After the partial privatization of the legendary 113 year old Indian Head Tree Farm run by Agriculture Canada (rebranded as the Agro-forestry Development Centre some years ago) scientists, staff, and the Reeve of the Rural Municipality of Indian Head raised the alarm earlier this summer that the new private sector operator had allowed thousands of tree seedlings to be overtaken by weeds. As anyone who has planted a perennial garden or miles of shelterbelts knows, once weeds get established the work of years can be undone in a season.
This moved the Public Service Alliance of Canada (PSAC) to issue an anguished news release on the subject. A few days later they withdrew their new release’s contentious characterization of the privatized working conditions at the Indian Head Research Station tree nursery among the volunteer staff. It is notable nobody has withdrawn observations on the poor stewardship of the Tree Farm under privatization. After all why should they? The weeds choking thousands of tree seedlings speak for themselves.
No doubt the passion of the PSAC workers comes from a deep sense of the importance of the Tree Nursery and its place in western Canada. Canadian historian James Gray wrote Men Against The Desert about that heroic struggle to preserve and enhance the ecology of the dry prairies through the planting of shelter belts.
When you drive anywhere in the rural west you can see evidence of that heroism and selflessness in the shelterbelts which are still so common. Remember the farmers who spent years of hot summers watering those little sticks and keeping them weed free so they could grow to maturity had no expectation of benefitting from those plantings. They were doing so for the benefit of the next and future generations.
The staff at the tree farm was part of that bigger project – a project bigger than any individual lifetime and a project which recognized the obligation of one generation to the next.
So to see generations of work compromised by the invincible irrationality of the Federal Agriculture Minister’s pogrom against those values makes this farmer seethe, so I can only guess at the restraint shown by the PSAC people and I can sympathize with their concerns.
Urban people have almost no conception of the extent of the vandalism of basic agricultural resources, like tree farms and research stations, not to mention the privatization of the wheat genome now almost completed by the Federal Agriculture Minister.
To see the work of generations destroyed by the group of zealots now occupying Ottawa demonstrates the fragility of the Canadian state and its unwillingness to do what those heroic prairie farmers and the government workers who supplied generations of shelterbelt trees did so well – look to the future.
but farmers still captive
On the face of it the recent Supreme Court of Canada ruling that shippers have the right to appeal to the Canadian Transportation Agency (CTA) on things like fuel surcharges imposed by railways on existing contracts might seem like good news for farmers.
An Ottawa based transportation lawyer is quoted as saying the decision upholds the 2008 Canada Transportation Act which was intended “to rebalance the legislative framework in favour of shippers”
While Vancouver lawyer Forrest Hume, the legal advisor for the Canadian Freight Management Association (FMA) the industry group which supported the case launched by Peace River Coal, is quoted in an FMA news release saying “From this point forward, all shippers that have a complaint about the growing list of incidental and supplementary charges imposed by the railways will know that they have recourse to complain to the regulator whether or not there is a confidential contract in effect.”
In its decision the Supreme Court observed “…rail services were and are not provided in a perfectly competitive marketplace. In certain circumstances, the railways were seen to have superior market power to shippers.”
So it was a good ruling for coal companies, grain handling companies, and other shippers dependent on rail service. However, this does not change the fact that farmers are not shippers under the Act or the fact few farmers or their organizations have the deep pockets necessary to undertake such an appeal on the off-chance they are a shipper.
Those few farmers who are still besotted with the private grain trade and their Astroturf organizations, from which many of them enjoy off-farm income, will no doubt argue this ruling will create more of the magical competition which is supposed to make everyone better off.
In the real world of farming, most grain farmers are captive to one or two of the handful of grain handling companies and those companies’ facilities are largely captive to one or the other of the railways. In the event members of the Western Grain Elevators Association actually manage to lower their rail costs, it is a safe bet they will not be passing those savings on to farmers in the form of higher grain prices.
In 1996/97 the single-desk CWB successfully fought to establish they were a shipper of grain under the Transportation Act and used that ruling to win a level of service complaint against the railways and later civil judgements which put tens of millions of dollars back into farmers’ pockets. Thanks to Minister Ritz killing the single-desk, farmers no longer have the market power or the legal right the single-desk Canadian Wheat Board gave them to play in that elevated league.
