Winnipeg Free Press - PRINT EDITION
'The man who killed the family farm'
Roving rural columnist finds Harper's decision to dismantle the wheat board goes against the grain for many Manitoba farmers
GILBERT PLAINS -- Clare McBride has already lost her Irish accent, even though her farming family just emigrated from the Emerald Isle in 1998. Except when she gets angry.
When asked what she thinks of Prime Minister Stephen Harper's decision not to let farmers vote on the future of the Canadian Wheat Board, her eyes dilate, her nostrils flare and that clipped, Irish tongue returns in all its glory.
"Stephen Harper's taking something that doesn't belong to him. It belongs to farmers," she fires back.
"It's like he sees a car and goes, 'That's a nice car. I'll just take it.' It's not his."
That feeling of betrayal is being expressed by farmers across the prairies over the Harper government's decision to dismantle the 69-year-old wheat board without allowing farmers a vote. A recent poll found 62 per cent of farmers favoured keeping the wheat board's monopoly on wheat sales.
I hear the word "dictator" again and again, from farm to farm, as I travel this staunchly pro-wheat board region around Dauphin and to the south of Riding Mountain National Park.
"I remember when we were in the Reform Party together and we talked about direct democracy," recalled Inky Mark, the former MP for this area, about his days with Harper. Direct democracy was where constituents would be allowed to vote on government policy initiatives and would even have a mechanism for recalling their MP.
Where's that direct democracy now? Mark asked. The federal government refuses to allow farmers to vote on the wheat board.
"It's because (Harper) knows he can't win it," growled McBride.
The Harper government has hardly discussed the issue. One can contrast this process with the intense debate over the Crow Rate rail subsidy in the 1990s. Then, the government of the day held public meetings with farmers across the Prairies.
There's been none of that. The Harper government's campaign has been tightly controlled, sticking to two main talking points.
One is the government believes in marketing freedom. Three generations of farmers have been forced to sell their wheat to the wheat board but will no longer after the board is gutted Aug. 1.
The other is the Harper government claims that it doesn't have to give farmers a vote because it was elected in most rural Prairie ridings that have farm constituents.
More on these arguments later.
Mark's successor in the riding is Robert Sopuck (Dauphin-Swan River-Marquette). Sopuck recently sat with the PM in lower level seats at the Winnipeg Jets season opener -- a favour that never would have been afforded to Mark. Mark was shunned by the party for representing his constituents' wishes and voting against the government's motions on the wheat board.
Privately, Sopuck has told people he's "a team player" and will abide by his government's decision. Mark has always been a maverick. In an interview with the Free Press, Sopuck denied his region is staunchly pro-wheat board. He maintained farmers in his riding are "split 50-50" on the issue.
"A 50-50 split?" people here reply. "Are you kidding?" Informed estimates show 80 to 90 per cent of farmers in this riding favour the wheat board.
"People out here think co-operatively. My grandfather said many times the reason he survived was because he could turn to his neighbours," said Larry Bohdanovich, who farms 2,500 acres of crop land south of Grandview and supports the wheat board.
It's a highly ethnic community with a history of pulling together, he continued.
"It's the Ukrainians and Germans and French guys that want the board the most. We tend to co-operate more as a community."
They are also staunch wheat board supporters simply due to logistics. They are too distant from the Canada-U.S. boundary to benefit from an open border with the U.S. -- that is, if the U.S. keeps its border open after the wheat board's gone.
Some here go so far as to say the government's discourse has tried to mislead. An example is a parliamentary communication sent by MP Merv Tweed (Brandon-Souris) to constituents that said the wheat board was "imposed" on farmers by government. That's a false statement.
The wheat board has been the sole seller of Prairie wheat since 1943, when a Liberal government agreed to farmers' demand to make the wheat board their mandatory seller. Under pressure from farmers, Manitoba later allowed votes to add oats and barley to the wheat board sellers' monopoly, which farmers passed with a majority of about 90 per cent. Saskatchewan and Alberta quickly followed Manitoba's lead.
