SASKATOON (Staff) – Allowing farmers to sell some of their wheat outside the Canadian Wheat Board’s pool accounts doesn’t doom the 61-year-old marketing agency to extinction, says agricultural economist Daryl Kraft.
CWB officials last week warned that the proposal by the Western Grain Marketing Panel will create a dual market in which the cash price will often be more attractive than the pooled price.
That will lead to increased pressures to do away with pooling altogether, says the board, and once pooling goes, single-desk selling won’t be far behind.
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But Kraft, of the University of Manitoba, said he thinks the board’s pooled price will fare well in comparison with the cash market price, keeping in mind that the cash price will have to be discounted by several dollars a tonne to reflect the costs of dealing in an open market.
“Overall, if you took it at the end of, say, five years, the individual who selected the cash, unless they were very selective in their timing, would end up with a slightly lower price because of the added risk management costs,” he said.
And he added that even if the price pooling system was threatened, that wouldn’t necessarily lead to the board’s demise.
Pooling is an important philosophical issue, he said, but it doesn’t contribute to the board’s overall revenue from selling wheat. The board gets premium prices in world markets thanks to single-desk selling and the government’s financial guarantees, not pooling.
Agricultural economists interviewed last week generally agreed the board will drop out of the feed barley market if it loses its export monopoly. And there is widespread skepticism about the proposal that the board retain malting barley.
“I haven’t found one person yet who agrees that you could work this system and maintain the malting premium,” said Hartley Furtan of the University of Sask-atchewan.
Economist Kurt Klein, of the University of Lethbridge, said even if all the changes proposed by the panel are implemented, it won’t end the pressure for even more deregulation.
“I really believe this is only the first stage in the total transformation of the board.”
But he also believes the board can continue to compete in barley and wheat markets even without an export monopoly, acting as a large co-operative grain company: “They have a lot of smart people. They’ll look at various options and I’m sure they’ll find something that works and do very well.”
