Canadian Wheat Board

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Canadian Wheat Board
Commission canadienne du blé
433 Main Street and Canadian Wheat Board Building, Winnipeg.jpg
Canadian Wheat Board Building (on right)
Agency overview
Formed 1935 (1935)
Type Marketing board
Jurisdiction Government of Canada
Headquarters Winnipeg, Manitoba
Minister responsible Gerry Ritz, Minister of Agriculture
Parent agency Agriculture and Agri-Food Canada
Key document Canadian Wheat Board Act
Website www.cwb.ca

The Canadian Wheat Board (French: Commission canadienne du blé) is a marketing board for wheat and barley in Western Canada. Established by the Parliament of Canada on July 5, 1935, its operation was governed by the Canadian Wheat Board Act as a mandatory producer marketing system for wheat and barley in Alberta, Saskatchewan, Manitoba and a small part of British Columbia. It was illegal for any farmer in areas under the CWB's jurisdiction to sell their wheat and barley through any other channel than the CWB. Although often called a monopoly, it was actually a monopsony since it was the only buyer of wheat and barley.

Amid criticism, the Canadian Wheat Board's monopoly officially ended on August 1, 2012 as a result of Bill C-18, which was tabled by the Harper government and passed in December 2011. The CWB continues to operate as a voluntary marketing organization. This will no longer be an option by 2016, the government imposed deadline for when privatization must occur.

Staff[edit]

Prior to the Bill C-18 the Board of Directors was organized as a cooperative with most of the directors being elected by farmers. It was governed by a 15 person Board of Directors. Of which:

  1. Ten of the directors are elected by grain farmers in the western Canadian provinces of Alberta, Saskatchewan, Manitoba and parts of British Columbia;
  2. Four of the directors are appointed by Governor in Council on the recommendation of the Minister responsible for the Canadian Wheat Board;[1]
  3. The President of the Board is appointed by the Governor in Council, on the recommendation of the Minister responsible for the Canadian Wheat Board with certain restrictions including that the CWB must be consulted on the recommended candidate.[2]

On December 15, 2011, Bill C-18 Act received Royal assent. The original elected board was removed. Now only 5 appointed directors remain. "Four directors are appointed by the Governor in Council on the recommendation of the Minister" while "the president is appointed by the Governor in Council on the recommendation of the Minister[3]

First wheat boards[edit]

By the early 20th century in Western Canada, grain purchasing, transportation and marketing were dominated by large companies headquartered outside the region, such as the Canadian Pacific Railway and the trading companies which dominated the Winnipeg Grain Exchange. Producers were deeply suspicious of the business practices of these companies and hostile to their positions of power. Farmers were impressed by the success of state-led marketing as it was practised during World War I. The government created a series of boards in and around the war, each with progressively more power to control the grain trade. The Board of Grain Commissioners of 1912 was purely for regulation (to supervise grading, etc.), but by 1915 the government had seized control of all wheat exports to help the war effort, and by 1917 futures trading on the Winnipeg Exchange was banned. In 1917, the new Board of Grain Supervisors was given monopoly powers over wheat, and fixed uniform prices across the country. Soon afterwards, the Board took over marketing of crops as well. Farmers were worried that after the war prices would crash and various agrarian groups lobbied Ottawa to keep the Board in place. The government relented by creating the Canadian Wheat Board for the 1919 crop only. Farmers got a guaranteed price for that crop, paid immediately, and later a further payment once the Board had sold all harvest and made a profit. This system of guaranteed prices and distributed income was extremely popular and when the Board dissolved in 1920, farmers were livid. It certainly did not help that, "from a peak of $2.85 per bushel in September, 1920 [prices] began a slow and sickening decline to less than a dollar a bushel in late 1923."[4] This marked contrast to the stable prices of 1919-1920 Board seemed to confirm farmers' suspicions of market trading.

Interregnum[edit]

Main article: wheat pool

After the dissolution of the early board in 1920, farmers turned to the idea of farmer-owned cooperatives. Cooperative grain elevator operators already existed, like United Grain Growers, which had already been started in 1917. In 1923 and 1924 the wheat pools were created to buy Canadian wheat and resell it overseas. The Alberta Wheat Pool, the Saskatchewan Wheat Pool, and Manitoba Pool Elevators quickly became giants in the industry and displaced the private traders. However they did not hedge against falling prices (instead relying on provincial government guarantees), and during the price collapse of 1929, they effectively went bankrupt. The majority of farmers did not want the private traders to return, and now it also seemed impossible for them to own their own marketing companies, so the idea of a government marketing board was revived.

