Gray is a professor in the University of Saskatchewan’s policy, business and economics department.
My comments and research have been the subject of several articles and editorial pieces in various farm newspapers. In many cases my views and research findings have been misrepresented.
I have chosen not to respond to the comments in an attempt not to add fuel to the divisive and costly dispute over barley marketing in this country. However, the misrepresentation of my research has reached the point where I feel I must clarify it for the sake of both my reputation and general public knowledge.
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The research completed in 2005 by Schmitz, Schmitz and Gray is freely available for inspection at www.kis.usask.ca. Our methodology, which we used in an earlier study published in a peer reviewed journal, considered what would happen to malting barley prices if Canada’s large production of malting quality barley were sold with multiple sellers.
In the study, we estimated that the Canadian Wheat Board single desk generated additional revenue of $59 million per year over and above what would have been generated in the absence of a single desk. Although it has received little attention, the study also shows a slightly negative impact on feed barley prices.
The main result of the study is driven from the fact that Canada is a large producer of malting quality barley, far larger than the United States. Over the 1998–2003 period of the study, Canada had 25 to 41 percent of world malt barley exports. In most of these years Canada produced a lot more malting quality barley that was not selected as malt and was sold as feed.
As outlined in the report, eliminating the single desk and selling more of the Canadian crop as malt would depress the malting barley prices in Canada, the U.S. and the world. This effect would reduce producer revenue by $59 million.
Critics of our study like to point out that U.S. prices are higher than the malt prices in Canada. While this is evident at times, it is also unreasonable to think that Canadian producers can capture the existing U.S. prices in the absence of the CWB.
These high U.S. prices would no longer exist because there would be a lot more malting barley for sale. Using existing U.S. prices as the benchmark for prices that would be achieved in the absence of the single desk ignores the reality that Canada is a large producer of malting barley, selling into a global market of limited size.
