Big harvest for some, not for others

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This article was published 17/08/2022 (1375 days ago), so information in it may no longer be current.

OTTAWA — Brandon-Souris MP Larry Maguire recalls bartering bushels of wheat to buy one of his first cars in 1969.

Up until a decade ago, the Canadian Wheat Board held a monopoly on sales of wheat and barley, a system that left some farmers trying unconventional ways to get better compensation for their grain.

“We were trading wheat to livestock operations, or to car dealerships to buy cars. They would come pick up the wheat,” said Maguire, who recalls his family selling bushels to a Niverville rancher and a Steinbach car dealership.

“It wasn’t very much fun,” said Maguire, who first entered politics to advocate for an end to the wheat board.

“It was frustrating, because you couldn’t market your own product.”

Before he was an MP, Maguire’s Conservative colleagues in the Harper government ended the Winnipeg-based wheat board’s monopoly in August 2012.

The decision was hugely controversial.

Groups of farmers in Alberta and southern Manitoba had long wanted an open-market system. In March 1996, a group of roughly 40 Manitoba farmers illegally crossed into North Dakota with grain, as a protest that landed at least one farmer in jail.

But others wanted to keep the government system, arguing it delivered stable compensation for northern farmers and shifted risks onto Ottawa. The CWB’s own plebiscite found a majority of customers wanted to retain the monopoly, and audited reports that found less than 10 per cent of profits paid for overhead costs.

A decade later, Canadian agriculture has changed drastically, but the debate hasn’t ended over whether the Canadian Wheat Board helped or hindered farmers.

“Unfortunately, it’s really hard to do any empirical analysis to shed light on this,” said James Vercammen, a food economist at the University of British Columbia.

Farming groups had provincial wheat pools created after the First World War, when sky-high prices for Canadian grain dropped by half. Those pools bought and marketed grain abroad until the Great Depression wreaked havoc on agriculture.

At the request of western provinces, Ottawa created the Canadian Wheat Board in 1935, a monopoly that used small-scale grain elevators and a subsidized railway network to get grains to ports.

“It allowed for the viability of elevator companies and predictability of the industry, but it didn’t offer the types of competitive pricing that is out there today,” Maguire argues.

Wheat was a steady commodity for global markets in the 1900s, when only specialized officials living abroad could predict demand and prices for grains.

But the latter half of the century saw changing market demands and agricultural innovation, with farmers shifting to soybeans, canola and lentils. Those commodities had always been sold on the open market, relegating wheat and barley to rotational crops.

And online services allowed farmers to find buyers abroad — and notice a huge price disparity with what American farmers were earning for wheat.

Saskatchewan farmer Stewart Wells argues the wheat board did a poor job of explaining how its research abroad and management of currency-fluctuation risks had benefited farmers.

“They were truly incapable of understanding what they were trying so hard to destroy,” said Wells, vice-president of the National Farmers Union.

It didn’t help that parliamentary hearings into shelving the wheat board had limited testimony to the capital, while Federal Court found the Harper government broke the law by not adequately consulting farmers.

“There was a series of this mythology, about all these things that would have happened if the wheat board just disappeared.”

For example, the old system restricted who could operate a flour mill, and opponents argued that they could open numerous pasta-processing plants once the market opened. But Statistics Canada shows little change in flour milling since 2010, while there is inconsistent data on domestic pasta production.

Maguire argues the shift to an open market prompted Manitoba’s agriculture sector to pivot from crops to livestock, since being so far from major ports drove up the price of the province’s wheat. To him, that’s what led to a booming hog industry.

“It was extremely important for the diversification and processing in the Prairies,” he said.

“It certainly has levelled the playing field even more for the opportunity to raise livestock in Western Canada.”

But the adjustment hasn’t benefited all of Manitoba. The monopoly had used the Hudson Bay Railway to ship grain through the Port of Churchill, and the end of the monopoly meant no grain left the port for four years.

The town still hasn’t recovered from the layoffs, with only occasional grain shipments during the port’s open season. To Maguire, the lack of private demand suggests it wasn’t profitable, and that the monopoly’s choices ended up undercutting profits for farmers.

Wells counters that farmers now sell their grain at a single point of time, instead of Ottawa sending top-up cheques when the wheat board was able to sell at higher-than-expected prices.

“It had a totally different marketing mandate than what the private companies have now,” he said.

As an economist, Vercammen says it’s impossible to actually tell what impact the closure of the wheat board has had on farmers, given other factors such as global supply shocks, climate change, a deregulated rail sector and more tech-savvy farmers.

What is clear is that the lack of a monopoly has shifted power to multinational corporations, he said.

“The smaller farmers certainly benefited from the price pooling.”

Agriculture companies now operate fewer, but larger-capacity elevators, and play a larger role in transporting and marketing grain. Economies of scale suggest those companies are making more revenues, and farmers are still debating whether that has meant more revenue for their vocation.

Vercammen, who grew up farming near Carlyle, Sask., says it’s likely the change has meant more profits for some and losses for others.

“The wheat board provided the advantage that allowed everybody equitable opportunity for marketing and getting the average price,” he said.

“There are two sides to all of these arguments.”

dylan.robertson@freepress.mb.ca