Fantasy creates grain chaos

by on Apr 16, 2014 in Blog | 1 comment

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.

  1. Grain exports are hardly down at all.
  2. 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.

The Market Speaks

The Market Speaks

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.

Harper’s Sense of humour

by on Apr 11, 2014 in Blog | 3 comments

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.

Punch and Judy Victorian

Grain companies present market data

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?

Grain Czars

by on Mar 25, 2014 in Blog | Comments Off

and other magical beasts

 

(March 25, 2014) We all know that a month ago a grain trader opened the otherwise secret world of the grain trade and showed prairie farmers just how badly they were being ripped off on grain prices.  A modest amount of research using readily available public sources soon demonstrated the grain companies are taking the lion’s share of that money.

None the less there are still some who want to see the Federal Government put in a sort of Czar who can “discipline” the railways.

Czar Nicholas II

Czar Nicholas II

However such a solution would be no solution at all for farmers who have seen their share of the international grain price drop from over 90% on wheat sold through the farmer controlled single desk Canadian Wheat Board to around 40% on the private market.  That is a marketing problem, not a transportation problem.

Proponents of a railway Czar need to do a simple thought experiment.  If Harry Potter waved his magic wand and instantly transported grain from the inland elevators to the terminal elevators, how would that change grain prices for farmers?  Wouldn’t the grain companies simply have more money for themselves?

The evidence is pretty straight forward that even if we did have a farmer-czar to discipline the railways, that would do little good for farmers and farm gate prices.  Worse, it would undermine the reasonably effective regulatory system we now have in place, a result which would make the railways and their AstroTurf supporters happy indeed.

Thanks to Ottawa, the grain companies now own the grain as soon as it is unloaded at the country elevator.  Then they sell it to customers for their profit.  When the Wheat Board was alive, farmers bargained collectively with the end use customers and got premium prices.  Now the grain companies have taken those customers.  So it is no surprise these new middlemen have put farm prices in the dumpster.

Something called “the basis” is used by grain companies to justify low prices and point at the railways.  They try to pretend, with the help of an uncritical media and too many pliant academics that the basis comes down from Mount Olympus engraved on stone tablets.  In practice the basis is whatever the grain companies say it is – they are after all oligopolies operating in secret.

Grain Co Basis Fairy

Grain Co Basis Fairy
may not be exactly as illustrated

This can be seen as an example of “transfer pricing” much loved by oil companies and other multinationals to disguise what they are doing to avoid taxes, royalties, or in this case paying farmers their fair share of the economic rent they have a right to expect for their production.  It is a structurally defective system and the single desk was one of the few market friendly mechanisms which worked for western farmers.

Even if you accept the notion there was a shortage of about 1,500 cars a week, for a few weeks this winter, on a shipping season of around 420,000 cars that could not be a very large percentage.  The railways contend the grain companies simply did not order enough cars early in the crop year.

In any event, the system is working great for the grain companies and just fine for the railways.  So if all some farm groups have on their agenda is asking for a transportation czar their meetings are a waste of time.

Farmers do not need to be shy about reminding the bunch that killed the single-desk of the mess they have made.  Farmers do not even need to say “we told you so,” but they do need to demand a vote on restoring the single desk.

“Dream no little dreams” said Tommy Douglas.  “Think big” said Preston Manning.  Single desk supporters have always been the majority and it is time they started acting like it.

That ship has sailed

by on Mar 8, 2014 in Blog | 5 comments

The Ritz/Raitt command to the railways to move a million tonnes of grain a week or else is full of irony.  It will not change the fact the prairie crop has been stranded which has pushed farm prices down by half.  It was perfectly predicable and the government was certainly warned.

Since there will also be a huge carryover of old crop into the new crop year that also means prices for western farmers will not recover for a long time unless there is a massive crop failure in the near future.  This mess is the consequence of Agriculture Minister Ritz and his Prime Minister’s reckless and thoughtless destruction of the CWB.

Certainly there were logistical problems under the farmer controlled CWB, however the farmer controlled CWB identified the root problem and decisively fixed it in 1998 when they successfully sued those responsible and tuned up the system for the next ten years.

