Some will win, some will lose Farm size, producer experience a deciding factor, say experts
It’s official. Western Canada’s single-desk grain marketing agency is a thing of the past.
But the passionate and divergent views surrounding single-desk marketing aren’t likely to disappear soon.
From the most fervent pro-board supporters to the most dedicated open-market advocates, every one of Western Canada’s 75,000 grain farmers has an opinion on the advantages and disadvantages of mandatory grain marketing through the Canadian Wheat Board.
For Stewart Wells, a grain farmer from Allan, Sask., the loss of the single desk ranks among the worst policy decisions in Canada’s agricultural history.
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“What we’re about to see is the biggest transfer of wealth away from farmers since Confederation,” said Wells, one of eight farmer-elected CWB directors who were removed from the board last December.
Rolf Penner, a wheat grower from Morris, Man., has a different view.
The Manitoba vice-president of the Western Canadian Wheat Growers Association said the new marketing environment will result in less price distortion, more flexible delivery opportunities and a more robust agricultural sector.
“I’m very happy,” said Penner, who farms about 30 minutes from the American border and has spent decades comparing CWB returns with U.S. spot grain prices south of the border.
“One of the great things to see is how quickly the market on both sides of the border has successfully arbitraged,” he added.
“We’ve got this fantastic market rally, thanks to drought in the States and other things that are going on in the former Soviet Union, and for the first time in 70 years, we’re able to fully participate in one of these demand driven rallies…. That’s a very exciting thing for a farmer.”
Dale Hicks, who farms in the Assiniboia and Gravelbourg areas of southern Saskatchewan, said the removal of single-desk marketing will have little impact on his operations.
“As far as how it will affect my business, it doesn’t affect us one little bit,” said Hicks, a director with Winter Cereals Canada.
“It’s business as usual.”
Hicks said farmers across the Prairies have lots of places to sell their grain and are taking advantage of robust markets.
Bill Brown, a professor and agribusiness expert from the University of Saskatchewan, said the removal of single-desk grain marketing is likely to go down as one of biggest agricultural policy moves in recent memory.
“It’s a big change, there’s no doubt about it,” said Brown, head of bioresource policy, business and economics at the College of Agriculture.
But he added most farmers have experience with the open market.
“Most farmers are growing some canola, and maybe some feed barley that they had to find a local market for … or they were growing lentils or peas or something like that so it’s not a completely new shift for farmers.”
According to Brown, U of S academics have conducted numerous studies over the past 25 years assessing the economic benefits of single-desk marketing.
Most of those studies suggested that centralized marketing delivers an economic benefit to western Canadian farmers as a whole.
But on an individual basis, it remains to be seen who will emerge as winners and losers.
For farmers that have less market influence and less sophisticated marketing programs, the advantages of single-desk selling are likely to be more evident.
And for well–capitalized farmers who produce and deliver larger volumes, manage their businesses and grain inventories efficiently and are accustomed to marketing large quantities of non-board grains, the open market may prove preferable.
Either way, the changes in grain marketing are likely to foster a new business environment that favours large over small, rewards business acumen, encourages capital investment and is conducive to further consolidation in the grain industry, a situation many consider synonymous with the corporatization of agriculture and the loss of farmer influence in the marketplace
“I would think that the grain companies didn’t really like the idea of the wheat board having some control in the marketing process and now that that’s gone, they feel that they can get more involved in the process and benefit form it,” Brown said.
“The trend in the last 30 or 40 years has been (toward industry consolidation) and (that) is going to continue.”
