Ask Ken Ritter about the Ontario Wheat Producers’ Marketing Board and before long he’s talking about fruit.
Apples and oranges, to be specific.
The chair of the Canadian Wheat Board has heard open market proponents hold up the Ontario board, which gave up its single desk marketing authority in 2003, as a model for changing the CWB.
They say Ontario’s experience shows that the CWB could operate effectively in an open market and that farmers would benefit from increased flexibility, more marketing options and higher prices.
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“I see no reason why a two-system model wouldn’t work in Western Canada,” said Lynn Cohoe, president of Homeland Grain near Woodstock, Ont. “Farmers make a decision on what’s best for them, based on the market at the time. It’s the best of both worlds.”
Ritter has a different view.
The Ontario board has been reduced to a bit player in an open market, he said, and there’s no evidence that the province’s wheat growers benefited from the change.
“In fact some economists say farmers have lost financial clout as a result of the changes,” he said.
But arguments about whether Ontario farmers are better or worse off are almost beside the point, Ritter added.
What’s important, he said, is that the wheat industry in Ontario is so different from Western Canada that lessons are not transferable.
“The comparison is not accurate,” he said. “It’s irrelevant. It’s apples and oranges.”
The CWB points to a long list of differences between the prairie wheat industry and Ontario’s:
- Size: Over the last decade the Ontario wheat crop has averaged 1.3 million tonnes, with a record 2.2 million in 2003. Over the same period, production in Western Canada averaged 22.4 million tonnes.
- Product: Wheat growers in the two regions grow different products for different end-use markets. While Western Canada produces several classes of wheat, by far the dominant is hard red spring, used for bread production. Ontario grows mainly soft red and white winter wheat destined for cookie, cake and cracker makers, with some hard red winter and a tiny amount of hard red spring.
- Markets: About half of Ontario’s crop is sold to domestic buyers, 30 percent to the United States and the rest to overseas customers. The CWB sells roughly 35 percent into the domestic market and the rest for export.
- Location: Ontario growers operate in a densely populated region with a large local demand and are within a few hours trucking of at least 15 flour mills, eight ports and the U.S. Prairie farmers are hundreds of kilometres from export position and flour mills are dispersed widely across the region.
- Crop options: While acreage has been declining, wheat remains the top crop in Western Canada. In Ontario it ranks well behind corn and soybeans.
- Transportation: Prairie farmers are captive to two national railways for most grain movement while Ontario growers can truck their crop directly to end users or use rail or water.
“Here, in order to have market clout and get space on the rail network, you have to have considerable size to balance the railways’ power and the wheat board provides that for farmers,” Ritter said.
Those who want to end the CWB’s single desk powers acknowledge that the two markets are vastly different, but say the Ontario experience can still provide valuable lessons.
“We’re not saying that it is directly transferable to Western Canada,” said Blair Rutter, executive director of the pro-open market Western Canadian Wheat Growers Association.
“But we think it does demonstrate that marketing choice can work. By any measure – acreage, production, exports – you’d have to characterize it as a resounding success.”
Open market proponents also say the fact that the Ontario board is still in business and accounts for up to 20 percent of the wheat marketed in the province shows that, contrary to what the CWB says, a voluntary board without physical assets can survive and compete effectively in an open market.
Ontario industry players offer mixed views as to whether their marketing system would be a suitable model for the prairie grain industry.
Ontario board chair Peter Tuinema said the system works well in Ontario, but that doesn’t guarantee it would work in the West.
“I have to emphasize we’re a very, very different market place than Western Canada,” he said, highlighting that wheat is the number three crop for most farmers and markets and transportation are much more accessible.
Kevin Campbell, a grain merchandiser with C and M Seeds of Palmerston, Ont., sees no reason why a dual market wouldn’t work in the West, but noted it would require a huge shift in thinking by producers and the CWB.
He described the OWPMB as an aggressive player in the marketplace that has shown an ability to compete with private grain companies.
“If the board posts the best price, they’ll get the grain, it’s as simple as that,” he said.
Most Ontario growers are happy with the new system, but Stan Brien of Ridgetown, Ont., said western farmers should be cautious about losing what they have in the CWB.
“I think it would be a mistake to use Ontario as an example,” he said. “Growers should be very, very careful.”
