Killing the CWB continues
One of the many pleasant aspects of being a grain farmer was dealing with CWB staff. I could always be confident they had no secret agendas or axes to grind and their only orientation was to make my life easier.
It was always a contrast to the private grain traders whose only loyalty was to the shareholders of their employer. The more thoughtful employees of the private trade recognized they were involved in a zero sum game of swindling farmers and exploiting their powerlessness.
Until the Harper pogrom against Canada, CWB employees had the benefit of earning what most saw as a “right livelihood” and their resulting dedication showed not only in their day to day dealings with sometimes hostile farmers acting out of ignorance of a very complex grain trade, but in the continued loyalty of many former employees to farmers and their welfare.
In spite of the fact a Federal Court Judge ruled Agriculture Minster Gerry Ritz’s legislation changing the CWB was illegal, his appointees are systematically purging Wheat Board staff.
The reaction to the news the Wheat Board will lose 70% of its staff by this summer is mixed. The collection of internet trolls supporting Agriculture Minister Ritz have remarked that now there are fewer people sponging off farmers, and Ritz’s paid collection of cheerleaders in the Astroturf groups are applauding. This is wholly disingenuous. Even the most inattentive must have noticed the feeding frenzy as a new crop of private sector sponges line up at the trough to take money from newly powerless farmers. The majority of western farmers who understand the international grain trade and voted to keep the single desk CWB are appalled but not surprised at this abuse of power.
At this stage, Harper and his collection of useful idiots and sycophants have, to use an appropriate Shakespearian quote, “piled sin upon sin.” Although it may be too late to avert the misery of the staff being unjustly fired, the Courts will shortly have an opportunity to reverse this illegal nonsense.
As the chaos unfolding in the western grain industry comes home to the rest of Canada, the set of court cases designed to restore the CWB will be a test. Does Canada wish to succeed as a nation by protecting a resource that is both fundamental to national survival and critical to feeding the world? Or will it give up western Canada’s marketing and quality control arm, the single desk CWB and settle for less?
More than Medicare and other icons of Canada, the Wheat Board represents not only the lynch pin of western agriculture, but the wellspring of much that is essential to Canada as a nation. It is no accident that every Member of Parliament voted to make the CWB single desk permanent.
Nations can fail and often do, but if our institutions fail western farmers who depend on the single desk Wheat Board in the great game of global competition, then recrimination lays ahead. Farmers and CWB staff who dedicated their efforts to truly helping farmers deserve better.
This institutional destruction is something conservatives throughout modern history have worked assiduously to avoid. What a pity and irony that the vandals of this world now claim the title of those who should most hate such destruction.
What a difference a few weeks makes
What a difference a few weeks makes. It seems like only yesterday that Cherilyn Jolly Nagle of the industry Astroturf group the Western Canadian Wheat Growers Assoc. was signing one of the first private contracts committing her to deliver a significant volume of durum wheat to the private trade. Agriculture Minister Ritz had assured his followers, and few are more devout than Ms. Nagel, that without the Wheat Board interfering in the market, farmers would never have to start their trucks or grain augers in the winter if they did not want to.
Ms. Nagel obviously took him at his word. Pity she did not understand a few simple facts. Facts like: it is not physically possible to move all the grain grown on the prairies to port in a few weeks after harvest. It takes all year because there are simply not enough terminal elevators to handle it all at once.
Oh, another pesky fact. Customers only want grain, well, when they want it.
Perhaps Ms. Nagel is getting a bit concerned about delivering on that much publicized contract because at a recent meeting Ms. Nagle received a cold shower of reality from the head of CP Rail when she told him “We’re kind of looking for real good service right off the combine,” asking if CP Rail will add more cars to accommodate her.
“No,” was the blunt reply from CP which apparently sparked laughter around the room.
As Ms. Nagel and no doubt many other farmers will find out, without the CWB farmers have very little influence over railway performance or indeed much else. All Ms. Nagle can do is sue CP rail for making her start that truck and grain auger in the middle of a cold Saskatchewan winter. She can also pray that the durum contracts she signed with such fanfare let her off the hook for late delivery.
