SASKATOON – There’s no evidence the Canadian Wheat Board undercuts world wheat prices to steal markets away from foreign competitors, say researchers.
A team of three agricultural economists studied 20,000 of the board’s wheat sales contracts negotiated from 1980-94 and compared them with prices received by other exporters.
“In analysis of those sales did we find that the board ever completed a sale at less than competitive bids? Yes,” said Daryl Kraft, an agricultural economist from the University of Manitoba and member of the research team. “Were those sales substantial? No.”
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In recent years the board has often been accused by U.S. grain traders, wheat industry lobbyists and government officials of using its monopoly powers to grab markets away from the U.S. by offering significant price discounts.
It’s a charge that has been denied by the board, and Kraft said the researchers’ analysis supports the board’s version of events.
“I would think with those sales that did occur at less than competitive prices, they would not capture a very substantial share of those markets in those countries,” he told reporters.
An official with the U.S. National Association of Wheat Growers said his organization wasn’t convinced by the study.
“We believe the board does undercut the world price to gain market share,” said Barry Jenkins, adding the board’s selling price often seems to have little relation to the value of the product.
The research project, funded by the board, was designed to find out whether prairie farmers receive any financial benefit from selling hard red spring wheat through a single-desk selling agency as opposed to selling to multiple buyers in an open market.
The research team, which included Hartley Furtan of the University of Saskatchewan and Ed Tyrchniewicz of the University of Alberta, concluded the board was able to capture an average premium of $13.35 a tonne.
Kraft said the researchers did not investigate in detail the circumstances under which the board offered price discounts, although he speculated one reason may have been to account for ocean freight disadvantages resulting from distances from Canadian ports to export destinations.
“If the board happened to be a day or two or three away in shipping time from that competitive quote, clearly they would have to offer a price less than that quote to land that wheat there at a comparable price,” he said.
