A new grain-marketing era: Canadian Wheat Board monopoly ends
August 7, 2012, 3:04 am
Leslie-Ann Kroeker
For the first time in his life, Moosomin farmer Murray Bruce woke up Wednesday morning with the ability to do what he pleased with his wheat.
He figured he wouldn't take much time to exercise his new rights.
Bruce was one of the first farmers in the province to sell his wheat to a producer without first going through the Canadian Wheat Board (CWB). He sold 2,500 bushels to Parrish & Heimbecker Wednesday morning.
"I woke up and thought 'I can do this now' so I did," said Bruce.
The CWB monopoly officially came to an end last Wednesday, eight months after Bill C-18 was passed in parliament.
Since the 1940s, the CWB was the sole purchaser and marketer of the West's wheat and barley-farmers could sell there grains only to the Wheat Board. The end of the monopoly now gives farmers the opportunity to sell their own grain and barley to whomever they want.
The CWB will still exist under a new logo and will run on a voluntary basis; which means producers can chose whether or not to sell their grain to the board.
There has been much debate whether the end of the monopoly is a step in the right direction or will have a negative effect on grain markets.
Those who oppose the end of the monopoly say producers will now have to deal with large international grain companies, and might not always get the best price for their grain-which the Wheat Board would regulate in the past.
But those in favor of the end of the monopoly say it will allow farmers to finally control their own prices and get better pay outs in the open market.
For Bruce, being able to have sole control of his wheat is a dream come true.
"It's a wonderful thing. It's a great achievement and I was beginning to think I wasn't going to see it in my lifetime-the ability to sell my own wheat. It really is a market-freedom day," said Bruce.
Bruce said the whole idea of a monopoly was outdated and in the end hurt the wheat and barley farmers by preventing them from capitalizing on their products. He looks forward to wheat becoming more of a cash crop.
"It was something that was so entrenched in our politics and in the farming community. It was so ludicrous a program that they just didn't know how to get rid of it until Harper and Ritz had enough gumption to keep pushing it through," said Bruce.
"Now we can actually grow a field of wheat, combine it and sell it that very day. We can have a cheque for it the same day instead of waiting eight months."
Because he has other commodities on his 8,000 acre farm, Bruce says adjusting to selling his own wheat will not be difficult.
"Eighty per cent of our other commodities we've been able to sell, it was just wheat and barley we couldn't. It's not going to be an adjustment, we've been selling our canola and oats on an open market forever."
"It's our grain now, it never used to be, it was the Wheat Board's. Not anymore."
He said with more grain buyers coming in the open market, it will create an even greater opportunity for producers in the future.
"More options, more choices. It's exciting," said Bruce.
Marketing-freedom day in Kindersley
Prime Minister Stephen Harper, along with federal Minister of Agriculture Gerry Ritz, was on a farm outside Kindersley, Sask. to make the official announcement Wednesday afternoon.
"They said it couldn't be done, but we did it," said Harper in his speech.
"Never again will Western farmers. . . be told how they can and can't market their products."
Speaking at a podium that read 'marketing freedom', the Prime Minister acknowledged the farmers who had gone before legislation in the past and argued against the monopoly, calling them courageous. He congratulated them for their fight and officially pardoned those farmers who went against the 'unjust legislation.'
"To them, much of this victory is owed," said Harper.
MP for the Souris-Moose Mountain, Ed Komarnicki said pardoning past offenders of the Wheat Board was a historic moment for the country.
"The pardon was given to any of those who have received convictions as a result of their civil disobedience in terms of working against the law they felt was unjust," said Komarnicki
"There will certainly be a handful or more who were directly involved and sentenced. . . It is certainly an unusual occurrence. It doesn't happen on a regular basis."
Harper went on to say Wednesday he is proud of his government for dismantling the monopoly.
"Our government has simply given to Western Canadian grain farmers the exact freedom that already belongs to similar farmers in the rest of this country," said Harper.
"This truly is a great day."
Alan Johnston of Johnston Grain Marketing in Welwyn was on hand Wednesday afternoon in Kindersley to celebrate. He met and shook hands with Prime Minister Harper and congratulated him on the day.
"It was a pretty happy day. Everyone was really just tickled pink," said Johnston.
"People flew in from Winnipeg. Two guys flew in from Calgary that I saw. There were piles of trucks and cars that drove in from all over the country. . . It was just a day everyone expected. It went well."
For Johnston, it was an emotional day as well. He said he has been fighting 40 years for the change.
"Since I was farming up to when I was a grain broker I've been fighting for an open market," said Johnston.
Johnston was so passionate to see the end of the monopoly that he flew down to Ottawa in November to see Bill C-18 passed.
"I was a part of all of it. It was in my hide, I had to be there," said Johnston.
He said being under the monopoly was a horrible thing for the grain market in western Canada.
