North Dakota farm groups think cross-border opportunities for direct farmer sales will be limited after the Canadian Wheat Board loses its marketing monopoly.
The forces of arbitrage, where the market takes advantage of price imbalances until they disappear, will cause prices on either side of the border to be similar.
They argue that opening the border to more individual trade will quickly eliminate all opportunities except small ones.
“I assume that if you had no wheat board, you’d have a similar price,” said Robert Carlson, president of the North Dakota Farmers Union.
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“I’m not sure why there would be much of a price difference on either side of the border.”
Wheat is now selling in Minot, N.D., for about $8 per bushel and Carlson said it would likely be the same in Canada in a free market.
Neal Fisher, administrator of the North Dakota Wheat Commission, said few American farmers would drive trucks into Canada, but limited numbers of Canadian farmers might drive south for specific sales.
“At times there are probably great opportunities for Canadian growers if they have the opportunity to market here,” said Fisher.
“We have never felt that there are great opportunities to market (in Canada) because of the small domestic population.”
Fisher said he expects short term shock waves when the monopoly ends as farmers on both sides of the border see foreign trucks in their local areas.
However, farmers will see the benefits over time, he added.
“It’d probably be better for everybody, because at times, just at the wrong times, (the CWB) casts a huge wet blanket over marketing opportunities (for American farmers),” he said.
Fisher said he believes the board monopoly causes Canadian grain to be dumped in the world marketplace, driving down world prices. Eliminating the monopoly will be better for prices and market operations.
“When you have those kinds of disruptions in otherwise normal market functions, it tends to be disruptive to the process, and I don’t think it’s good for market function overall,” said Fisher.
However, Carlson said he is convinced the board earned Canadian farmers big premiums compared to U.S. prices, and the end of the monopoly will further weaken North American farmers and give more control to giant multinationals.
“It’s been consistently true (that the CWB has earned more money for Canadian farmers),” Carlson said.
Carlson and Fisher agreed on one thing: after the board monopoly disappears, the Canadian wheat market will likely be similar to the U.S. market, for good or bad.