Revival[edit]

The Canadian Wheat Board was re-created in 1935 the aim of controlling grain prices, so as to benefit farmers devastated by the great depression. During the Second World War, the authority of the Board was expanded, and the Board was given the authority to set statutory maximums on wheat, oats, barley, flax, and corn between December, 1941 until expiry after the war. Membership was made compulsory for Western Canadian farmers in 1943 via the War Measures Act, now with the purpose of aiding the war effort. In April, 1943 the Board was also authorized to buy rapeseed and sunflowers. In 1965, the Canadian Wheat Board Act, which had until then subject to expiry and requiring periodic amendments by Parliament to extend the Board’s duration, was amended without time limit, thereby creating a permanent Board. CWB control over inter-provincial shipments of feed grains became a public issue during the grains crisis in 1969 to 1972 and was removed. Only non-feed wheat and barley remain controlled by the CWB.[5][6]

Operation[edit]

Canadian Wheat Board covered hopper car.

The farmers deliver their wheat and barley to grain elevators throughout the crop year. The Board acts as a single desk marketer of wheat and barley on behalf of prairie farmers. Upon delivery to an elevator, farmers receive an initial payment for their grain from the CWB that represents a percentage of the expected return for that grade from the pool account. After the end of the crop year, July 31, an interim payment and a final payment are paid to farmers, in addition to their initial payment so they will have received 100 percent of the return from the pool for the grain they delivered. The initial payments are guaranteed by the Government of Canada so that farmers will receive payment even if there is a deficit in the pool account. Initial payments are set with a risk factor built in to guard against the event that price expectations are not met.

Until December 15, 2011, compliance with the wheat board for most farmers and elevators was mandatory[7][8][9] and was punishable by fines and/or imprisonment.[10] Farmers from Eastern Canada and most of British Columbia were not controlled by the Canadian Wheat Board and were able to market all their grain on the open market. The area of British Columbia known as The Peace River District falls under the jurisdiction of the Canadian Wheat Board. Bill C-18 re-organized the CWB to now market grain through voluntary pooling.

Durum wheat

From the standpoint of supporters of the board and labour unions, the board gives individual farmers increased marketing power in a world market which gets them a higher price than they would otherwise get, not only through the efficiencies of scale, but as well by exercising oligopolistic marketing power on the selling side, especially for Durum wheat. A study conducted in the mid 1990s suggested that farmers gained on average a premium of $13.35 a tonne on wheat as a result of the board's monopsony.[11] Supporters of the monopsony fear that an end to the board would put farmers in a situation like that in the early part of the 20th century where farmers effectively competed with each other to sell their grain, a situation that effectively put them at the mercy of big agribusiness and the railroad monopolies and reduced farm incomes. The counter-argument is that producers of non-Board crops such as canola do not seem to have this problem.[12]

Support for the CWB[edit]

In a recent plebiscite (referendum) conducted by Meyers Norris Penny, 62% of CWB farmers voted that they wanted to keep the wheat board.[13] Proponents of maintaining the CWB have stated that the collective barganing power of the wheat board gives farmers a better price than they would have if they were individually marketing to large multi-national corporations.[citation needed] At this time, farmers already have the ability to market all the crops save wheat and malt barley independently, meaning it is possible to succeed marketing grain without board oversight.[citation needed] This, however, may make farmers more susceptible to fluctuations in the commodity market and to focus more of their time on the business aspect of farming, rather than farming.[citation needed] The Wheat Board currently attempts to offer producers more options in recent years - for example, farmers can now purchase binding futures contracts from the Wheat Board that attempt to pay them the same price that they would get for their grain in the U.S.