It is also worth remembering that rail costs are now a smaller part of the overall cost farmers pay to move their grain to market. Thanks to the end of the single-desk farmer-controlled Canadian Wheat Board the private grain trade now has superior market power to farmers. This allows it to make greater profits, easily making grain handling the biggest cost to farmers.
Before the end of the CWB, the grain handlers were regulated service providers like the railways still are, and were restricted by law as to how much money they could charge the farmer-controlled CWB. Effectively farmers owned grain marketed by the CWB from their farm to the end use customer. Now it is the grain handlers that own the grain from the time the farmer dumps it at the elevator, and the handlers are free to make as much money as they want from that grain and pay the farmers however little they can get away with.
The Supreme Court decision benefiting shippers does not change the fact western farmers are now captive suppliers with no market power and are receiving less than half of the world price they got with the CWB.
“The Canadian Wheat Board is dead but CWB, its government-owned, open-market successor, is still a lightning rod for controversy.” – Manitoba Cooperator
Last week Minister Ritz was quoted in the Manitoba Cooperator claiming killing the single desk Canadian Wheat Board is having a positive impact across the prairies.
He is starting to sound like one of those dreadful 1960’s “Chatty Cathy” dolls with the string coming out between its should blades. Pull the string and it would repeat the same mindless phrases over and over.
How does taking almost 2 billion dollars of wheat sales out of farmers’ pockets in the last ten months and giving it to the private grain companies, most of whom are foreign owned, have a positive impact across the prairies?
How does having premium customers like Japan and China complaining about quality assurance and reliable supply, two areas the single desk excelled in, have any sort of positive impact?
We know from the audited statements of the now dead Canadian Wheat Board that the cost of moving wheat to port was in the range of 78 cents per bushel, and that was all in: rail, elevation, cleaning and terminal service. Over the past months the cost to farmers is now almost ten times as high – somewhere north of $6.69 per bushel. There are no Chatty Cathy talking points from Minister Ritz on where that money has gone aside from belligerence about why he will not table an audited statement for his crippled CWB.
We know the railways are constrained by law from taking any more money than they usually do, so that leaves the private grain companies with some explaining to do and blaming the railways when they were delivering grain at 98% of normal just does not cut it.
Blaming the oil companies for shipping oil by rail is always fun, but that oil largely goes south, not east or west. In 2013 there were about 140,000 rail car loads of oil shipped in Canada. That sounds like a lot until you realize that the CWB would regularly ship 240,000 cars of grain to the west coast each year, and there would be a similar number shipped by the private trade in other grains, not to mention the grain cars going east to the Lakehead, north to Churchill, and a smaller number of durum and malt barley cars going south to the US.
With the latest news that the private grain trade, which holds an oligopoly on port terminals, is not handling Minister Ritz’s CWB grain, we can say with confidence that only Chatty Cathy could repeat Minister Ritz’s mantra that “dual marketing” will work. As so many single desk supporters pointed out: without the farmer controlled single-desk Canadian Wheat Board, the only choice is the private trade.
The contest of interest now is the power play going on between the railways and the private grain trade in front of the Canadian Transportation Agency. Whoever wins that one, grain farmers can be assured they will pay more and get less – unfortunately farmers cannot take that to the bank.
Sometimes a single act or event can symbolize a whole culture. June 8th is the 66th anniversary of one of those profound acts. And this year’s announcement that the University of Saskatchewan will be closing its law library is one of those events which symbolize a different culture.
One of the displays in that law library was the rear fender from a farm tractor which symbolizes the culture that built the University of Saskatchewan. It was on June 8, 1948 Saskatchewan farmer Cecil George Harris while pinned under his overturned tractor, used his jackknife to carve his last will and testament into that fender’s paint. The fender was presented to the Court and used to establish the precedent that a handwritten will could be a valid legal instrument.
Mr. Harris was a farm person and he no doubt knew he was dying, yet his message was optimistic and his last efforts and thoughts were to protect his family’s future by writing a will. That says something about the quality of prairie farm culture and looking to the future – perhaps it is those long prairie vistas.
Since the law library where it was housed is now a victim of the same austerity mania that Ottawa uses as a cover to destroy what it either does not like or will not understand, it would not be a surprise to see this valuable artifact put in a back room or at worst, given the disrespect for academic freedom so recently on display at the University of Saskatchewan sold or sent to the recycling bin. Pretending a university can have a law faculty without a dedicated law library says much about the current culture which has come down from an Ottawa regime in full retreat from evidence-based policy.
