Canada’s railways were roughly schooled last year on what happens when dominant companies appear to fail the customers who are forced to rely upon them.
I think the big grain companies are in the same position the railways were in before the 2013-14 winter. They are dominant, they have gained huge market power, and they are able to operate without being too solicitous of their customers – Prairie farmers’ – approval. There’s no crisis, so maybe they think everything’s fine.
But the Alberta Wheat Commission’s recent decision to begin offering Prairie grain elevator prices, in some form yet to be determined, so that farmers can know what’s on offer out there suggests to me that the judging eye of farmers, farm organizations and the federal government has turned to the grain companies and finds something troubling. The grain companies would do well to take this new development seriously, because once a company or organization loses the social license to operate, bad things can happen to it. That social license is granted by the customers and public who rely on something, and actions are taken by governments elected by those people.
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The AWC decision looks to me like a shot-across-the-bows of the grain companies. It’s a farmer organization with government backing saying that there’s a problem. Wheat prices seem to be particularly bothering farmers, with basis levels confusing many and causing some to feel suspicious. The public listing service is meant to alleviate problems like this. It’s clear that there’s a desire among many farmers to not just leave price reporting and transparency in each company’s hands. Clearly farmers aren’t feeling very trusting about the grain companies right now.
This issue leapt up further in my mind in the last week as I have attempted to get comments from the big three grain companies about how they calculate their own wheat basis levels, how they reveal them and whether or not they will voluntarily share those with the AWC service. Only one – Richardson International – was willing to speak with me. That’s a pity, because farmers deserve to hear how the grain companies view farmer concerns and they have a right to know about the vital concerns of their industry. Richardson has been good in recent years in being willing to discuss farmer and industry concerns, and that to me befits their expanded role in the Prairie grain business. They’re not just one of many grain companies out there, which might have been the case 20 years ago. What they do and what they think is important to the farmers of Western Canada and they seem willing to discuss it.
The others don’t seem to be growing into this expanded public responsibility that goes along with their expanded role. I hope that changes.
I’m not saying there’s anything wrong with grain company activities or, with the present upset over wheat basis levels, anything improper, unfair or untoward going on. In fact, from speaking with brokers, analysts and farmers – and Richardson International – I get the strong sense that even though wheat basis levels are confusing and confounding to many farmers, there are valid, legitimate reasons why this is unfortunately so, and the grain companies are in fact often strenuously competing for farmers’ grain. (See my story Basis Confusing But Tells Story and look for a follow-up story in our February 12 edition.)
But I think the big grain companies need to step back for a minute, look at themselves and realize they aren’t the same companies that they were 10 or 20 years ago, and they shouldn’t be acting as if they are. Not only are there fewer grain companies to compete with, but the end of the CWB monopoly means they now control much more than they did just three years ago. In some ways they have become as dominant as the railways, which is a success story for each of those companies.
That success, however, is matched by increased responsibility they must show towards farmer concerns, even if they think there is no problem. They need to prove they deserve the social license to operate.
The railways blew that in 2013-14 and they were denounced, penalized and subjected to extraordinary government and legislative measures. The grain companies need to realize the same thing could happen to them if there’s a crisis and if farmers start thinking they are to blame. The time to prove they care about farmers’ concerns is now, because if a crisis hits it’s too late to patch up a bad relationship.
