Grain Companies take $13 million Valentine’s gift from farmers

(Pelly, Sk., February 18, 2015) “Farmers are justifiably angry over the on-going grain robbery by the private grain trade” said Kyle Korneychuk, spokesperson for the Canadian Wheat Board Alliance (CWBA), an independent prairie-wide farm group.

“Using newly revealed figures we know that farmers had $13.7 million dollars taken from them by the grain handling companies in excess profits in one week alone. This is a continuation of the multi-billion dollar rip-off of farmers by the private trade since the killing of the farmer-controlled single-desk Canadian Wheat Board.”

“The grain companies can call it basis, the economists can call it excess profits or excess basis, but it is real money that the grain companies have which should have gone to farmers” Korneychuk added.

Korneychuk went on to explain the low prices offered by grain companies to farmers were compared to recent west coast port wheat prices reported by Agriculture Canada to Feb. 6/15 and then combined with Canadian Grain Commission shipping data from week 27 of the crop year (Feb. 2 to 8/15) to show the size of the rip-off. Korneychuk said that week’s west coast port price for #1 HRSW (Hard Red Spring Wheat) was reported as being in the range of $337.96/mt ($9.21/bu) while the local price available from one of the giant grain handling companies in eastern Saskatchewan was in the $205.52/mt ($5.60 /bu) range. This is a $133/mt ($3.64/bu) difference.

The Canadian Grain Commission reports that for the week ending February 8, 2015, 227,000 mt of wheat was exported from Vancouver and the St. Lawrence. “Simple arithmetic shows us that for that week alone the grain companies have taken $13,781,170.00 in excess profits away from farmers. It is a wonderful Valentine’s gift to the private trade from Ottawa which farmers pay for” said Korneychuk.

Korneychuk then went on to explain the math which shows how much the grain handling companies are taking now that Ottawa has allowed them to own the grain from the elevator pit and insert themselves between farmers and their former end-use customers:

Wheat                                                                       Per metric tonne               Per bushel
Port Price (FOB Vancouver)                                            $337.96                      $ 9.21
Average Rail cost                                                               $40.00                      $ 1.09
Maximum Regulated Tariffs: (Cdn Grain Commission)
Primary elevation                                                             $15.50                       $  .42
Terminal elevation                                                           $ 10.40                       $  .28
Terminal cleaning                                                             $  5.83                       $  .16
Sub total:                                                                         $71.73                       $ 1.95

Net to grain companies:                                                 $266.23                      $7.25
To farmers:                                                                      $205.52                      $5.60
Excess profits to grain companies:                             $60.71                       $1.65

Korneychuk noted that this extra $60/mt ($1.65/bu) is over and above the regulated profits and return on investment allowed grain handlers under Canadian Grain Commission rules – rules which allowed those companies to expand and prosper during the 77 years of the existence of the single-desk Wheat Board.

“We know that last year at this time the grain companies were enjoying record world prices for Canadian wheat which have held more or less steady” said Korneychuk. “We also know The Canadian Transportation Agency rate cap audit showed that the railways moved about 20% more grain than the previous year. So unless the grain is being dumped into the harbour, the grain companies are selling an unprecedented volume of grain and taking record profits from grain producers.”

“A year later, in the face of farmer outrage and the unsuccessful efforts of the Agriculture Minister and others to divert blame to the railways, the grain companies are still taking excess profits and farmers are still getting nowhere near the 90% or more of the world price we once received with the single-desk Canadian Wheat Board” concluded Korneychuk.
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