(Feb. 18, 2013) News that the giant American firm, Archer Daniels Midland will close its modern flour milling plant at Medicine Hat, Alberta, in the heart of wheat country means lower wheat prices for farmers. This comes as no surprise to those who understood how the former Canadian Wheat Board operated when it was owned and controlled by farmers.
It was in the interests of famers to encourage local processing of grain so the CWB had a long standing policy of equalizing grain prices for processors so larger processors could not demand volume discounts from the CWB and squeeze out smaller processors. The Board also adjusted prices to account for different markets and freight costs and provided farmers with cash incentives to deliver directly to local processing plants. This resulted in expanding Canadian-based wheat and barley processing, more Canadian jobs, and more money in grain farmers’ pockets.
With the end of the farmer controlled single-desk Wheat Board that is all gone now. So ADM’s announcement that it is shutting down its Medicine Hat plant to focus on what it calls its “larger, more centrally-located” flour mill at Calgary comes as no surprise. In fact the Calgary plant is only six percent larger than the Medicine Hat plant. Calgary’s so-called central location really means farmers will have a longer distance to transport their grain and that means lower prices at the farm gate. Unless the world has turned upside down, consumers cannot expect ADM to lower its profit margins as a result of lower farm gate prices.
ADM is the largest flour miller in Alberta. One of the benefits Agriculture Minister Gerry Ritz touted about killing the Wheat Board was more value adding. With the move to kill a little under 20% of ADM’s flour milling in Alberta, those Ritz promises seem as credible as his pre-election assurances farmers would get to vote on keeping or killing their Canadian Wheat Board.
Here in Alberta it is Family Day. This plant closure is Prime Minister Harper’s and Minister Ritz’s family day present to the workers at Medicine Hat losing their jobs and the farm families who will see their grain cheques get smaller.