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Tragedy on Main Street

Yesterday a pile of people from throughout the Winnipeg grain trade listened avidly to the Canadian Wheat Board’s early season crop production and progress presentation. Analysts from all sorts of places were there, from grain companies, farmer groups, commodity organizations, federal and provincial government departments.

That makes sense, because there is no better way to get a grip on what the heck is going on in the farm fields of Western Canada. No one else does the sort of detailed and analytical work on soil moisture, seeding progress, crop conditions and likely crop yields and quality that the wheat board does. That also makes sense, because the board is an organization that oversees the sales of a vast crop of 20+ million tonnes of grain every year, so it’s got both a vested interest in knowing what’s likely to be coming into farmers’ bins three months from now, and is able to spread the cost out across a large population of farmers, making the per-farmer cost pretty low.

As I sat through the presentation I wondered if there would be many more of these. There almost certainly will be next summer, but what about after the monopolies disappear completely? Will the wheat board have a weather and crops surveillance wing any longer? It’s the kind of thing that might start looking very expensive and dispensable if the post-monopoly wheat board is marketing much less grain through which to spread out the costs. For the industry, this is a pretty crucial source of market information. How much worse will alternatives be? Is there enough incentive to create a private replacement, or will no one be able to figure out how to monetize that need?

And that brought me to a point that has been fluttering around at the wings of my mind for a little while, which is that – regardless of whether farmers agree with or oppose the board’s marketing monopolies – the effective winding up of the large and multi-faceted wheat board that we know will truly be a tragedy. In practical ways like with this example of the crop conditions presentation, the grain industry and farmers will be losing something that won’t easily be replaced.

But the greater tragedy is the death that the wheat board wind-up will mean for at least part of the dream of many on the farming left, the dream that collective action could gain for farmers what the free market could not. It’s a century-old dream and it had many high points, such as the erection of the grain elevator cooperatives. But element by element that dream has faded as an older generation of farmers retreats and socialistic approaches seem out of keeping with modern sensibilities. Even if many farmers are still pro-monopoly, they don’t seem likely to run to the barricades to protect the board.

While there has been much anger and denunciation between the pro and anti monopoly sides of this issue, with each side saying lots of nasty things about people on the other side, I don’t think too many reasonable people believe that the people supporting and working at the board haven’t been well-intended and dedicated to farmers. I know a lot of people who work at the board and it’s almost alarming how fervent they seem about their mission of serving farmers. For many of them, working for the board hasn’t been about getting a nice office job at Portage and Main and reaping the benefits, but about working for an organization and cause that they truly believe has been helping farmers and giving them more economic power – and money – than they would be given by the corporate-controlled free market. Lots of these people could have made better money in the corporate world – many indeed might end up making double the money working for grain companies around the world once the monopolies end – but they wanted to work for something they saw as a public good.

To me the essential questions about the wheat board as a marketing entity were always 1) how big a premium was it able to get for farmers from its supply control?; and 2) did that premium outweigh the costs, inconvenience and non-voluntary nature of the system?Analysts have given different answers to those questions, which is why we have had a multi-decade debate about this. But if the government manages to end the monopolies for the 2012-13 year, those questions will become academic, to be looked at by historians.

Morale can’t be good over at the board these days, with the agency now living with “lame duck” status and no doubt hundreds of workers wondering whether to jump ship before next year. They’ve endured years of attacks from the present government and some farm organizations, and that’s got to get to you after a while. Even if you believe in what you’re doing, constant denunciations must get wearing.

Generally and ideologically, I’m a big fan of robust free markets and publicly-visible derivatives markets for pricing. The wheat board doesn’t fit that model. But I’m no fan of industries dominated by oligopolies, so I understand why many people through the past century have thought that farmers needed a more activist approach to protecting themselves in the market. Now more than every a few gigantic players dominate the prairie grain trade. I’m quite skeptical that a well-functioning free market for wheat and durum will arise after the board monopolies die. So I understand why many farmers consider the marketing monopoly approach as at least equally valid as the free market. Monopoly supporters would say it’s much better.

Whether or not the board really was good for farmers for all these decades, there’s really no question that the support for it from many farmers, and the dedicated work of employees was driven by a commitment to try to achieve something good for farmers, and I hope farmers appreciate that, even if they weren’t monopoly supporters.

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