The Canadian Wheat Board successfully sued both railways for poor performance. Without that strength in numbers individuals like Ms. Nagel are essentially helpless. If past history is any guide, she can expect no help from the grain handling companies simply because their multi-million dollar inland elevators are captive to one of the two railways. For them discretion has always been the better part of valour, and rather than fight the railways, it is easier and safer for them to take more money from farmers. After all, the grain companies have a lot more capital on the line than a farmer from Saskatchewan.
Here’s a hot market tip for the Western Canadian Wheat Growers: stock up on starting fluid, you may need it this winter.
No rail cars available: Wheat Grower Assoc. moves grain off combine to port - may not be exactly as illustrated
Charter of Rights
Today marks the 30th anniversary of the Canadian Charter of Rights and Freedoms. This milestone document established that certain rights cannot be taken away by the tyranny of the majority.
Among other things, the Charter is meant to moderate the historic reality of British Parliamentary history which grew out of an aristocratic conception of citizenship. In that system, only members of Royalty were seen as fully human, while the rest of us were considered chattels, along with sheep and game animals.
This concept is still alive with the argument that Parliament is supreme even when our defective electoral system bestows a majority of Parliamentary seats on a political party which the majority of Canadians actually voted against. Although imperfect, the Courts and the Charter of Rights and Freedoms are intended to counteract this, and other weaknesses of our political system.
Part of our Constitutional legal challenge to Ottawa’s seizure of our Canadian Wheat Board rests on a Charter based argument. Here is an explanation of why the Charter is important from a Canadian journalist.
Let us pray
It used to be said that farmers prayed for a good crop and the private trade preyed on a good crop. With the anticipated end of our single desk Canadian Wheat Board, it looks like we are there again.
Minister Ritz claimed there would be more choice and freedom without our single desk. The sale of Viterra underlines just how faulty that logic was.
After the Wheat Pool cooperatives were bankrupted in the early 1990s their remains were cobbled together into Viterra. Several generations of work by western Canada’s farmers to build a cooperative farmer owned grain handling system were effectively stolen from the farm community. Now the parts of that system are being re-shuffled again for the benefit of the private trade so they can take more from farmers.
Viterra’s massive Cascadia export terminal in Vancouver will be 25% owned by James Richardson Company out of Winnipeg and they also acquire some of Viterra’s inland elevators across the prairies.
Glencore the giant European based trading company in announcing the deal said it would “be earnings enhancing to Glencore in the first full year after consolidation” which is a nice way of saying someone will get less money so Glencore’s shareholders can have more.
What this means for farmers who have to grow and deliver grain to elevators is that in many communities all the elevators, usually the only elevators within 100 miles, will be owned by one company. Even where there is more than one elevator company, they will be hostage to one railway or the other – so much for increased choice and competition.
Even producer car shippers can’t escape this nightmare. Cargill is the only company that has more capacity at its export terminals than it does inland. So the other companies with terminal elevators are not going to be inclined to displace their own grain, in their own system, to accommodate grain from shortlines and producer cars. That leaves Cargill as the only game in town for producer cars and CN rail as their only transportation link. Producers on a CP line will have to pay the railways to switch their cars to a CN serviced terminal. For those not shipping producer cars, as of August 1, the private elevator companies will own the grain as soon as it leaves the farmers’ truck and the CWB is simply another broker in the chain.
Here is a list of the Viterra elevators it is reported Richardson will acquire while Glencore will own the rest of Viterra’s elevators. Which company will be your new lord and master?
With the end of our CWB’s single desk we can see it means less of everything for farmers and their communities. Let us pray. . .
Unintended Consequences?
Last week grain handling company Viterra apparently became the focus of a takeover bid. This triggered an early Friday morning suspension of trading in its shares and a later share price jump of around 25%. Earlier in the week Ritz’s version of the Canadian Wheat Board announced it had signed a handling agreement with Cargill one of the largest grain companies in the world.
Many supporters of Minister Ritz’s attempts to wreck our Wheat Board have claimed the end of its single desk would result in more choices for farmers. Yet from the beginning supporters of the single desk Wheat Board pointed out these were statements of faith which ignored the reality of an international grain market owned and controlled by a few large companies.
