(January 8, 2014) With Ottawa now systematically destroying books in university and fisheries libraries across Canada, just as their appointees did to the library at the Canadian Wheat Board, many are noticing that evidence is no longer part of Ottawa’s decision making.

However we have to give Agriculture Minister Gerry Ritz full marks for conducting a science experiment in grain marketing.  You know the kind where you change only one thing at a time and then observe any changes.

First there was the worst drought in US history which removed that powerhouse of grain production from the world market so that Canada could quickly clear out our grain crop for record prices.  Prices which gave Minister Ritz’s killing of the single-desk farmer-controlled Wheat Board an undeserved reputation for causing higher prices.

Now this crop year we are seeing more normal production from the US  and the first results are in from Gerry’s science experiment about “what happens when you kill the single desk?”

Car Wreck

Tell the Minister his innovation was a success

All the concerns expressed by grain farmers have come to pass, in spades.

– there is chaos at the grain ports as terminals let ships sit idle while they favour handling their own inland sourced grain over cooperating with their rivals to keep our customers happy.

– The price farmers get for their wheat is hovering around half of what it was under the single desk Canadian Wheat Board.  Protein premiums are gone and our former international customers are complaining about their treatment at the hands of the private trade.

– The railways are taking advantage of the chaos to claim they need more money and reports are coming in that they have already raised freight rates in some parts of the prairies.  For shippers this is just another cost they are now free to pass back to farmers.  Besides, with their big inland terminals captive to one or the other of the US owned railways the shippers are hardly in a position to take on the railways over rising freight rates.  The farmer controlled CWB was the only one who ever successfully did so.

– Value adding is disappearing in western Canada and the announcements of pasta plants trumpeted before the election have been shelved along with the closure of a world scale flour mill in the middle of hard red spring wheat country at Medicine Hat, Alberta.

There is still high demand for grain in the global market but Canadian farmers are not really seeing that demand.  In fact the price of wheat is effectively zero over much of the prairies as the private trade squeezes farm prices by refusing to take delivery of grain until the spring at the earliest or as late as mid September when farmers need the bin space for the new harvest.

Critics of the Ritz experiment also warned that without orderly marketing, it would be a speculator’s field day as they could safely bet most of the huge Canadian crop would be dumped on the market regardless of demand and therefore prices would go nowhere but down – which is exactly what is happening.

So what’s left?  Well the price of wheat, for the first time in living memory is now higher in the United States than in Canada.  But that begs another question.  How long will US farmers tolerate attempts to flood their market with Canadian grain, clogging up their government subsidized transportation system and killing their prices?

The last time this experiment was tried was when another Conservative government in Ottawa killed the Wheat Board in 1921.  By 1923 the US imposed an emergency tariff on Canadian grain and cattle which was not relaxed for almost fifty years.  Between 1921 and 1929 there were more farm foreclosures in Alberta than during the whole of the Dirty Thirties.

So how many farmers will be bankrupted this time around?  Certainly those without reserves to put in their crops will face difficulties.  Ottawa’s experiment of destroying over 100 years of careful building so farmers could get the most out of the international grain market is now showing results which most farmers will not like and many will not survive.

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