"I was there. I remember," said Gerald Pederson, 79, who still farms with his son, Delbert, near Newdale.
"It wasn't imposed on us. Farmers were on their knees begging for the wheat board."
Someone who has taken an interest in the wheat board case is Arthur Schafer, Director of the University of Manitoba's Centre for Professional and Applied Ethics.
"The facts seem pretty clear," Schafer maintained. "One is that Western farmers have benefited significantly by selling their wheat through this monopolistic, collective marketing system. It's given them power vis-a-vis the huge grain companies and the international marketplace."
Dick Dawson, a former senior vice-president of Cargill Canada, once told the Free Press, in a candid moment after his retirement that farmers would be "dumb" to give up the wheat board.
"It's worked bloody well," Dawson said. "The overall scorecard for the wheat board would be a strong one."
To its credit, the Harper government hasn't argued very strenuously that marketing freedom will translate into greater prosperity for farmers. More money isn't going to magically appear in the markets. In fact, money will likely disappear. The wheat board doesn't take a profit from selling farmers' wheat. It merely pays its administration costs, which amount to about two per cent of gross sales. The rest of the money is returned to farmers.
Actually, the wheat board was allowed to borrow money at government rates and sell wheat on loan. For example, borrowing money at two per cent interest and loaning money at perhaps four per cent to a foreign buyer earned enough money in some years to pay all the board's administrative costs. So farmers had their grain marketed for free.
Private industry doesn't work that way. Private industry will definitely take profits.
The problem, maintained Schafer, is that "not all farmers have benefited equally" from the wheat board. For example, some who live along the border might be able to truck their grain into North Dakota and sell at a higher, spot price -- often a short-lived price opportunity -- on their own. Other farmers think they can do a better job of marketing their wheat than the wheat board.
"The ideology of liberty is very powerful," said Schafer. "So these farmers fly under the banner of liberty. How can you force everyone into the system? They wrap themselves in the banner of farmer autonomy and individual liberty. And this government is ideologically very sympathetic to appeals to individual liberty. The end result is the government is going to abolish the wheat board."
But it will be at a price. Schafer contends.
"Western farmers collectively will be heavy losers and so will Western Canadian agribusinesses. Huge American multinationals will benefit greatly. Some individual farmers near the border may benefit," Schafer said.
"What they're doing is going to seriously undermine, if it doesn't destroy, many smaller communities in Western Canada, and it's going to transfer power and wealth to gigantic American multinational corporations, and out of the hands of small family farms."
In Canada, Viterra has already said its operating profit should rise by up to $50 million by 2014, with the wheat board out of the way. Where will that profit come from? McBride knows.
"We get to tighten our belts, and they get to loosen theirs," she said.
It isn't likely to help Winnipeg. The Canadian Wheat Board had 435 employees at the time of the federal government's announcement, most of them working in downtown Winnipeg. Sources at the board say staff will be just 50 to 80 employees by Aug. 1 when the board officially loses its selling monopoly. (It will try to survive as a voluntary board -- Canadian Wheat Board 2.0, people are calling it -- even though it has no country elevators or port facilities to compete against private companies.)
Supporters say the wheat board monopoly has given farmers marketing clout, instead of tens of thousands of wheat growers "trying to undercut each other like in a Dutch auction," as farmer Doug Gamey of Strathclair put it. The wheat board has operated for almost seven decades with really only one asset but it's a powerful one: its monopoly to sell all Prairie farmers' wheat and barley. But that's the asset being taken away.
It's like a labour union in some ways, to put it in terms an urban audience might understand. Once that union becomes voluntary, its bargaining power falls apart pretty fast. The solidarity of labour unions -- a kind of monopoly of worker services, if you will -- earns employees seven to 14 per cent higher earnings over non-unionized employees, according to a recent Learning Curve essay in the Free Press by David Camfield, who teaches labour studies at the University of Manitoba.