Without our single desk Wheat Board, those who own the port terminals effectively control grain exports from Canada. Originally the major terminals were built and operated by the Federal Government as public utilities. Later they were sold to the cooperative grain handling companies owned by farmers. When those were sabotaged by the Government of Alberta in its pogrom against farmer-cooperatives, ownership went to private companies, with Cargill getting the second largest capacity terminal at Vancouver and Viterra taking over the largest, Saskatchewan Wheat Pool’s Cascadia terminal. Either one of these terminals have more storage capacity than the entire port of Prince Rupert.
Now that Cargill, with its strategic ownership of essential deep water terminal elevator space has the ability to broker the grain produced by Wheat Board permit book holders, those who spent so much time over the past two decades fending off just this type of change must be feeling vindicated in their predictions, if a little depressed.
The only remarkable thing about all this is that so many anti-Wheat Board types seem to think it heretical to observe that private companies are profit oriented and most of those profits come out of farmers’ pockets. The more dim-witted among them like to pretend, as a former American President liked to say, that private companies can “make the pie higher.” Unfortunately the grain marketing pie can only be divided up so many ways, and with these recent events, farmers will surely see their share get smaller. The only real questions are how quickly and how much?
As happened with the end of the Australian Wheat Board, in western Canada we can expect to see smaller companies like Viterra with strategic assets, taken over by larger firms. Friday’s stock market activity would indicate this is starting. The results for farmers will be just as predicted: fewer choices, much less market power, and lower prices as our position as a premium supplier of grain disappears with the single desk.
The CWB’s audits always showed it returned at least 98% of sales revenue back to farmers. Claiming farmers will see more money by inserting private companies, with their need for return on investment, executive bonuses and other costs, between the Wheat Board and our foreign customers is less than intelligent.
Minister Ritz and his vocal minority of supporters braying about the market working and efficiency ring hollow as we see the predicted consequences of ending the single desk borne out by these announcements. Apparently even arithmetic has escaped their notice.
Farmers Celebrate International Women’s Day
McKinney
Today is when we recognize and celebrate women’s economic, political, and social achievements. In Canada we often forget that until 1929 women were not even considered “persons” under our laws.
Too few remember how women overcame this abomination in our legal system. It all started with the grain farmers of western Canada. For over 30 years, since the 1890s they had been working to establish cooperative grain elevators and a Wheat Board to give them fair prices for their grain.
Women played key roles in the Territorial Grain Growers Associations which later grew into the Alberta, Saskatchewan, and Manitoba Wheat Pools. From the start, women were treated as valued members with equal voices and votes.
In 1917, Louise McKinney was elected from the rural district of Claresholm, Alberta to the Provincial Legislature. She was the first woman elected to the Alberta Legislature and the first woman in the British Empire to be elected to a legislature. In 1921, her neighbour Irene Parlby, a strong member of the Alberta Wheat Pool, was elected to the Alberta Legislature for the United Farmers of Alberta. Parlby become the first woman cabinet minister in Alberta and only the second such woman in the British Empire. Both women shared a determination to make Canadian law reflect the gender equality already practiced in the farm community and its cooperative organizations that wielded so much economic power.
Parlby
McKinney and Parlby became part of the “Famous Five,” a group of women who challenged their exclusion from “personhood” under Canadian law. With the support of western Canada’s grain farmers and their Wheat Pools they were successful in doing so when the British Privy Council (then the equivalent of our Supreme Court today) ruled that women were “persons” under the law and had all the rights and duties of full citizenship.
Statues of these courageous women may be found in downtown Calgary, where the Wheat Pools started, and next to the Parliament Buildings in Ottawa. It was the grain farmers of western Canada who contributed to their success and now grain farmers are again fighting to keep democracy and rule of law alive in Canada.
Putting up barriers
Sometimes a picture is worth a thousand words and the attached cartoon from 1929 is a good example. It shows a farm grain truck labelled Wheat Pool breaking through a fence and toll booth erected by the private grain trade.
It was not long after that, in 1935 farmers succeeding in getting their 100% Pool when the Canadian Wheat Board Act was passed by a Conservative government led by R. B. Bennett, from Calgary.
