Alberta’s proposed open market wouldn’t really test anything, says a prominent agricultural economist.
The Alberta government wants to set up a 10-year test open market for wheat and barley grown in the province.
Farmers would be free to sell their grain to the Canadian Wheat Board, grain merchants and brokers or directly to foreign buyers or domestic processors.
Proponents of the plan say not only would it give farmers marketing freedom, it would also provide a true test of whether the CWB or the open market puts more money into farmers’ pockets.
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But Daryl Kraft, an economist at the University of Manitoba, says no such system can actually compare returns from the open market with those from a single desk system.
The board’s value to farmers is as a single desk seller that can extract premiums from customers because it is the sole supplier of Canadian wheat, he said.
As soon as farmers are allowed to choose between the board and the open market, and other exporters are able to compete with the board for foreign sales, then the single desk no longer exists and neither do any benefits that it provides to producers.
“To the extent that there is a single desk advantage from sales to some customers, that disappears as soon as you have an open market in operation,” Kraft said in an interview.
Speaking to a recent farm meeting in Calgary, Alberta agriculture minister Shirley McClellan said if the CWB is as good a grain marketer as it claims to be, then it should continue to thrive in a test open market.
“If they’re so darn good, they don’t need to fear any competition.”
Richard Gray, an agricultural economist at the University of Saskatchewan, said that kind of comment reflects a misunderstanding of how grain markets operate.
The problem, he said, is that if you allow some producers an exemption from the single desk, they can “cherry-pick” the best markets. That not only leaves the board selling into non-premium markets but eventually results in an erosion of the premium altogether.
