By Joe Johnson (The Cascade) – Email
Print Edition: November 9, 2011
Is that a sickle which the Conservative government is slashing away with? It must be, as the Canadian Wheat Board is under attack from the right-of-centre party that is seeking its demise. The Tory government is in a complete ideological battle with the wheat board.
The significance of the wheat board should not be understated – it’s an important piece of Canadian history. It had a role in preserving our wheat growers during the Great Depression and, to this day, still ensures that farmers receive a minimum revenue from their crops.
Established in 1935, the wheat board acts as a government mandated single buyer to the producers of both wheat and barley. The producers grow their crops, sell it to the wheat board, and then the wheat board resells that product all over the world. This establishes an average world selling price which is then distributed back to the farmers based on the amount of wheat they contributed. It is a great way to maintain fiscal security for the farmers. It shields them from major economic fluctuations, minimizes competition, and gives them cost savings with economies of scale.
This system has worked very well over the years, but it’s not perfect. It only has operational control in Alberta, Saskatchewan, Manitoba, and the Peace-River region of BC. Because of this, there is contention between those growers that fall under the jurisdiction of the wheat board and those who don’t. And if a farmer within the jurisdiction would prefer to take their chances on the open market, it actually puts them in violation of the Canadian Wheat Board Act. This opens them up to fines that may be levied, or the more serious possibility of jail time. It’s then easy to imagine that anyone wishing to leave the wheat board would be very frustrated and see this as a violation of free enterprise.
Internationally, the wheat board has come under attack from the US by way of challenges to NAFTA violations. And while the Americans love to challenge Canada about the way we operate our business, this is just another thorn sticking into the board. If the federal government wants to improve relations with our trading partners, abolishing it is definitely one way to do it.
Bill C-18 will see August 1, 2012, as the day farmers are allowed to independently market their own wheat and barley. And it will also be the beginning of a five-year transitional plan for the government to take control of the wheat board. During this span they will then begin to look for realistic ways for it to be replaced by a private company. However, if that’s not possible, the wheat board will be shut down entirely.
So this sounds like good news for the farmer as they will be given choice for the first time. The only problem being that the whole organization will erode underneath the feet of farmers that wish to remain with the wheat board. As farmers opt to fend for their selves in the hopes of greater return, their prices will undercut that of the wheat board’s. Over a period of time the wheat board will then face greater and greater competition, driving prices down until the cost of the wheat board is no longer sustainable. This is one of the greatest concerns of farmers, that the price they receive for their product will drop significantly without the powerful wheat board behind them. It’s certainly an exceptional tactic on the part of the government, though. The Conservatives know that they don’t have the farmers support. A recent plebiscite found that 62 per cent of wheat growers still support the wheat board.
This debate is greater than just the preservation of the wheat board. The issue is the role of government and how our social and economic bodies function.