Over the past years this organization has pointed out the systematic destruction of research capacity in grains carried out by Ottawa. As grain producers our members understand all too well what happens when research capacity is privatized. We have a vivid example this spring where seed canola which was privatized in the 1980s now costs in the order of $600 a bushel compared to seed wheat which is still funded by farmers in the public interest and costs a fraction of that astronomical number.
With the closure of the Winnipeg Cereal Research center, our capacity to continue producing the highest quality of cereal grains is being thrown to the winds by Ottawa and the giant agro-chemical companies are picking up the elite scientists who gained their expertise in farmer- and publically-funded laboratories and research farms. Ottawa wants all plant breeding to follow the canola model which aims to promote herbicide sales while coasting on the yield gains already in hand created by farmers funding science in the public interest.
Scientists, commentators, and academics from around the world have expressed dismay at the systematic destruction of scientific and academic libraries across Canada under the trusteeship of the Federal Government. One of the first acts of this pogrom against evidence was the destruction of the Canadian Wheat Board library in 2013. With last month’s sabotage of Health Canada libraries, even the general public should now realize what a serious problem this represents.
While it is all too easy to destroy libraries, research facilities, and marketing agencies, Ottawa may find that it is not so easy to destroy the cooperative values symbolized in a steel tractor fender now hidden away at the University of Saskatchewan.
Last month the Canadian Canola Growers Association (CCGA) provided western farmers with their laugh of the day when they breathlessly opined in a news release that an amendment to the so-called Fair Rail for Grain Farmers Act “could open the door to have compensation flow back to farmers from the grain companies, when railway service failure has occurred.”
At the time many thought this simple-minded observation showed that the CCGA was playing its usual role as an apologist for the grain companies – another example of an Astroturf organization with no real connection to the farm community beyond a glitzy annual general meeting in a large city hotel celebrating Board members mainly noted for their deeply conservative pedigrees and idealization of private markets no matter how defective or destructive.
However, the announcement the CCGA would be filing a level of service complaint with the Canadian Transportation Agency (CTA) demonstrates its Board are more than willing to waste farmers’ money on futile and pointless gestures to provide political cover for a Federal Agriculture Minister and the private grain companies who have stripped over five billion dollars from western farmers in less than ten months.
Did the CCGA Board of Directors notice that under the Canada Transportation Act only “shippers” which the Act defines as “a person who sends or receives goods by means of a carrier or intends to do so” may launch level of service complaints? As has been said by lawyer and independent Alberta Conservative MP Brent Rathgeber and many others, farmers are not shippers.
Perhaps for political reasons the CTA may accept the notion that the CCGA has the intention of actually shipping some canola by rail but otherwise one has to wonder at the CCGA spending farmers’ money for such a faint-hope appeal to the CTA unless its purpose in doing so is political.
If the CTA considers the complaint, farmers’ money will be spent pushing a weak argument which the railways will be happy to refute with reports from Quorum, the Independent Grain Monitor showing overall grain shipments are down only 6% and shipments to Vancouver are down only 2%. It is hard to make a credible case against the railways when the system to Vancouver is running at 98% capacity and the overall system is running at 94% capacity.
But it gets worse. The CTA could appoint a mediator in the dispute and then the CCGA would also be on the hook for half of the mediation costs, which could amount to hundreds, if not thousands of dollars per day. Chump change for the railways, but a lot to farmers who’s hard earned money the CCGA should not be wasting on political smoke screens.
Being successful at the CTA is only the first step however. To put money back into farmers’ pockets, the CCGA, like the farmer controlled Canadian Wheat Board before it, would have to sue the railways for damages. The CWB was able to show that as the shipper of all wheat and barley, it had sustained millions in damages which it was successful in getting from the railways and returning to farmers. However, the CCGA would be hard pressed to show how it sustained any damages since it is, in its own words “an association of associations.”
So it would be fair to say this effort by the Canadian Canola Growers Association is likely to only prove useful for providing political cover and some bogus legitimacy for Bill C-30, better named the Fairy Dust for Grain Farmers Act given Royal Assent yesterday (May 29/14).