Challenges and Successes[edit]

Since 2006 when the Conservative Party came to power, Chuck Strahl, then minister of Agriculture worked towards the end of the Wheat Board's monopsony, including the replacement of government appointees to the board of directors in favor of individuals who oppose the board's monopsony, a gag order on wheat board staff, the firing of the pro-board President of the Board, and intervention in the election of farmer elected members of the board of directors.[14][15]

  • December 2006 CWB board of directors election. Only one of five farmer elected seats goes to opponents of the Canadian Wheat Board's monopsony on the selling of Canadian wheat and barley internationally. Since there is only one incumbent farmer elected board member opposed to the monopsony, only two out of ten farmer elected directors are opposed to the monopsony. Nonetheless, the government appoints five members to the board so supporters of the board's monopsony have only an eight to seven majority. Doubts have also been cast on the results because Strahl, the minister of Agriculture, removed upwards of 20,000 farmers from the voters list in the midst of the election. These farmers were disqualified for such reasons as not having delivered any grain to the Wheat Board in the past two years or having produced enough wheat or malt barley to have generated significant enough income from which to live off.[16]
  • December 19, 2006: Chuck Strahl dismisses CWB president Adrian Measner, an outspoken supporter of the monopsony. This was done by Strahl with the statement "It's a position that [he] serves at [the] pleasure [of the Minister/Government]. And that position was no longer his."[14] It was suggested that Measner had gone too far for refusing to remove pro-CWB documents from the Board website and also appearing at press conferences with opposition leader Stéphane Dion.[17] The majority of the CWB's board of directors opposed the firing of Measner.[18]
  • March 28, 2007: Barley Plebiscite. 62% of farmers vote to end the wheat board's barley monopoly.[19] Legislation to amend the act dies on order paper when the September 2008 election is called.
  • February 26, 2008: Conservative government loses court battle over unilaterally dismantling the CWB because it was contrary to the Canadian Wheat Board Act.[20]
  • December 7, 2008: Board of Directors elections. Four of five candidates elected support the single-desk marketing agency.[21]
  • January 21, 2010: Supreme Court of Canada sided with the federal government in its 2006 order barring the board from spending its money on lobbying.[22]
  • December 7, 2011: Federal Court judge Douglas Campbell rules the Conservative government broke the law in introducing legislation to end the Wheat Board.[23]
  • December 15, 2011: Conservative legislation Bill C-18, ending the CWB monopsony, receives royal assent.[24]
  • June 18, 2012: Federal Court of Appeal upholds Bill C-18[25]
  • August 1, 2012: end of monopsony takes effect

Criticism[edit]

Grain elevator in Wrentham, Alberta

Arguments in favour of privatization believe that farmers should be allowed to opt out of the board.[citation needed] Others believe that they could get a better price for their grain than the board itself and would like to market their own grain.[citation needed]

The total acres seeded to canola in western provinces has often exceeded that of wheat.[citation needed] While an increased canola crop is popular now, it may change based on market fluctuations, and this destabilizes the work food supply, much like corn-for-ethanol subsidies in the US caused a massive increase in world food prices in the 2000s.[citation needed]

A study by authors Colin A. Carter and R. M. A. Loyns found that measurable costs of the single-desk to farmers exist, they vary and could be as high as $20 per tonne in any year for wheat[citation needed]. The CWB's operating costs were paid out of the revenue it earned on the sale of farmers' grain and its financial trading activities. For barley growers, they estimated the hidden costs of the Board to be larger than $20 per tonne.[26]

Some opponents of the board's monopsony have suggested it to be replaced by a 'dual market' system.[citation needed] This is presented as a compromise where board supporters could continue to sell their wheat and barley through the board and board opponents could have the option to sell outside the board. From the standpoint of supporters of the board, however, this is not a viable alternative as a dual market would effectively end the board's monopsony and any benefits that it may give to farmers.

Opponents argue that because the benefits farmers receive from the CWB increases their land value, elimination of the CWB monopsony will lower the value of their land.[citation needed] Lower land prices would make Canadian farmers more competitive but could also leave many owing more than the value of their reduced land. Retiring farmers selling their land could be faced with a much reduced retirement fund but new entrants into farming would be able to purchase land at lower cost.

