Federal Agriculture Minister Gerry Ritz recently announced that majority ownership of the Canadian Wheat Board had been sold to a partnership composed of Bunge and a Saudi agricultural investment fund. Its one of the last steps to the eventual complete disposal of the CWB by the federal government. A minority ownership is being maintained by the federal government on behalf of farmers. Eventually that too will be offered for sale at the discretion of farmer shareholders who ship grain to the newly revised CWB. When that happens, and it will, the once mighty Canadian Wheat Board will come to an end as a government-owned grain marketing monopoly. The final end is a foregone conclusion being its demise was a political promise by the ruling Conservative government from the very beginning. Even if the Conservatives are defeated in the next election there is no real hope that it will be revived to its former glory as the premier single-desk seller of grain. The cost and logistics of doing so would exceed any political benefit from such a small voting bloc that traditionally votes Conservative anyway. Even a doctrinaire NDP government, the traditional supporters of the old CWB, would be reluctant to turn the clock back for almost no political gain.
As expected the usual suspects sprang up to accuse the federal ag Minister of some nefarious conspiracy to defraud farmers of their rightful assets. They claimed the actual value of the CWB was in the billions of dollars not the $250 million the new buyers paid for the entity. One wonders if the CWB was even worth the sale price being its assets included a couple of laker ships, grain rail cars, and a few country and terminal elevators much of which are already depreciated out and long in the tooth. Much of the CWB’s vaunted global marketing expertise has either departed or is a ghost of its former powers. One wishes the new buyers well and that they may yet get some benefit out of the CWB’s much diminished resources.
The opposition to the sale came from an ad hoc group called the Friends of the CWB, mostly composed of small operators, National Farmers Union stalwarts and their ideological brethren. All of the mainstream cereal and oilseed producer groups supported the sale. Interestingly, the CBC exposed its usual leftish bias by featuring Stuart Wells a spokesman for the Friends group and former NFU official as the spokesperson on the issue. No one representing the majority mainstream grain producers was included in the CBC story. I guess one should be thankful that even that biased media story was broadcast, being the entire CWB issue remains a complete mystery to most Canadian citizens.
The CWB saga has not been without some repercussions on grain growers. One of the original goals of deconstructing the marketing powers of the CWB was to give producers the right to market their own grain. That has not gone as well as had been portrayed – it’s a classic story of being careful what you hope for you may just get it. Price spreads known as basis have been considerable when producers sell to private grain traders. Grain company interest in buying and marketing wheat has been troublesome as they learn to operate in a market that had been dominated so long by the CWB. The vaunted unfettered access to American grain markets has also not quite materialized for all growers especially those far from the border. It may take years for the private grain market to become stable and consistent.
What is also missed are the former regulatory powers of the CWB that could force better railway compliance in timely shipping of grain to terminal elevators. What is sorely missed is the marketing power the CWB had with global grain markets. In low price marketing cycles the CWB was always able to move wheat in volume due to its economies of scale and financial strength backed by the Canadian government. Private multi-national grain companies almost all of whom operate in other grain-growing countries do not always have the best interests of Canadian producers in mind. Clearly the change away from the CWB has cost grain growers both in lower prices and market access.
However, having said all that, there is no turning back and the CWB story needs to run its course. Those that are trying to turn the clock back need to leave the issue alone and let the CWB seek its final fate.