Murray Fulton has no doubts about what the end of the single desk for wheat and barley would mean to the Canadian Wheat Board.
The University of Saskatchewan agricultural economist said the end of the export monopoly would inevitably result in the demise of the grain marketing agency.
“Contrary to what the task force indicates, the most likely impact of removing the single desk selling powers is that the CWB will cease to exist,” he told a seminar at the university last week.
In its place, he said, will arise a grain marketing, handling and transportation system similar to that in the United States but without the protective government subsidies that grain growers receive south of the border.
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The demise of the single desk and the CWB will in turn will have a far-reaching negative impact in areas ranging from rail freight rates to producer cars to short-line railways to grain quality, research and market development.
Fulton made his case in a paper presented to a seminar at the U of S sponsored by the Saskatchewan Institute of Public Policy entitled The Last Straw.
The paper doesn’t purport to provide a cost-benefit analysis of the single desk versus the open market; rather, the idea is to paint a picture of what the CWB and the grain sector would look like with no single desk.
“Such an examination has not been undertaken and is needed as decisions are made regarding the future of the CWB,” he said.
In the paper, Fulton analyzes a variety of issues that would face the board in an open market environment:
- Possible organizational structure, including various types of ownership and governance.
- Whether farmers would have an incentive to invest in the CWB’s successor organization, either as a co-operative or a farmer-owned share company.
- The need for, and possibility of, the new company acquiring physical assets such as primary and terminal elevators, or whether it could rely on other grain handling companies to handle and ship grain on its behalf.
- Whether the new company could effectively compete with well-established large multinational corporations in the world marketplace.
- Whether the new company could successfully offer price pooling in an open market environment and whether it would be able to obtain premiums for high quality Canadian grain, as it does with its single desk powers.
- The impact of the loss of the single desk on other aspects of the marketing, handling and transportation system.
- The impact of the loss of the board’s ability to advocate on behalf of grain farmers and influence industry and government policy in a wide range of areas.
Fulton’s conclusion is that whatever kind of organization is created to replace the single desk CWB, it is bound to fail.
“Although the people and groups that are calling for reform of the CWB are arguing for marketing choice, the proposed changes to the CWB would not generate this outcome – instead only one marketing structure would survive.”
And he said farmers should be aware that once the single desk is gone, it’s almost certainly gone forever.
“The likelihood of replacing an open market system with a single desk selling system is very small, in part because of the cost of doing so and in part because the political will that would be required for such a change would be immense.”
The full text of Fulton’s paper can be found on www.kis.usask.ca.
