Gary Storey can’t figure out why any rational farmer would want to get rid of the Canadian Wheat Board.
“Who wouldn’t want to have a monopoly?” the University of Saskatchewan agricultural economist said last week.
Storey is one of the authors of a study on the performance of the wheat board in world barley markets, a study that concluded the board’s single-desk status is worth an average of $72 million a year to prairie barley growers.
Last week Storey and co-authors Richard Gray and Andrew Schmitz held a public meeting in Saskatoon to talk about the study.
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Storey said the ability of a monopoly seller to extract the highest possible price from the marketplace is basic economic theory.
“Monopolies are not bad if they’re working for you and that’s what I think producers have in the Canadian Wheat Board,” he said. “If the monopoly is relatively efficient, why on earth would you want to give that up?”
Nobody in attendance was about to disagree. The meeting was sponsored by the province’s Pro-CWB Coalition, which is promoting the board side in the barley plebiscite, and the 30 or so farmers on hand were all board backers.
The study found the average annual benefit from single-desk selling in the 10 years ending in 1994-95 was $42.01 on sales of six-row malting barley, $34.06 on two-row malting barley and $3.52 on feed barley.
The annual benefit declined in the last five years under study, from $102 million in 1990-91 to a disadvantage of $7 million in 1994-95.
However Gray said this doesn’t mean single-desk selling is becoming less beneficial. Rather, it reflects the reduced use of Export Enhancement Program subsidies by the U.S. The lower the world price, the more valuable the board’s ability to use its monopoly status to extract price premiums, he said.
“Current market conditions have reduced the price discrimination power of the wheat board, but if prices fall and the U.S. intervenes with the EEP again … those values will go up again,” said Gray.
