Turning the coyotes loose
(Feb 4, 2014) A few days ago a friend asked me why most of the media stories about the chaos in grain shipping at the west coast failed to mention the end of the single desk farmer-controlled Canadian Wheat Board.
As in any system with a lot of moving parts, one failure often leads to another. Ottawa killing the single desk Wheat Board has removed one of the very few balancing forces in a system that is otherwise dominated by just two oligopolies. One being the railways and the other the few companies with terminal elevators at port.
For anyone who understood the critical role the Wheat Board played in coordinating those moving parts and providing a counter-balance to the market power of those oligopolies, the chaos at ports is hardly a surprise.
Farmers could be forgiven for concluding the railways, who after all understand the system better than most, are really just seizing an opportunity to enhance their power and the wealth of their shareholders. We have been here before as John Morris, one of western Canada’s most perspicacious editorialists notes in the Manitoba Cooperator:
“The minister is also a fan of removing the revenue cap on grain shipments, which would be the railways’ final victory in a long-running campaign to get absolutely everything their way. Perhaps it’s ancient history now, but some of us remember when the railways hinted if not outright promised that if the government got rid of the Crow rate, they might be able to afford to improve service. The railways also said they could improve efficiency by getting rid of all those old wooden elevators and all those branch lines.
So the railways got what they wanted. The Crow is gone. The boxcars are gone. The branch lines are gone. The wooden elevators are gone. The wheat board is gone. But the railways are shipping half as many cars as they did 30 years ago. Their solution to improve things — and one apparently shared by Minister Ritz — is to get rid of the revenue cap so they can charge even more.
Did we mention that the revenue cap is set at a level to guarantee a profit, and is adjusted for inflation?”
Eating farmers’ lunch
When the Wheat Board was around, whenever there was a bump in production, as we are having this year, it just meant there were larger than normal carry-over stocks, while grain still flowed smoothly through the system to customers. The notable exception being 1998 when the railways discovered snow in the mountains. The CWB successfully sued both railways for poor service and fixed the problem.
So it is not a big surprise that the grain companies are blaming the railways and reporting a shortage of around 2,000 cars per week. This is certainly enough to disrupt the system and provide a convenient smoke screen to distract people from the basic cause of the transportation chaos, which is the loss of the single desk Wheat Board.
The short answer to my friend’s question about the absence of the farmer-controlled CWB in these stories just speaks to the short memory of the media and the fact they never asked anybody who might say “We told you so” which is what more and more farmers are starting to say.
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