Perhaps within the Ottawa bubble and amongst the most gullible of the urban based agricultural press this will be seen as a bold move that will put money back into farmers pockets, but the real question is how can a group like the CCGA, which has only the thinnest democratic mandate, use farmers’ money to provide support to a Minister who has no credibility for achieving anything beyond being supremely destructive?
There is more news on the Fairy Dust for Grain Farmers Act. Apparently a procedural matter has slowed the Senate’s rubber stamping this bit of legislative smoke and mirrors with predicable huffing and puffing from Conservative Senators desperate to be seen doing something to off-set the billions of dollars of damage they’ve already done to western grain farmers by killing the single-desk Canadian Wheat Board.
In related news the giant Louis Dreyfus Company launched a level of service complaint against CN Rail which should come as no surprise nor should the applause from the Western Grain Elevators Cartel since a successful complaint ought to increase their profits.
The critique of the Fair Rail for Grain Farmers Act (Bill C-30) made by an independent Conservative MP from Alberta was that it did nothing for farmers since farmers are not legally considered shippers. Shippers are the ones who own the grain and farmers give up their ownership of the grain once they unload it at the elevator.
What is a surprise is the expectation by some of the farmers who supported killing the Wheat Board that the grain companies winning level of service complaints will act like the single-desk Wheat Board and increase prices to farmers.
I would not hold my breath on that one. The giant grain companies did not get that way by leaving money on the table for farmers. Their shareholders and owners can be forgiven for wondering why they should limit their legally acquired profits much less share those profits with farmers.
To use an ugly phrase, “farmers have no skin in this game” thanks to Minister Ritz killing the single-desk Wheat Board, even if they are the ones who pay for the whole thing. Agriculture Minister Gerry Ritz kept his promise that farmers would no longer be responsible for the grain once it hits the elevator pit. It is too bad some farmers and too many politicians thought that was a good thing without thinking about the money farmers would lose.
The sound and fury in the Senate about a procedural matter slowing consideration of Bill C-30 signifies nothing for farmers. Perhaps some fairy dust fell in the works.
On May 1 the misnamed Fair Rail for Grain Farmers Act (Bill C-30) hit what Conservative partisans called a “speed bump” when several of its provisions were ruled Out of Order by Speaker of the House Andrew Scheer after a point of order was raised by independent Edmonton-St. Albert, Alberta, MP Brent Rathgeber last month (April 10/14).
Mr. Rathgeber understood the implications of what has been said here and elsewhere about this legislation: with the killing of the single-desk CWB farmers are simply not shippers since they lose ownership of their grain when it leaves their truck at the inland elevator so Bill C-30 will do next to nothing for them. When he was attacked by Minister Ritz, Mr. Rathgeber, a lawyer, drove that point home with the following response quoted in IPolitics:
Many will recall that Mr. Rathgeber left the Conservative caucus to sit as an independent last year over what he saw as a lack of government transparency. His intervention on Bill C-30 shows that Ottawa has not changed its ways. It is still promoting policy which appears designed to mislead the public with no planning and certainly no respect for evidence.
So the Fair Rail for Grain Farmers Act should really be called the “Fairy Dust for Grain Farmers Act.” And a thank you is owed to independent MP Brent Rathgeber for highlighting that this will do nothing to help farmers or stop the multi-billion dollar grain robbery of farmers that Minister Ritz and his cronies are now attempting to cover up.
This bit of legislative smoke and mirrors will be sent back to the Commons Agriculture committee today. Farmers can look for more sound and fury signifying nothing. While Minister Ritz’s rapidly shrinking band of supporters just need to repeat these words from Peter Pan: “All you need is faith and trust… and a little bit of pixie dust!”
Editor’s note (May 5/14): This afternoon Bill C-30 was given third and final reading in the House of Commons and now moves on to the Senate. As stated above, this legislation will do little or nothing for grain farmers who, with the exception of producer car loaders, cannot be considered “shippers.”
At times the whole Wheat Board, grain marketing issue can appear dauntingly complex. So here is a quick summary:
- Since the invention of the telegraph, the international grain market has been controlled by five giant companies.
- Aside from Canada there are really only three countries producing reliable bulk supplies of grain for international sale: The United States, Argentina, and Australia. Pre 1917 the Ukraine was also among this group. Depending on weather and other factors India and China occasionally export wheat and other grains.
