Predictions of wheat board’s demise appear to be ‘somewhat premature’

Not too long ago, an ideological battle raged across the Prairies over the fate of the Canadian Wheat Board (CWB).

Not too long ago, an ideological battle raged across the Prairies over the fate of the Canadian Wheat Board (CWB). One side wanted to maintain its single-desk marketing powers over export wheat and barley, whilst the other side wanted the board dismantled and eliminated. There was a compromise of sorts made when the federal Conservative government eliminated the CWB export monopoly, but let it live as another voluntary grain marketing organization. Many predicted that change was just a slow death and better to put it out of its misery than spend any more tax dollars on propping up the new board.

Well, it seems predictions of the CWB’s death were somewhat premature.

As expected, once the CWB lost its original mandate, it went through a complete reorganization and emerged much slimmer and focused on what it could do as a grain marketing company. It also shed any pretension that it still represented the interests of Canadian grain growers, as it had in the past. It quickly divested itself of promotion, advocacy and research activities and support. It was to focus strictly on grain marketing in order to survive.

Interestingly, it has not only survived, but has moved forward to acquire grain-handling facilities in western and eastern Canada. That’s a move that had to be made, as using its competitors’ facilities wasn’t going to work very well in the long run.

Critics were quick to allege that the CWB was using funds from growers or some leftover horde of cash from the old CWB to buy these assets. Management was quick to counter that was not the case, that funds were coming out of profits from its marketing operations.

Perhaps there was an idea that the new CWB was not supposed to make any money on its handling business. One tends to forget that the CWB in the past was many things to the grain industry, but at its core, it was a grain-marketing organization with decades of experience in the global marketplace.

Once the board was set free so to speak, it used that knowledge core to take on the competition.

One also has to remember that those that stayed behind to manage the new CWB had real incentive to try to make it a success — and their livelihoods depended on that happening and soon.

Now it probably helped that this year was somewhat of a bumper crop year across the Prairies and that there is no scramble by any grain buyer to buy up scarce product.

In fact, buyers can be very choosy as to what and from who they buy wheat from this year. The big issue is that moving any grain is hindered by the lack of significant additional rail movement to export ports.

Now one ponders that even with movement being restricted, the big grain companies would still have an advantage over the CWB, being they controlled the handling facilities that the board needed to move the grain they bought and sold. Yet somehow the CWB did and made money at the same time.

That’s perhaps a reflection of the core experience they had in finding markets and handling logistics. Only management knows for sure, but they must be having a good year if they are finding the funds to buy up handling facilities.

All of this must be much to the chagrin of the anti-CWB folks.

It’s impossible to determine, but one wonders if the CWB was still operating under its old mandate, would grain movement be any better with this bumper crop. The old board had powers to muster rail cars and space on a more equal basis and could put the squeeze on railroad companies. That doesn’t happen now, as grain movement and grain companies are just other clients to railway companies.

Considering the competition for rail space from oil companies and their expanding tanker car fleet, grain movement is lucky to have the share it has now.

What probably is missed by some grain growers is their access to deliver grain or even sell it to local grain buyers. Under the old CWB board, every grower with a permit book, no matter how big or small, had an equal opportunity to sell and actually deliver grain at a set price.

That’s gone and one suspects that grain buyers might have developed preferential lists for buying. That was the sort of thing that caused the CWB to be originally created.

History does repeat itself.

— Ahead of the Heard