October 14, 2014

Ottawa has farm groups chasing their own tails with transportation consultations

(Pelly, Saskatchewan) Ottawa’s latest consultation on grain transportation appears to have farm groups chasing their own tails while ignoring the real culprits in the grain marketing debacle observed Kyle Korneychuk spokesperson for the non-partisan Canadian Wheat Board Alliance.

Instead of recognizing the conflict of interest built into the system which allows inland terminal companies to also own port terminals, and in some cases grain ships, Ottawa has diverted the attention of many farm groups into wasting their time participating in a Canadian Transportation Agency consultation asking for input on what advice to give to the Minister of Transportation on the “minimum [grain] volumes the railways should move.”

Our analysis, which was supported by other independent analysts at the University of Saskatchewan Grain Summit earlier this year shows that the grain companies are responsible for the grain marketing catastrophe that was a result of ending the farmer-controlled Canadian Wheat Board.”

Even in times of bumper crops the farmer-controlled Canadian Wheat Board never had to pay significant demurrage because ships were waiting to get a load of grain.

“Meanwhile” observed Korneychuk “the opposition is playing ‘gotcha’ politics over whether the rail fines are daily or weekly. Farmers already know Minister Ritz’s word is worth nothing since he promised us a vote on killing the Wheat Board before the last election and then went back on his word.”

Korneychuk questioned the idea of forcing the railways to move an arbitrary tonnage of grain. “This does not help farmers” he explained “the elevator companies control what happens, and dictates from Ottawa to the railways do not change the fact the grain companies have made record profits because of their new position as middlemen between farmers and the international grain market – a fact even the private sector supporters of the FNA proposal to assume control of Ritz’s crippled wheat board acknowledge.”

Korneychuk said there is a need to recognize that killing the single-desk Canadian Wheat Board has allowed the private grain companies to insert themselves as middlemen between farmers and their former customers. “With the single-desk farmers got better than 90% of the world grain price by using their single-desk marketing agency and it did an exceptional job of managing the logistics of a constrained rail and grain handling system in an efficient and equitable way.”

“With the single-desk farmers had the market power to not only extract the best prices but they also balanced off the natural monopolies in grain handling and transportation” Korneychuk concluded, “and it benefited western grain producers for 79 years by allowing them to retain the beneficial ownership of their grain, sell directly to end-use customers, and manage delivery logistics. The multi-billion dollar grain robbery perpetrated by the grain companies last crop year demonstrates that Minister Ritz’s promises of competition in the grain industry benefitting farmers were simple-minded delusions.”

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