- Western Canadian farmers were unique – they developed a collective bargaining agent called the Canadian Wheat Board to deal directly with end-use customers bypassing the international grain companies.
- About 70% of the west’s wheat is exported overseas. 20% is milled and consumed in Canada and 10% is exported to the United States.
- They also developed the largest farmer owned cooperative grain handling system in the world known as the prairie Wheat Pools.
- At the same time western farmers supported the development of plant breeding in the public interest.
- Western Canada’s niche in the international grain market was supplying quality assured grain to the world’s highest paying markets while, with the exception of Australia, the other grain producing areas concentrated on undifferentiated bulk sales.
These innovations are unprecedented in human history and served western farmers well for almost 80 years. They have been slowly destroyed by governments acting under pressure from the international grain trade. The end of the farmer controlled single desk CWB has resulted in chaos in grain exports, and huge profits for the private grain trade at the expense of farmers as the following letter from a Manitoba grain producer shows.
Mr. Ritz, I am a small- to medium size farmer. I harvested about 50,000 bushels of wheat last fall. According to your CWB’s market newsletter, the Vancouver selling price has been about $11 per bushel this winter.
Under the former Canadian Wheat Board, the traditional rule of thumb that farmers used was to subtract $1.50 per bushel from the average port selling price to determine what they would receive for their grain. This covered the board’s marketing cost, the grain company handling fees and the transportation.
Therefore, if you had not destroyed the Canadian Wheat Board, I would have received $9.50 per bushel. That would have translated into a gross farm income of $475,000. With the wheat board gone, I am now receiving $5.50 per bushel instead of $9.50. Thanks to you, I have been shortchanged $4 per bushel.
That translates into a reduction of $200,000 from my gross farm income. My return on wheat is now below the cost of production.
You and Prime Minister Harper are responsible. Please send a cheque.
The last time this happened was in 1921 when the CWB was ended by Ottawa. It resulted in more farm foreclosures between 1921 and 1929 than during the whole of the great depression. Farmers lobbied very hard to restore the CWB and succeed in 1935. The farmer-controlled single desk CWB was officially* ended by Ottawa in 2012 without a farmer vote.
* Note: A colleague and friend from Manitoba pointed out that although the CWB single desk officially ended August 1, 2012 that it effectively ended with the passing of Bill C-18 in December of 2011 just months after Ag. Minister Ritz had promised farmers they would have a vote on ending the CWB.
He writes: “Effectively the CWB ended as soon as the bill was passed since the elevator companies stated to do private contracting for delivery after Aug 1, 2012.”
Many thanks for an important clarification.
But the profits of the grain companies are real
After all the smoke around the chaos in grain marketing has cleared, the evidence shows two things very clearly.
- Grain exports are hardly down at all.
- It is obvious that the private grain companies have run the system to make record profits at the expense of farmers.
These are facts agreed upon by the majority of informed observers except for the Western Grain Elevators Cartel which comes as no surprise. So in this multi-billion dollar murder mystery we know who done it, how they did it, and the motive is for profit.
But it is still interesting to ask how this was allowed to happen. At the heart of the whole mess in grain transportation is a quasi-religious belief held by many that the more unregulated the market, the more efficiently it allocates resources. The conventional wisdom is even though it is not always fair, overall efficiency is more important.
This thinking comes from the fact many economists of a certain age were weaned on Samuleson and Scott’s textbook Economics which contains a little fable to illustrate their view of the dangers of regulating markets. It is about a King who interfered with the market to feed his people and the result was “his starving people blessed their starving king.”
Outside the pure celestial realms of theoretical economics, government rationing of resources is always the rule during crisis and regulation is critical for the post-Second World War prosperity that gullible politicians have unravelled over the past 25 years.
The difficult thing about explaining the current mess is the evidence shows the belief that an unregulated market produces efficient use of resources is demonstrably false but people do not like having their assumptions challenged by evidence. Last year the CWBA issued a news release on this problem with a blasphemous headline which turned out to be a bit ahead of its time: “Competition creates chaos at ports.”
