It’s a question that has bedeviled prairie agriculture for years.
Which system is better — single desk selling or the open market?
There has been no shortage of strong opinions, with some farmers breaking the law and going to jail to make their point.
What has been in short supply is facts.
Now the Canadian Wheat Board wants to change that.
The board has hired an independent consultant to come up with a generally accepted, unbiased way of determining which system puts more money into grain farmers’ pockets.
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And the marketing agency is promising to live by the results.
“We will make changes or do whatever is necessary to ensure the highest values are received by farmers,” said board chair Ken Ritter.
He said he’s “reasonably confident” that single desk selling provides greater returns, but like all farmers, he’ll be anxious to see the results of what is being called benchmarking.
Ritter acknowledged the exercise poses potential risks for the board, but said the agency’s directors want to do what’s best for farmers.
“We’re going to do an honest process,” he said.
Under the proposal, farmgate prices will be compared at several comparable locations in Canada and the United States.
Those numbers will reflect the relative costs of the entire Canadian and American marketing systems, including handling and transportation.
Also, port selling prices at Vancouver and Seattle will be compared. Those numbers will show which system extracts a better price from the world market. It’s proposed that the numbers will be assessed by an independent auditor and then made public.
The information will also be used by the board internally, to assess whether its marketing team is making sales at the high points of the market.
Performance record
Once the formula is adopted, perhaps this summer, the board will be able to track its performance on a regular basis.
“The whole direction from the board has been to get something in place that could be used repetitively,” said CWB director John Clair, chair of the committee overseeing the benchmarking process.
The man hired to do the job is Richard Gray, an agricultural economist at the University of Saskatchewan.
Last fall, he put together a team of economists from Canada and the U.S. to devise the technical methodology.
In December an array of academics, grain industry officials and farm representatives gathered in Saskatoon to review the proposal and suggest improvements.
Included in that group were economists who have produced research suggesting farmers fare better in an open market.
Gray said that for the benchmarking system to have credibility, it was vital to get input from supporters and detractors of the board.
“I won’t pretend we came to a consensus on everything. But it was an opportunity for someone to come forward with better ideas if they in fact had them.”
One area of difficulty is assessing whether the U.S. price is affected by wheat board sales strategies, and if so, how to take that into account.
One thing the group did agree on is that no matter how extensive the data and how complex the calculations, it won’t provide a precise indicator of performance.
Nor will it end the political debate over grain marketing.
“That would be wonderful,” said Ritter. “But I’m sure somebody will be able to find a hole and criticize it.”
Gray hopes to present a final report to the board by the end of May, but before then he’s asking farmers and farm groups for their thoughts on several questions:
- Should the benchmarks include factors outside the wheat board’s control, such as rail freight rates and elevator tariffs?
- Should benchmarks be established for other grains besides wheat board grains, and if so, what organizations should be responsible?
- What tradeoff should be made between simplicity and accuracy?
- How should the board deal with the potential trade risks associated with making commercially sensitive price information publicly available?
Details of the proposal can be found on the internet at www.usask.ca/
agriculture/agec/working.htm.