Some CWB opponents have argued that much of the lower quality land is in close proximity to the US border and would be the first to realize the benefits of the US market.[citation needed]

American complaints[edit]

Although the Board was reformed to meet free market conditions under the North American Free Trade Agreement and the World Trade Organization Treaty, American producers continually complain. Despite numerous challenges and much posturing by the United States, the World Trade Organization ruled in 2003 that the Wheat Board was a producer marketing body and not a system for government subsidy although the decision has since been overturned. In fact, Canadian producers have almost no government subsidy while their American and European Union counterparts are heavily subsidized.[27][28][29] The attacks on the Wheat Board are one of the major irritants in bilateral relations between Canada and the United States.

Western alienation[edit]

The fact that the Wheat Board primarily markets crops produced in Western Canada has become a source of alienation and even Alberta separatism for many Western Canadian farmers. Farmers in Eastern Canada (east of Manitoba) and most of British Columbia (non-Peace River) are exempt from the CWB's monopsony control of non-feed wheat and barley - these have their own marketing boards, but they are not compulsory.

Calls for abolition[edit]

There had been calls by many groups to abolish the Wheat Board[citation needed]. Many of these groups took their fight to the internet to spread their message and gain support for their cause[citation needed]. While many were focused on the Canadian Wheat Board, others concentrated on international wheat boards, the other primary target being the Australian Wheat Board, before the AWB itself converted to a private firm, leaving the CWB as the only significant agricultural State Trading Enterprise (STE) exporter worldwide. On December 7, 2008, CWB permit book holders voted in favour of maintaining the wheat board by electing four pro-board candidates with one marketing choice candidate being elected. Stewart Wells, president of the National Farmers Union, said "The message can't be any clearer".[30] Others argued that the voter's list was flawed, as it included many small or part-time producers who may not deliver to the Board, as well as non-producers such as landowners whose livelihood might not solely rely on farming.[31] In December 2008, the draft modalities text of the Doha Development Round was revised such that upon signing in its revised form, the CWB would lose statutory privileges such as the single desk within 5 years of the signing.[32]

Harper government[edit]

One of the aims of the Conservative government since coming to power in January 2006 was to end the monopsony on Western Canadian wheat and barley. The Conservatives had been unable to get this change approved by Parliament because they held a minority of seats until the May 2011 federal election and all opposition parties supported the monopsony. The Conservatives also lost a court battle to unilaterally dismantle the CWB without an act of Parliament.[20] In the aftermath, Harper and then Minister of Agriculture Chuck Strahl stated their intent to continue with the removal of the traditional role of the CWB, particularly in regards to barley (which is generally a more corporate crop[33]), perhaps through Parliamentary action.[34][35][36]

After winning a majority in the May 2011 general election, the Conservative government announced its intention to remove the CWB monopsony through legislation.[37] In response, the CWB held plebiscites on whether to keep the monopsonies on wheat and barley. The results were released on September 12, 2011; 51 percent of barley growers and 62 percent of wheat growers voted to maintain the board's monopsony.[13] Notwithstanding, the government plans to remove the monopsonies on August 1, 2012 regardless of the plebiscites' results. In defending this policy, Agriculture Minister Gerry Ritz claimed the CWB plebiscites were seriously flawed and that the Conservatives' election victory gave them a mandate to remove the monopsonies.[citation needed]

According to the CWB, the government advanced the timetables to Christmas 2011, prompting them to launch a protest campaign urging Canadians as well farmers to speak out against the government's decision to end the monopsony. Meanwhile, the government issued leaflets explaining what would "bring marketing freedom."[38][39]

See also[edit]

References[edit]