As the March 8, 2014 Regina Leader-Post reports, Ottawa is not even enforcing its own laws:

“Among the last reports prepared by a still-independent Canadian Wheat Board was the second study by rail analyst John Edsforth, both of which pointed out that Prairie farmers were overpaying by as much as $275 million a year to transport their crops, compared to what is considered fair under the federal grain transportation law.  The government response was to kill the wheat board.”  Emphasis added

Without some organization with the legislated power to manage grain transportation logistics as the farmer controlled CWB did so well, this problem will not be solved, even by orders carved in stone tablets and brought down from the Prime Minister’s office by his Cabinet.

Ottawa does not want to recognize that the grain companies are the proximate cause of all this.  As yesterday’s blog and many other articles and sources demonstrate, it is the grain companies who now get the lion’s share of the money farmers once got for their grain.  In fact, farmers now get less than 40% of the grain cheque and the railways and grain companies are now taking the other 60%.

The numbers from the farmer controlled CWB confirm just how huge the grain robbery this past couple of years has been.  For example, consider the CWB annual report on the 2009/10 crop year when farmers ran the show.

Gross revenue of $5.1 billion, minus the $630 million paid to the grain companies and railways to move the grain, leaving farmers with $4.3 billion, or 84% of the grain cheque.

At 84% back to farmers I think we are very safe to say that the bar set by the farmer-run CWB sure beats the 40% farmers are now getting.

So irony rules the day in Ottawa.  We have a Federal Government who claimed farmers working together offended their dogma about markets and killed the Wheat Board.

Yet now they have gone to a command and control dictat ordering what amounts to a not quite innocent third party (it really hurts to say that of the rail ways) to fix a problem created by the Federal Government allowing the grain companies to do what they want to farmers.

In the end this order from Ottawa will not put an extra dime into farmers’ pockets.  That ship, as they say, has sailed until we get the single desk back.

How bad is it?

by on Mar 5, 2014 in Blog | 2 comments

(March 5, 2014)  The media is now full of stories about the chaos at grain ports.  Unfortunately few of them are going much beyond the simple minded mantra of blaming the railways.

Much as I hate to miss the chance to criticize the railways, this time the rancor is misplaced.  This is clearly a problem created by the private grain companies and transportation is just a subset of that bigger picture.

So I was pleased to have some fresh information on the subject delivered by the president of the Grain Workers’ Union Local 333 to the Agricultural Producers’ Association of Saskatchewan meeting just under two weeks ago.

This is the union representing the people who actually put the grain in the ships among other things.  In spite of the hyperbolic nonsense that shows up in the Alberta press about strikes; this is a union that has not taken a job action for 12 years, so they are hardly militant.

Those farmers who actually paid attention to what the farmer-controlled Wheat Board was doing know that the CWB was exceptionally efficient at getting the right grain to the right customer.  Most of the time in the last ten years the CWB paid no net demurrage for keeping ships waiting and often ended up putting extra money into farmers’ pockets because the ship owners paid extra money when they were loaded and on their way faster than expected.  These amounts typically ranged between four and eight million dollars.

In 1996/97 when the CWB had to actually pay ship owners for late deliveries, the farmer controlled CWB successfully sued those responsible for almost double what demurrage had cost and then went on to earn extra money each year because of the market discipline they had administered.

So how bad is it now?  There are currently 50 ships waiting to load.  According to the very expensive Market Research Services Newsletter Ritz’s version of the CWB issues monthly each ship costs in the order of $15,000 per day including fuel costs.  According to the Grain Workers Union presentation:

“We have ships that take 3 weeks to month or longer to finish loading product.  We don’t see any ships that arrive and are able start and finish loading without being kicked back to anchor at least 1 time but the rule is generally 2 times sent to anchor. A ship being sent to anchor during the single desk was a very rare occurrence.”

What has this done to the price of grain?  The CWB Market Research Services newsletter from Feb. 26/2014 indicates the price of wheat at Vancouver is $11.38 while the average price farmers are getting in country for the same grain is around $4.69 assuming they can sell it at all.