Probably the most reputable study on whether the wheat board's monopoly benefits farmers was conducted in 1996 by respected farm economists Daryl Kraft, Ed Tyrchniewicz and Hartley Furtan.
The economists were allowed to compare the wheat board's actual sale prices, which are normally kept strictly confidential, versus open market returns over a period of years. They found the wheat board's monopoly added an average $13.35 per tonne onto wheat sold in Western Canada. That can mean earning as much as $15,000 to $20,000 more on 988 acres of wheat.
Sopuck argues that removal of the wheat board's monopoly will spur more food processing in Western Canada, and that may very well be true. That would create jobs and benefit the economy. But why would doing away with the wheat board encourage more processing? Presumably because it would lower wheat prices to farmers.
There are other realities to food processing. Most processing is done close to the markets where the end product is consumed. So flour millers congregate around places such as Buffalo, N.Y. Two reasons for that: it's cheaper to ship raw product than finished product, so you want to process foods close to major markets; it's easier to store raw product such as wheat down on the farm than finished product at production facilities.
"The question is whether the government can act in a lawless way," said Schafer. "But the question is also about the sovereignty of Parliament."
The crux of the dispute rests in Section 47.1 of the Canadian Wheat Board Act. The Act says that before government can add or subtract a crop from the wheat board, it must do two things: consult with the farmer-elected board of directors of the wheat board; and consult with growers of that crop by a vote.
The Harper government has done neither.
"Parliament passes a bill about how things should work in the future. And the new Parliament, the Harper Parliament, abolishes the wheat board without following the previous legislation and without repealing the previous legislation. Can they do it?" asked Schafer.
"In one sense, no Parliament can bind the future. In another sense, the government is supposed to abide by the rules. And the rules say you've got to consult the farmers, and they didn't."
Bill Toews, who farms near Kane in southern Manitoba, thinks the prime minister has underestimated farmers. Farmers have now launched no fewer than three court challenges against the federal government over its wheat board bill.
"I don't think the government anticipated farmers reacting the way we have," said Toews, one of eight farmer-elected board of directors removed from office by the Harper government last year. "I think the government wanted to do this thing quick and dirty and get it done."
Only one of the three court challenges has a chance to stop the government before it terminates the wheat board -- the others will likely be decided after the fact -- and it is the one brought forward by the former wheat board directors, including Toews.
The farmer directors won their first judgment in November. Federal Court Judge Douglas Campbell ruled the Harper government broke the law by introducing Bill C-18 to end the wheat board's monopoly powers without consulting the wheat board or holding a plebiscite of Prairie grain growers.
The federal Conservatives ignored the ruling and pressed ahead anyway, passing Bill C-18, the Marketing Freedom for Grain Farmers Act, the following month.
The eight farmer-elected directors of the wheat board are now seeking an injunction to stop Bill C-18 until the legality of the government's actions can be contested in court. A ruling from Manitoba Court of Queen's Bench Judge Shane Perlmutter is imminent.
The second case before courts is Ottawa's appeal of the Campbell decision, and responses from the board of directors and another group called Friends of the Canadian Wheat Board. The third and most recent court action, again by Friends, challenges the constitutionality of the federal government's actions.
Toews said Prairie farmers are a tenacious group.
"Everybody I talked to says, 'we'll take it to the Supreme Court if we have to,' " he said. "It's too important a case, and not just important for the Canadian Wheat Board. As far as we're concerned, it's an issue of democracy that all Canadians should be concerned about."
If court actions fail, farmers like Bohdanovich predict the loss of the wheat board will accelerate the rate at which farmers leave the land. Farmers will be forced to own larger farms just to earn the same returns they made when the wheat board monopoly existed.
You just have to drive through rural North Dakota, which has an open market system. North Dakota's countryside is empty. Farms have grown to 20,000 to 40,000 acres in size. Good-sized farms in Manitoba are now 10,000 to 20,000 acres. It means fewer people to support rural communities.
