malting barley storage charges, $5.50 a tonne. The number is not backed up with any evidence. In any case, storage costs will be incurred under any marketing system and will ultimately be paid by producers.
- Excessive handling charges, $4 a tonne. The board is not responsible for setting handling charges, and in fact handling charges on non-board grain like canola are higher.
- Demurrage and port congestion $3 a tonne. Similar costs exist for non-board grains and in the U.S. marketing system.
- Delays in CWB payments, $3.35 a tonne. Interest and storage charges for producers are determined by transportation capacity and market demand and there is no evidence they would be any smaller in an open market.
- Taxpayer costs, $9 a tonne. The only direct transfer of government money to farmers through the board is to cover pool deficits. That is a benefit to producers, not a cost, said Schmitz.
