Politics, not economics or logistics, will determine the Canadian Wheat Board’s future role in grain transportation, says the head of a research team studying the issue for the federal government.
“I think in the end it will come down to a political decision,” said agricultural economist Ed Tyrchniewicz. “It’s a very sensitive issue.”
The 11-member team of academics and grain industry officials will be handing in a report to Agriculture Canada and Transport Canada within a matter of weeks. The report will then be submitted to Willard Estey, who is carrying out a comprehensive review of the grain handling and transportation system.
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The board’s future role in transportation has become one of the most high-profile, contentious
and politically charged issues in the ongoing debate about reforming and improving the grain system.
The board says it must have some control over grain movement in order to market grain effectively and efficiently.
Proponents of a more deregulated system say the board should concentrate on selling grain and leave it to the railways and grain handling companies to get it to export position.
A recent study commissioned by the four western provincial governments, known as the McKinsey report, said the board’s role in allocating cars and issuing contract calls leads to various operational problems.
That study recommended the board either get out of the transportation business altogether and simply buy grain at terminals, or that it take on an even greater role in moving grain to market.
Tyrchniewicz said his group’s study won’t make specific recommendations, but will assess the impact of changing the board’s role on such things as accountability, efficiency, competitiveness and producer equity.
Researchers had industry officials complete a 53-page questionnaire. “Some people referred to it as an instrument of torture,” Tyrchniewicz said with a laugh.
They also did extensive interviews with farm and industry leaders and conducted computer simulations to figure out how things would work if the board’s role was changed.
The questionnaire asked industry groups to describe the impact on their operations if the board was a port buyer of grain, and also if it bought and took control of grain at the farm.
That took some industry officials by surprise, said Tyrchniewicz, since most of the discussion about changing the board’s role has focused on reducing that role by making it a port buyer.
“The industry didn’t much like our questionnaire,” said Tyrchniewicz. “I think we threw a curve at them by going at the on-farm buying issue. They thought we were going at it from the wrong end.”
Meanwhile board officials assert that having some say over the transportation system is critical to its role as single-desk seller of prairie wheat and barley.
“In order to get the right grain in the right place at the right time at the lowest cost, we need a significant role in the country,” said CWB spokesperson Deanna Allen. “There is no marketer in the world that doesn’t have an interest in how its product is distributed or transported.”
She said the board also acts as the farmers’ advocate in the transportation system, ensuring that all producers have equitable access to the handling and transportation system.
Board officials delivered that message at a recent meeting with the authors of the McKinsey report. Allen said the board doesn’t accept the choice offered by that report, that the board should either get out of transportation or get significantly more control.
“It’s not at all clear … that the two extremes are necessary to address the issues they raise,” she said, adding that if there are specific problems, they should be addressed individually. “There is something between a teaspoon and a shovel.”
The industry and farm groups are split on the issue, with traditional board supporters like the National Farmers Union wanting the board to stay involved and critics like the Western Canadian Wheat Growers Association favoring a diminished role for the board.