Farmers then had direct access to customers around the world without paying fees to the private grain trade.
In fact the law forbade the CWB from keeping the profits (“retained earnings”) from grain sales which had so enriched the private trade. The CWB returned every dime of sales, less operating costs, to farmers. It was a rare year when less than 99% of grain sales did not go back to producers. This will end if Ritz has his way
Already Gerry’s new CWB, run by his own appointees after the illegal dismissal of farmer-elected directors, is making noises about profits. These can only come from one place: farmers’ grain cheques.
So the irony is that the Ottawa Conservatives have succeeded in erecting another barrier between western farmers and the world market. Gerry’s new grain company will no longer be anything but another grain brokerage.
So how much “profit” is Gerry’s new Grain Company going to take from farmers over the next four or five years before his appointees sell it off? In fact, the CWB’s current audited statement shows this year it has squirreled away $102 million of farmers’ money into a contingency fund; a fund under a cloud from class action law suits.
What do Gerry’s appointees running his grain company plan to do with this money? We’ll never know because Gerry’s appointees only answer to him and never have to stand for election or be accountable to farmers. If the courts allow this to continue, the CWB will be just like any other grain brokerage taking profits for itself out of every farmers’ pocket.
The barriers are back up, but farmers are already working to break them down again. Register here to help. You can also make a donation here or donate here.
Back to the Future
A good book says there is nothing new under the sun and Gerry Ritz’s crippled Wheat Board certainly takes us back to the future, in 1922.
The way the real world works has not really changed much since that time. Sure, we have electronic technology that is smaller but then so do the same big four grain companies that ran the world’s grain then and mutations of which still run the world’s grain trade today. The only real difference is the internet has replaced the telegraph.
But this is all paper. Farmers have real wheat that must be physically moved to customers. Until Harry Potter waves his magic wand and makes distance disappear, that will be a problem.
One thing our Wheat Board did very well was price discriminate. As a single desk it can and does charge different customers different prices. It does so to gain advantages for farmers on transportation and prices. Without the single desk there will be a magic wand called ‘arbitrage.’ Now this is one of those words that sounds complex but hides a very simple fact. Like water, prices will fall to a more or less common level. That’s arbitrage at work. So without the single desk how could a voluntary wheat board price discriminate? Like the voluntary pools of the 1920s it will find itself competing to provide the arbitraged or the lowest common price.
Farmers now need to ask themselves another question. Without the Wheat Board allocating grain cars, will the railways be willing to send rail cars to their local elevator? How much influence does the local elevator agent and his company really have over the railways? Since the elevator companies will be paying the railways for car allocations out of the farmers’ money, how generous will they be with the payments? Without the Wheat Board, it is a private market and no one will ever really know, at least until they see their small grain cheque.
It is a flat world when it comes to wheat
In the November 24 Western Producer D’Arce McMillan argues that “ending single desk won’t change realities of wheat market.” However, it was the problems created by those realities that the Canadian Wheat Board (CWB) was created to address. Without the CWB it will be the same old market Canadian farmers and consumers have been insulated from since farmers founded the Wheat Board in 1935.
From a consumer point of view, the contention that the mixture of wheat Canadians eat will not change once the single desk Board is gone is unrealistic. Here is why:
When it comes to commodity trading the world for all intents and purposes is flat. In the absence of orderly marketing, the private trade arbitrages all prices to a lowest common denominator almost automatically.
Part of that flat world is made possible by low-cost ocean transport. The Baltic Dry Index measures how expensive it is to move things by ship. Larger and more fuel efficient vessels have lowered unit costs by two thirds in the past five years.
Once a commodity is on an ocean freighter it can go anywhere in the world. This results in some odd things happening. For example, eastern Canada imports most of its oil from the Middle East half way around the world rather than pay the high overland shipping costs to get oil from western Canada.
Wheat also travels on the sea. So contrary to Mr. McMillan, that is why it is entirely reasonable to expect that without the CWB a lot of eastern Canadian flour will be milled from wheat coming in by ocean-going ships, rather than rail car from western Canada or even from south of the border.
