WINNIPEG — It’s popular these days to complain about Canada’s grain industry being over-regulated and stifling to entrepreneurship.
But on the international scene, definitions of over-regulation and entrepreneurial freedom are reaching new extremes.
Iraqi farmers have recently been warned failure to sell their harvest to the government could cost them an arm and a leg — literally — under a decree that thieves would be punished by amputating their limbs.
On the other side of the equation, glimpses of the Former Soviet Union illustrate what happens when government controls — and in some cases governments — are removed from the marketing picture.
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How can you complain about the price if you don’t know what it is?
“There is no price discovery,” said Jacquie Ryrie, a Winnipeg Commodity Exchange official who just returned from Russia. “There is no means of pulling together purchasers and sellers.”
That’s despite the fact that there are 30 commodity exchanges in operation, down from 800 a short while ago. “They range from a completely lawless auction house to a computerized bid and offer system,” Ryrie said. The auction houses are doing most of the business.
On the trade front, think relations between Canada and the U.S. are sour? As the Soviets are learning, no one wins in tit-for-tat trade disputes.
Sergey Andreyev, a senior official with the Institute of World Economy and International Relations in Moscow, outlined what happens when co-operation deteriorates between trading partners.
While the old system of centrally-planned production and distribution was inefficient by world standards, it aptly balanced the region’s trade based on mutual needs.
That system has broken down.
- Many countries within the region have started to use higher “world” prices when supplying commodities to their former partners, chiefly Russia, in the federation. Russia retaliated, charging higher prices for energy.
- Lured by the appeal of foreign currency, Uzbekistan started exporting cotton it once supplied to the Russian textile industry.
Russia retaliated by increasing the price of agricultural machinery, chemicals and energy.
- The unrestricted influx of private traders doing trade has increased supplies in lucrative markets, created shortages in others, and reduced overall quality.
Andreyev said food distribution chaos is heightening social and political instability.
