The Canadian Wheat Board puts at least $800 million a year into prairie grain farmers’ pockets, says the National Farmers Union.
The NFU, a strong supporter of the single desk marketing agency, last week issued a report in which it attempted to quantify how much the board is worth to prairie producers.
Using previously published academic studies and data from corporate annual reports and making its own estimates, it concluded that marketing and policy efforts by the board generate more than $2 million a day in farm income that would disappear if the board was dismantled.
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The NFU said the actual number is probably higher than that, because it deliberately used conservative estimates in its calculations.
NFU president Stewart Wells said in a News release
news that $800 million roughly equals the value of the Crow benefit that was eliminated by the federal government in 1995.
“The loss of the Crow is a significant cause of the farm crisis now gripping farmers,” he said. “Losing the CWB would be equally devastating.”
The $800 million includes premiums extracted from world markets as a result of the board’s status as a monopoly provider of high quality Canadian wheat, transportation savings arising from the CWB’s market power in rail transportation, earnings generated from reduced interest rates and savings from blending of grain at terminal elevators.
Wells said it’s important to note that the $800 million a year is money extracted from the market as a direct result of CWB activities, as opposed to money paid to farmers by taxpayers.
“Anyone trying to destroy the CWB marketing and policy advantages is going to make farmers more reliant on tax dollars and farm support programs.”
A fact sheet published by the farmers union includes a card to be mailed telling the government to keep its hands off the CWB.
Here are some of the factors that went into the NFU’s calculation of $800 million:
- $270 million in wheat and barley price premiums, based on academic studies conducted in the late 1990s. The NFU reduced those studies’ findings by 25 percent for its calculations.
- $43 million in transportation savings from CWB tendering, terminal rebates, performance penalties and bonuses and dispatch.
- $68.5 million generated by low CWB borrowing costs.
- $225 million arising from freight rate savings, estimated at $5 a tonne, resulting from the board’s role in transportation.
- $160 million in savings resulting from the board’s role in preventing the introduction of genetically modified wheat, thereby avoiding the potential loss of overseas markets and keeping herbicide costs down.
- $30 million from blending at terminal elevators.
Other benefits of the CWB identified by the NFU include risk management savings, market development, producer cars and support for short lines.