Processors pay a premium for a reliable supply of a consistent quality grain. With the single desk the CWB is the only grain dealer on the planet with the logistical ability and the financial incentive to make a speciality of providing reliable supplies of premium grain. Along with a policy of encouraging domestic processing by having a uniform price, this gives domestic processors an incentive to use western Canadian wheat while still leaving a premium on the table for farmers.
However, if Harper removes the CWB single desk, processors will no longer have access to a reliable and consistent supply of wheat, not because the wheat disappears, but because the cost of assembling and delivering supplies will no longer be provided by the CWB and the logistical costs of assembling the required volumes will increase. This is exactly what is being reported by Reuter’s news service:
”Canadian millers, who include Archer Daniels Midland and P&H Milling Group, have said they may tap U.S. wheat to manage risks around no longer being able to secure all their supplies through a single supplier.”
The largest processors will also demand, and get, bulk discounts from the private trade, and the smaller processors will seek operational economies by sourcing cheaper grains elsewhere.
Without a single desk supplier like the Wheat Board, ultimately all sizes of processors will seek the cheapest source of grain, regardless of where it comes from. That is where the flat earth comes in. Like oil, grain from off shore will be cheaper than grain transported over thousands of miles of roads or rails from western Canada.
Many of those ships carrying wheat will come from two deep water ports. One will be the Piranha River which allows ocean-going vessels to travel up the center of the Argentinean wheat growing region. The other port is Odessa, the deep water Black Sea port that started the world’s wheat trade after the defeat of Napoleon in 1812.
Chernobyl sits just 600 very flat kilometres north of Odessa in part of the Eurasian wheat belt. Historically, it is grain grown in this area that was shipped around the world. The declining cost of ocean freight along with killing our Wheat Board means this area can again start shipping grain to Eastern Canada’s food processors just like eastern Canada’s refineries process Middle Eastern oil.
Without the CWB looking out for their collective interests, western farmers will find the world is as flat as the prices they can expect from a truly globalized wheat market.
Incidentally, for those who like to eat, the scientific literature is full of articles documenting contamination of grains from this area with radioactive materials from the Chernobyl accident. The good news is that 25 years later contamination levels in grains are lower and some mitigation efforts have reduced levels by a third on small test plots. The bad news is soil contamination levels are not appreciably lower.
So the evidence, on many levels is not as reassuring as some writers would have western farmers or their customers believe.
An historic news conference
On December 15, 2011 the Senate passed legislation ending the Canadian Wheat Board in spite of the fact a Federal court judge had ruled it illegal. This demonstrates the very limited value of the Senate as a chamber of sober second thought when it has been stacked with partisan appointees. The Harper appointed Governor General gave it Royal Assent the same day.
Our democracy rests on a system of checks and balances between the Parliament, the executive branch and the Courts. The Conservative Senators demonstrated they do not respect the rule of law by supporting the authoritarian approach to government being pursued by the Harper regime. This is really an old story of the conflict between the democratic rule of law and the dictatorial.
However, this story is not over yet. On December 14th in an act of courage and integrity, the farmer-elected directors of the Canadian Wheat Board held a news conference in Winnipeg, announcing they will be challenging Harper’s arbitrary and unlawful use of executive power and will be asking the courts to make the Harper regime follow the law.
This reminded me of another historic news conference held decades ago in Alberta. In 1929 a group of women, prominent among them a farm woman from Didsbury, Alberta named Irene Parlby announced they had successfully used the courts to establish that women were persons under the law. This established the basis for our modern system of individual rights.
Once again it is the farmers of western Canada, first through their support of the Persons case, and now with their challenge of the Harper Conservatives, who are the ones standing up for democracy and the rule of law.
Like the Persons case, the results of this challenge will set the course for the future of our democracy. Prime Minister Harper and his government have shown by their actions they believe the rule of law is optional for them. Chief Justice Fraser wrote about the consequences of such an attitude:
“The detrimental consequences of the executive branch of government defining for itself – and by itself – the scope of its lawful power have been revealed, often bloodily, in the tumult of history.”
The Directors will be in a Winnipeg court room December 16th. Once again all Canadians owe a debt of gratitude to a group of farmers from western Canada who have the courage of their convictions and are fighting a battle for us all.
Video link
