Ripple effect of monopoly's loss

Many people seemed to think ending the Canadian Wheat Board's monopoly would result in little change to Prairie farming, except to give farmers more ways to sell their grain.

So there has been a bit of wailing lately as some of the more predictable spinoffs start to gyrate -- namely the City of Saskatoon inviting the Canadian International Grains Institute (CIGI) to move and certain foreign multinationals sniffing around Canada's biggest little grain company, Viterra.

CIGI provides targeted marketing and client services that have proven incredibly efficient at developing and maintaining customers while feeding market intelligence back to the Canadian industry.

Seventy per cent of CIGI's research, customer support and training programs are related to wheat, durum and barley.

Its $8-million annual budget is cost-shared between industry and the federal government through matching investment programs. The board contributes 30 per cent, so its absence will cut CIGI's funding by 60 per cent, although the federal government has stepped in to fill the gap over the next four years or so.

CIGI has helped brand Canadian wheat as the best in the world.

But more than that, CIGI is arguably one of the best international ambassadors a small Prairie city with a reputation for cold winters could have.

More than 35,000 people representing grain, oilseed, pulse and special-crops industries from 115 countries have participated in CIGI programs and seminars over the past 40 years.

Many of those programs are held in Winnipeg, usually during the summer months, with participants staying anywhere from five days to six months. The institute also hosts up to 600 domestic participants in Winnipeg every year, many of whom have never before been here. That's a lot of hotel rooms and restaurant meals.

But with the board no longer its anchoring supporter, there is less reason for CIGI to remain, especially since Saskatoon has invested significant resources over the past 20 years or so to develop an agriculturally focused research cluster.

Whether CIGI stays or goes is of little concern to farmers, provided it continues with its branding and customer-support roles.

But it does matter to the city of Winnipeg and to the province of Manitoba. Provincial Progressive Conservatives recently pounced on that in an apparent bid to shame the Selinger government into entering a taxpayer-funded bidding war to keep CIGI home.

This new-found concern over the loss of Winnipeg jobs comes from the same party that supported the Harper government's change to the wheat board, and in fact criticized the NDP's campaign to protect the board and keep the jobs in the province as a waste of taxpayers' money.

As for Viterra, which has acknowledged it is entertaining offers from outside interests, there is no good reason why regulators shouldn't allow it to be bought up by the likes of Swiss-based Glencore, rumoured to be collaborating with Canada's second-biggest little grain company, Richardson International, on the deal.

Viterra is a grain company, not a national treasure or resource like potash. And it recently announced it expects revenues to jump upwards of $50 million now that the CWB is allowing it to deal directly with farmers.

Known as the "biggest company you never heard of," Glencore was founded in 1974 by Marc Rich, a trader who fled the United States in 1983 after being indicted for racketeering, trading with Iran and dodging a $48-million tax bill. Then-U.S. president Bill Clinton later pardoned him, and he sold the company to management in 1994 for US$600 million.

Glencore has since become the world's largest commodity trader, reporting revenue of $186 billion in 2011, up 28 per cent from 2010. It recently floated an initial public offering of $10 billion. Other rumoured Viterra suitors are ADM, with 2011 revenues of $81 billion, and Bunge, with $58 billion. By comparison, Viterra's revenues were a mere $8.25 billion.

New ownership won't matter much to farmers, other than to ensure they are dealing with an organization that has very deep pockets. But the implications for Canada's reputation as a quality supplier of grain are less clear.

Canada has a unique grading system that is recognized as among the best in the world for its ability to put consistent quality into customers' hands year in and year out. They don't always get the premium, but they do get the sale.

Some claim that's not necessary and Canada is selling a Cadillac wheat when most of the world is paying Ford prices.

The multinational grain companies now selling Fords from everywhere else are taking over our Cadillac showroom. Will they keep the brand or make Canadian farmers compete for the Ford business?

One gets the feeling the changes in play today are just the tip of the iceberg.

Laura Rance is editor of the Manitoba Co-operator. She can be reached at 792-4382 or by email: laura@fbcpublishing.com

Republished from the Winnipeg Free Press print edition March 17, 2012 B5