"It was the worst thing that ever happened to western Canada. Keep in mind it was only western Canada, not throughout (the country). It cost western Canada millions of dollars over the last 67 years," said Johnston.
He is already beginning to see the effects of a free market.
"We are already moving up here. A bushel is a dollar higher than we ever had before. . .I traded winter wheat out of Redvers last week at $7.25 (a bushel). We've never seen those prices before. There's a drought in the United States that's helping the markets, but there have been droughts before and we were never able to capitalize. We never saw it come back to the producer, now we can," said Johnston.
However, unlike Johnston, not everyone was happy with the change. Several groups have been formed in favor of the keeping the monopoly, one being the Friends of the Canadian Wheat Board.
"By destroying the world's largest marketer of wheat and barley, Stephen Harper has transferred a tremendous amount of wealth and influence away from farmers," said Stewart Wells, Chair of Friends of the Canadian Wheat Board last week in a press release that responded to Harper's announcement.
Wells noted that the farmer-controlled CWB was always an advocate for the farmers and had the resources to be a strong voice.
"There is no longer any meaningful influence by farmers inside the grain trade," said Wells.
But according to Johnston, there wasn't a single person in the crowd Wednesday who wasn't happy to hear the announcement.
MP Ed Komarnicki said Prime Minister Harper's announcement was a historic moment for the province and allowing farmers to take control of their wheat and barley will be good for southeast Saskatchewan.
"There were a lot of farmers attending who have been promoting the idea of being able to market the grain as they see fit for a long time against some very difficult odds. It was very gratifying to see them there," said Komarnicki.
He has spoken to several farmers in the area who are excited for the upcoming season.
"They can now have the choice to go with the CWB or to go with any other buyer. They are able to deliver their crops to whoever they wish at a price that is going market price. In fact, some farmers today mentioned to me that they were picking off winter wheat and able to make sales," said Komarnicki.
Komarnicki said selling grain should have always be seen as a matter of choice, and not an imposition from the Canadian government.
"It's a fundamental principle. They own the land, they do the investments for the farm land, they grow the crop, they take the risk, they do all of that and it seems odd that (they didn't) have the ability to sell their grain as they see fit. It's something that other farmers in other areas in Canada could do and it was long overdue in terms of giving farmers the opportunity to decide."
With demand high and the prices looking to be at good levels this year, Komarnicki said farmers will be able to adjust accordingly.
"It's an important step. I know there will be a steep learning curve for everyone involved in the industry but I think in time everyone will be able to adjust, including the Wheat Board," said Komarnicki.
The future of the wheat board and prairie farming
Because of the end of the monopoly, the CWB has shown major signs of adjusting. It just recently signed handling agreements with all western Canadian grain companies.
Since the CWB does not have its own elevators in the province, other operations are needed in order for farmers to sell their grain to the board. Now, producers who still choose to contract with the CWB can deliver wheat and barley to any grain elevator across the Prairies.
Ten companies, including big names like Parrish & Heimbecker, Viterra, Cargill and Louis Dreyfus have all signed on with the CWB to be grain-handling providers.
"The future is bright for CWB and the farmers we serve," said CWB CEO Ian White last week. "We now have the necessary business arrangements in place to operate in the new grain-marketing environment."
"They will be taking steps to be a competitive force in the market and I trust that farmers that wish to utilize their services will ensure that they will stay a positive force in the marketplace," said Komarnicki.
"I'm sure many will (still use it) but it will be in a large measure what the best deal is for them and I'm sure that's how many will perceive it."
Johnston on the other hand isn't too sure the CWB will be as successful in the next few years.
"I'm sure some people will use it, I just don't know if it's as much as Mr. White expects. He's calling for maybe 40 per cent of the grain, so we'll just have to see," said Johnston.
Bruce said he doesn't know any farmers in the area who were against the Wheat Board, just their policies.
"The Wheat Board will still go strong. They are just one of the other options we have to sell our grain. We can still pool it (or) we can sell it on our own. So nothing has really changed for any farmer who would like to use it. It's still all available to them," said Bruce
"There are farmers out there who don't want to deal with the marketing of their grain, don't want to have to watch it. They just want to be able to grow it, haul it in and let someone else do the marketing for them."
Chris Thomas, the general manager of the Moosomin Parrish & Heimbecker terminal, says the next year will be a transition period for everyone in the industry but isn't too worried about the direction farming is taking.
"It will be a transition for all of us. There are things popping up in the computer system already that they haven't thought of. I think it's great though. The marketing-freedom for farmers now it pretty important," said Thomas.
"For us, we used to source wheat for the Wheat Board and then have to buy it back from them to send it to our own mills. Now we can skip that step. That is going to be good for us."
"Nothing has changed for the people who want to leave it status quo, they still have the Wheat Board. But we also have the chance to market how we want and that's why today is so special," said Bruce.
"The future looks bright."