Killing the CWB was a bad move not just because farmers are not getting a “fair” share, but because it has produced a remarkable under-utilization of capital resources: ships going back to anchor two and three times, terminal elevators running significantly under capacity, rail cars sitting, etc. Yet, from an overall financial view, money is still being made – just not by farmers. With the single-desk, money was being made (with most of it going to farmers) but the big difference was that with the single-desk CWB the utilization of capital stock was optimized, customers were happy, prepared to pay premium prices, and their ships seldom had to wait. All of which gives the lie to the ideology that regulation of the economy is always bad.
The various Astroturf groups which supported the destruction of the CWB have decided to call for even more deregulation even though it failed to produce the results they claimed would happen. Faced with a defective market, they are calling for even more of the same. With two railways and only three companies owning all the terminal elevators in Vancouver these calls can only be seen as faith-based rather than evidence-based. Perhaps ending the licensing of dogs is the final frontier for these true believers, but the evidence shows more deregulation just leads to misallocation of capital resources and more money out of farmers’ pockets and into those of the middlemen. The grain companies and the railroads are doing just fine and no doubt hope to do better as long as they are allowed to exploit their positions in this defective market created by Ottawa.
Instead of doubling down as their well paid Astroturf supporters are calling for, Ottawa should admit their fantasy-based experiment with grain marketing was a failure and reverse its destruction of the farmer controlled single desk Canadian Wheat Board. Aside from giving farmers their fair share of the value of their grain, restoring the single-desk would make Canada’s grain marketing more efficient.
Many commentators have remarked on Prime Minister Harper’s humourless approach to life and government, but Bill C-30 “the Fair Rail for Grain Farmers Act” shows how wrong they are. The Prime Minister and his Agriculture Minister must be nearly anoxic with laughter over the debate in the farm community on the merits of the Act and who can blame them?
For almost 78 years western grain farmers retained what lawyers call the “beneficial ownership” of their grain as the Canadian Wheat Board sold it for them to end use customers around the world. With the exception, sort of, of producer car loaders, it is now the grain companies that own the grain as soon as it leaves the farmer’s truck – a fact too many farmers have yet to get their heads around.
It was less than 18 months ago that Minister Ritz said one of the virtues of killing the Canadian Wheat Board was farmers would no longer be responsible for the grain “once it hit the elevator pit.” Which is now exactly the case – farmers now have no choice but to sell their grain directly to the elevator companies or some broker working for one of the big five grain companies.
So farmers are no longer “shippers” of grain and really have no legal interest in rail service, port prices, quality control, or much else they have taken for granted over the past three generations even though all those things and more make a critical difference to the economic viability of western Canadian grain farming.
Farmers also took for granted the fact the Wheat Board regularly returned better than 90% of the international price for wheat back to the producer. Now the farmers’ share has dropped to around 40% and it is likely to hover in that area as long as the new system Minister Ritz boasts about continues to operate.
Western farmers outraged by grain prices that have fallen by half are asking where “their” money went. In spite of evidence to the contrary, the Western Grain Elevators Cartel is claiming they have nothing to do with the missing money and are pointing the finger at the railways. A lot of less informed farmers seeing they cannot deliver to the local elevator have fallen for this bit of misdirection.
Sadly, this claim is not even remotely accurate. In fact grain car unloads at Vancouver have yet to run at less than 98% compared to last year and overall grain exports are down a mere 6%. So the grain is moving and being loaded into ships at essentially normal levels.
The grain companies are making record profits through their stranglehold on logistics. If ships have to sit there waiting for the correct grain, or if farmers in the west have to wait a few months for the convenience and profit of the grain companies, well, as an oil company executive essentially remarked, that’s free enterprise.
So Ottawa’s “fair rail for grain farmers’ act” is really a bit of comedy to pacify their more unquestioning supporters. In fact it will make the lives of the grain companies a little bit easier and allow them to continue laughing all the way to the bank while farmers debate the merits of giving the railways more money, maybe, at different times of the year while pondering the mysteries of the “basis” and other shadow puppets in the Punch and Judy show being pulled by the private grain trade.
This latter is especially ironic when you consider the magnificent western farm leader Ed Partridge saw through this whole charade over 90 years ago and galvanized the movement which created the single-desk Canadian Wheat Board to get farmers the full value for their grain.
It is said history repeats itself, first as tragedy, then as farce. Who says Prime Minister Harper and his sidekicks in Agriculture and Transportation do not have a sense of humour?