THE WHEAT marketing situation in Ontario holds lessons for those on both sides of the Canadian Wheat Board debate and undoubtedly warrants watching.
But it is too early to consider dismantling the CWB’s marketing powers based on the Ontario experience.
Many open market supporters, who contend that marketing boards including the CWB should have to compete with private trade, say the Ontario situation shows that farmers favour an open market system. It’s estimated that as much as 80 percent of Ontario wheat growers have opted to sell this year’s crop outside of the Ontario Wheat Producer’s Marketing Board.
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But is it a sign that farmers are ready to wave goodbye to single desk sales agencies or are other factors at play?
The shift among Ontario wheat growers to the open market may be a case of farmers preferring to take a bird in hand now, the spot price, versus what might remain in the bush later in the average pooled price.
If farmers are selling to private buyers for higher daily spot prices, study is needed to determine whether the peaks and valleys of spot prices will translate into a higher average price through the entire crop year than what’s offered in the Ontario marketing board’s year-end pooled price.
As well, the Ontario board must post its expected pool price for the entire year. That allows private companies to entice farmers by offering premiums above the board’s posted price.
This could be interpreted as the open market behaving as it should, with competition driving up prices for growers. But a single day’s spot price compared with an entire year of projected income are two distinctly different measurements.
As well, the more densely populated Ontario wheat-growing region provides closer alternative markets, such as mills, for growers to sell to, compared to what most prairie growers enjoy.
But what are the possible lessons for western growers now selling through the CWB? In Ontario, delegates to the Ontario board voted to open the wheat markets. It can be no other way.
Western farmers who elect directors to the CWB can vote for open market candidates. While not a direct vote on whether to go to an open market, a strong contingent of open market supporters elected as CWB directors would amount to the same thing.
The most important lesson coming out of Ontario is caution. The implications of the Ontario experiment will not be known for some time. The way similar actions, if taken out West, would affect the CWB are even more shrouded.
Western farmers would be wise to monitor how things work out in Ontario over time, to give them a better idea of what candidate to support in their next CWB election.