Bohdanovich says he will be forced to expand his land base just to maintain his current lifestyle.
But there will be one significant difference between farmers in Western Canada and the United States. The U.S. subsidizes its farmers to a much greater degree.
"American farmers are hugely subsidized, much more than we are. So if we get rid of all our infringements on the market, while the Americans keep theirs, as they surely will, it's a kind of suicide," said Schafer.
Brad McDonald, who farms near Strathclair, says the Harper government should have at least received something in return from the U.S. for giving up the wheat board. Americans have been bitterly opposed to the board for decades, saying it gives Canadian farmers an unfair advantage.
Another issue is that wheat is more complex to market. Canola, which has always been sold on the open market, has just eight degrading factors, for example frost damage. Wheat has 23 degrading factors including frost, ergot, fusarium and wheat midge.
Under the wheat board, farmers didn't have to worry so much about these factors. With its tremendous volumes, the board could often blend the wheat to make a higher grade. Under a private system, farmers will lock in a price and grade on the futures market before they know what kind of crop they have. They could lose value when they deliver it.
Certainly there is a deep divide among farmers. While 62 per cent support the wheat board, that leaves 38 per cent that oppose it, and that's a sizeable chunk. How do you balance the rights of the individual against those of the majority?
If there were a vote, the issue becomes what percentage of the vote is required to remove the wheat board. One place that tries to balance individual and group rights is labour union law. Under sections 49 and 50 of the Manitoba Labour Relations Act, a vote of 50 per cent or more is needed to decertify a union. Under those terms, anti-wheat board farmers wouldn't have enough support according to the poll.
Of course, there hasn't been a vote.
But unlike a union, once the wheat board is gone, it can't come back. That is stipulated in Canada's bilateral trade agreements. Another government can't come in and bring back a wheat board. That makes it imperative that any decision on the wheat board is made properly.
The Harper government claims it has a mandate because it won most rural Prairie ridings last election. And in the campaign, the PM made his intention known that he wanted to eliminate the wheat board.
Is that enough?
In response, wheat board supporters say a government runs an election campaign on dozens if not hundreds of different policies, not just one. As well, farmers have seen their political clout diminish over time to where they now represent just two per cent of the population.
Besides, the wheat board has its own elections. The wheat board is controlled by a farmer-elected board. If farmers want to end the wheat board, they can vote in candidates opposed to the board. Many people have run in wheat board elections representing the exact views that Harper holds, but few have been elected. If a majority of wheat board opponents were elected, they could end its mandate, but that's never come close to happening.
Some people question whether the Harper government would try similar actions against segments of society other than farmers.
"It's deeply disrespectful," said Schafer. "Farmers have a right to feel betrayed, not because the Conservatives did something they said they would do, but because the Conservatives are behaving in a lawless manner that treats the community with disrespect by failing to consult farmers before changing the law."
McBride can't claim her forefathers built the wheat board, but it was a deciding factor in her family's decision to move to Western Canada. Her fiancé, Justin Dutchyshen -- the couple will be married by the time this goes to print -- operates one of the largest farms in Manitoba along with his father, Wayne, near Gilbert Plains, just east of Dauphin. The Dutchyshens have deep roots in the area.
Although just 29, Dutchyshen has already seen farmers lose their grain elevators, rail branch lines, the wheat co-ops and now the wheat board. He thinks farmers must make a stand.
"My grandfather and great grandfather were advocates of the board and helped start the board. Those guys worked so hard to keep it. To see it now go out in a blaze..."
Former MP Mark is more direct.
"I believe that within five years, half the farmers here (in the riding) will be gone," said Mark.
"It's about turning rural Canada into a corporate farm," he maintained.
"I believe Harper will be known as the man who killed the family farm."
Republished from the Winnipeg Free Press print edition February 25, 2012 J1
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