Glenn Tait admits he knows little about the Ontario Wheat Producers’ Marketing Board.
The Meota, Sask., farmer knows that open market proponents talk about Ontario’s deregulated wheat marketing system as a model for changes to the Canadian Wheat Board.
But he wonders if Ontario’s experience has relevance.
“I could be better informed, I suppose, but as far as I’m concerned, whatever happens in Ontario might as well be on Mars,” he said.
“It’s so different from us, it’s got no bearing on what we do here.”
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A couple of hundred kilometres to the southeast, another grain farmer takes another view.
Gerrid Gust of Davidson, Sask., doesn’t know much about the situation in Ontario either, but what he has heard at farm meetings or through the media has him looking with envy at his eastern counterparts.
He’d like the federal government to look at how well the Ontario board functions in the open market and whether that could work in Western Canada.
“I would definitely think it should be looked into,” he said.
“I think if the CWB had to compete like the board does in Ontario, it would be a benefit to farmers.”
With its large crop and storied history, does the West’s wheat industry have anything to learn from Ontario’s experience? Those who want to end the CWB’s single desk authority believe so, and frequently cite Ontario as a model for change.
They say farmers there are better off financially and are happy with the open market’s flexibility and maintain that the Ontario board continues to work effectively, handling 15 to 20 percent of the crop through its pool account and cash pricing options.
“I think if farmers there weren’t better off you’d be hearing from them, but that’s not the case,” said Brenda Brindle of the Alberta Grain Commission, which favours ending the CWB’s single desk. “The silence is deafening.”
Not surprisingly, those who want to retain the CWB’s single desk say Ontario farmers are no better off under the open market and even if they were, the two wheat industries are so different that comparison is meaningless.
The Ontario board effectively gave up its single desk powers in 2003 when its farmer delegates and directors voted overwhelmingly to offer unlimited exemptions from the single desk.
The board had experimented in recent years with limited exemptions, starting in 2000 with 150,000 tonnes, or about 15 percent of the crop.
Ontario board officials say the vast majority of wheat growers like the change and there is no talk of reinstating the agency’s still-existing single desk authority.
“It’s certainly been a positive move,” said Peter Tuinema, a Thornloe, Ont., farmer and chair of the OWPMB.
Farmers are happy with the marketing flexibility they now have to sell into the pool, use the board’s cash or forward price contracts or sell through private traders.
Marketing flexibility is important, but for many the key question is which system provides a better price.
Tuinema said it’s difficult to assess whether prices are better than they would have been if the single desk was still in place, adding that depends largely on individual farmers’ marketing skills.
An Alberta government study of Ontario’s direct marketing program agreed.
“The overall impact on producer prices is difficult to evaluate because the prices sold at are not available,” said the study, which was published last year.
The authors said the OWPMB has lost its ability to leverage higher prices from domestic processors, although that was balanced off through increased sales to the United States through private traders.
A CWB analysis concluded that the old pricing formula used by the Ontario board would have been consistently above cash market bids during the first 18 months of the open market. It also noted that milling capacity increased more in Western Canada than in Ontario during the last five years.
Jim May, director of purchasing for Dover Flour, the largest Canadian-owned milling company, which operates two mills in Ontario, said the single desk system worked well for millers and producers.
Previously the company did all of its business with the OWPMB, evenly dividing its wheat procurement between grain elevator companies and farmers. Now almost all of it comes through grain companies, which presumably extract a profit margin from farmers in the process.
Also, under the old system farmers who delivered directly to the mill received a $5 a tonne premium over the formula price negotiated between the board and millers. That’s now gone.
“I think Ontario producers had everything they needed,” said May, referring to the various marketing options offered under the single desk. “They just went one step too far.”
Proponents of the open market option say one telling sign of its success is the rise in wheat acreage since the move to direct marketing, although most observers say acreage is a function of rotational issues, relative prices among wheat, corn and soybeans and fall planting conditions.
“The increase in acreage is entirely due to the fact that things are so bad with other crops we grow that people figure we’ll lose less with wheat,” said Ridgetown, Ont., farmer Stan Brien.
The Alberta study concluded that the change has had varied effects.
On the plus side, it listed improved marketing of fusarium-infected wheat to the U.S. as a result of aggressive specification-based sales by private grain companies, increased sales to the U.S. and less overseas exports, and more timely payments to producers selling outside the pool.
On the downside, prices are more volatile, with open market prices at times well above or well below the pool price, which requires producers to make sound marketing judgments. As well, there are quality control problems relating to blending soft red and hard red winter wheat varieties and less direct contact between producers and millers.
