Canadian and American wheat producers stand to benefit from the elimination of single desk grain marketing in Western Canada, says the head of an influential U.S. wheat growers organization.
Alan Tracy, president of the U.S. Wheat Associates, said the elimination of single desk marketing will result in higher prices for Canadian farmers, clearer market signals and more private sector competitors vying for Canadian wheat.
U.S. producers will see more rational pricing and fewer examples of trade distorting sales in the global marketplace, he said.
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Tracy repeated a claim that is often made by open market advocates, saying Canada often makes grain sales based on artificially low prices.
He said the practice ensures the movement of Canadian grain but drives down returns.
“Looking at it strictly from the interests of our U.S. producers, we do suffer from the fact that the wheat board, by administrative pricing, distorts the price of wheat,” Tracy said.
“We also think it (the elimination of single desk marketing) would benefit Canadian producers. It’s very apparent to us as we … track Canadian pool prices and back out the handling costs, that our producer average prices throughout the year here virtually always exceed the Canadian price by a good margin.… I think (prices) will absolutely increase on the Canadian side of the border and we would hope that there would be some improvement for us as well.”
Tracy’s claims are at odds with the wheat board’s analysis, which estimated that it extracts an additional $600 million out of the international market place each year.
U.S. Wheat Associates was established to promote global exports of American wheat. It receives funding from the U.S. Department of Agriculture and wheat commissions in 19 American states that administer and collect wheat checkoffs.
Tracy said cross border grain movement is a key issue on both sides of the border.
Some U.S. facilities will provide more appealing delivery options to Canadian producers and some Canadian facilities will attract business from U.S. growers.
“There could be some initially disruptive movement of grain from Canada into the United States, but as prices find their level in Canada and as producers get used to the new regime, we think a lot of that (movement) will level out,” he said.
Tracy also said some Canadian producers may benefit by gaining access to the U.S. rail system and to American port facilities in the U.S. Northwest.
“I believe the U.S. rail system is probably a little bit more competitive than the Canadian system because we have some lower passes to go through and that improves winter movement in particular,” he said.
“I think there will be an opportunity for some throughput from Canadian facilities by rail through the United States, and while it will be easy for opponents of liberalized trade to (discredit) that, I think in the long run that will be good for the U.S. side as well.”
