RED DEER – American trade challenges that chip away at the Canadian Wheat Board are likely to continue, says a Montana State University agricultural economist.
“This will go on forever, as long as the wheat board is around operating as both single buyer and seller of grain,” said Vince Smith at the recent Alberta Agricultural Economists Association.
While the wheat board is a single desk seller of wheat and barley destined for export or human consumption, farmers are not required by law to sell to the CWB if they sell into feed markets or use it on-farm.
Read Also
Dry summer conditions can lead to poor water quality for livestock
Drought conditions in the Prairies has led to an decrease in water quality, and producers are being advised to closely monitor water quality for their animals.
Smith said preconceived opinions about the wheat board’s operations fuel resentment toward the board. He listed reasons behind the resentment:
- Although Canada does not import American wheat, Canadian wheat, particularly durum, flows freely into the U.S.
- Americans, including the current presidential administration, believe the board is a government controlled agency that manipulates prices.
“Over the past decade and a half, in a variety of domestic settings and when it is politically convenient, the CWB management has claimed it successfully price discriminated in world markets.”
He said that claim could indicate market distorting practices because a better price encourages more grain production. Extra grain eventually finds its way into the world market.
As a marketing board, Smith said the agency should offer prairie grain as a Canadian branded product.
- Malting barley sales are handled differently in the two countries.
American farmers are contracted to grow malting barley, while Canadians have what he called a “lottery” system.
Smith said Canadians pass on opportunities to grow higher yielding feed barley varieties in hopes they will achieve malting quality.
“That tends to generate much larger areas of malting barley plantings than you get in the United States.”
Maltsters like the system because they do not have to pay for storage. They carry about three months of inventory and farmers bear the rest of the storage costs on their farms until their grain is accepted.
- Analyzing the board’s influence on markets is a challenge because, like most other exporters, it keeps sales information confidential. Smith said there is no full accounting of costs at the board or what price premiums it receives from selling high-quality product.
He said many economists have doubts about CWB-sponsored studies from the mid-1990s that estimated CWB benefits.
For example, he said prices and costs did not vary by much when comparing farmgate prices in Western Canada and the U.S. for the same product.
He said there were also concerns that these findings cannot be studied and replicated with similar results by other researchers because the board will not release sales figures.
“No matter how well the study is done, it’s not going to be credible.”