  1. ^ Canadian Wheat Board Act, subsection 3.02(1)
  2. ^ Canadian Wheat Board Act section 3.09
  3. ^ Government of Canada. "Board of Directors". Marketing Freedom for Grain Farmers Act. Government. Retrieved 30 January 2013. 
  4. ^ MacEwan, Harvest, 103.
  5. ^ History of CWB [1] CWB Website
  6. ^ Alberta Gov. Website
  7. ^ Canadian Wheat Board Act, Canadian Wheat Board Act, section 45
  8. ^ Canadian Wheat Board Act, Canadian Wheat Board Act, section 66
  9. ^ Canadian Wheat Board Act, Canadian Wheat Board Act, section 20 and 21
  10. ^ Canadian Wheat Board Act, Canadian Wheat Board Act, section 68
  11. ^ "UPSHALL DELIVERS STRONG PRO-CANADIAN WHEAT BOARD MESSAGE - Government of Saskatchewan". Gov.sk.ca. 1996-02-16. Retrieved 2011-02-14. 
  12. ^ Canola Growers oppose being included in CWB single desk
  13. ^ a b "Farmers vote to keep Canadian Wheat Board". CWB. 2011-09-12. Retrieved 2011-09-12. 
  14. ^ a b "Strahl fires wheat board president". CBC News. 2006-12-19. Retrieved 2007-08-27. [dead link]
  15. ^ "Pro-monopoly Wheat Board director fired". CBC News. 2006-09-31. Retrieved 2007-08-27.  [dead link]
  16. ^ "dead link". Retrieved 2007-08-27. 
  17. ^ "Strahl fires president of Canadian Wheat Board". CTV. 2007-12-19. Retrieved 2007-08-27. 
  18. ^ Eshpeter, Ken. "FARMERS OPPOSE TORIES' WHEAT BOARD POLICY AND STRONG-ARM TACTICS". Vue Weekly. Archived from the original on 2007-09-28. Retrieved 2007-08-27. 
  19. ^ "Farmers vote to end wheat board's barley monopoly". CBC. 2007-03-28. Retrieved 2011-12-30. 
  20. ^ a b "CWB versus Attorney General Canada re: barley regulations". Canadian Wheat Board. 2007-07-31. Retrieved 2007-08-27. 
  21. ^ Conservatives use Taxpayers Money to Kill Wheat Board. NFU press release, Nov 26, 2008.
  22. ^ "Top Court ruling a defeat for Canadian Wheat Board". Vancouver Sun. 2010-01-22. Retrieved 2010-01-22. 
  23. ^ "Ottawa broke law on Wheat Board, court rules.". Toronto: The Globe and Mail. 2011-12-07. Retrieved 2011-12-09. 
  24. ^ "An Act to reorganize the Canadian Wheat Board and to make consequential and related amendments to certain Acts.". LegisInfo. 2011-12-07. Retrieved 2011-12-09. 
  25. ^ "Judge backs Ottawa's bid to break up wheat-board monopoly". The Globe and Mail (Toronto). 2012-06-18. 
  26. ^ "The Economics of Single Desk Selling of Western Canadian Grain: Executive Summary". .agric.gov.ab.ca. Retrieved 2011-02-14. 
  27. ^ "Real Results: Leveling the Playing Field for American Workers and Farmers". United States Trade Representative. 2004-07-08. Archived from the original on 2007-03-08. Retrieved 2007-08-27. 
  28. ^ "USDA Budget Summary 2006 - Farm and Foreign Agricultural Services:". United States Department of Agriculture. Archived from the original on 2007-03-20. Retrieved 2007-08-27. 
  29. ^ "New EU budget: a historic missed opportunity". Open Europe. 2005-12-20. Retrieved 2007-08-27. 
  30. ^ CWB Election Results Show Support for CWB Monopoly - Johnstone, Regina Leader Post, 8 Dec, 2008
  31. ^ "CWB Report on Elections Process". CWB Website. 
  32. ^ "6 December 2008 revised WTO Doha draft modalities text (see Annex K)|WTO Website". Retrieved 2009-06-04. 
  33. ^ "Why workers everywhere should support the Canadian Wheat Board:". National Union of Public and General Employees. 2006-05-11. Retrieved 2007-08-27. 
  34. ^ "Harper 'disappointed' by court decision on barley". CBC News. 2007-08-02. Retrieved 2007-08-27. [dead link]
  35. ^ Stand Up For Canada, 2006, Conservative Party of Canada Federal Election Platform, page 18
  36. ^ [2][dead link]
  37. ^ "Grain monopoly end should be slow, orderly-Cargill Canada CEO". Reuters. 2011-05-11. 
  38. ^ "Wheat Board monopoly to end in 2012: minister". CBC. 2011-05-18. 
  39. ^ "Wheat board launches campaign against plan to end monopoly". The Calgary Herald. 2011-11-08. 
  40. ^ http://fullcomment.nationalpost.com/2012/04/30/colin-craig-free-the-fishermen

External links[edit]