Twelve days ago Regina Leader-Post columnist Murray Mandryk pointed out that:

“based on today’s world price, 11.2 per cent is paid in transportation freight, 39.5 per cent is taken by the elevator companies and a measly 49.8 per cent is left for the farmers.” 

Now we have newer numbers from the Market Research Newsletter indicating the situation is much worse for farmers than when Mandryk reported.  Now the grain companies and railways are taking 60 percent of the grain and the farmers’ share has dropped below 40 percent.  Contrast that with the fact a serf in the Middle Ages got to keep between 75 and 80 percent of his crop.   Ritz-Serfdom

It is now fair to ask if this mess is really the grain companies bungling the marketing or are they simply exercising their market power to take more money from farmers by manipulating the system for their own profit.

The future looks even worse because the customers who once relied on the integrity of the farmer-controlled Wheat Board are going elsewhere. Saskatchewan Economy Minister Bill Boyd obviously forgot his speaking notes when he let it slip that there would be at least a 25% carryover of old crop into the new crop year until sometime in 2015.  So there will be a massive carryover of Canadian grain depressing prices on the prairies and around the world.  Barring a major crop failure in Canada or the US, this is the new normal.

The short sellers and speculators must be thanking Minister Ritz and the Harper government for making their job of fleecing western farmers that much easier.  No doubt there are many rewards awaiting them when they finally leave office but they will certainly not come from western farmers.

Editor’s note:  the quote attributed to the Grain Services Union should have been attributed to the Grain Workers Union.  Revised March 7, 2014 to include date of CWB Market Research Services newsletter used for second citation.

Oscar for Ritz?

by on Mar 3, 2014 in Blog | Comments Off

I missed seeing the Academy Awards last night.  However, like most people I appreciate great acting skills and technological whiz bang on the screen.

So in the spirit of the Oscars, I would like to nominate Agriculture Minister Gerry Ritz for “best supporting actor.”

Ritz’s performance must have turned the stomachs of many in the audience at an Agricultural Producers Association of Saskatchewan meeting on February 26.

Who can possibly forget the common sense observation of APAS president Norm Hall that the billions of dollars farmers have lost because of the marketing crisis had negated “all the increased yields we’ve got in the last twenty years” and Minister Ritz’s “emotional response” that he worked hard?

So for best supporting actor in American hustle the award should go to Minister Ritz.

With farm gate prices now half of what they would have been under the single desk farmer-controlled Wheat Board and huge volumes of grain being carried into the next crop year it should come as no surprise that farmers will not be nominating either Minister Ritz, or his Director Stephen Harper for more awards anytime soon.  What they are responsible for is not funny, it is a tragedy.

A modest proposal on grain and rail

by on Feb 24, 2014 in Blog | 3 comments

(February 24, 2014)  The three Prairie Agriculture Ministers and Federal Agriculture Minister Ritz are meeting today in Winnipeg to wring their hands over the catastrophe they created in western Canada’s grain exports.  No doubt there will be much finger pointing and probably some not-so-subtle bullying of the lone NDP Ag Minister to shut up about the Wheat Board and orderly marketing.

Conservative Ag Ministers consulting with Manitoba counterpart (center) - May not be exactly as illustrated -

Conservative Ag Ministers consulting with Manitoba counterpart (center)
- May not be exactly as illustrated -

Ritz and his cohorts will be hoping to distract farmers and the Canadian public from their responsibility for a catastrophe which strikes at one of the fundamentals of the Canadian economy:  grain exports.  No doubt they will appoint some favorite cheerleaders to Minister Ritz’s recently announced transportation study where they will spend the three million or so dollars of taxpayer and farmers’ check off money blowing smoke for the next five years.

Since I love new words and phrases and having been involved organizing the defence of farmers in too many regulatory and court processes over the years, I have a legal concept the Ministers might like to refresh themselves on:  “proximate cause.”

This handy little concept means “the source from which all your misery flows.”  Certainly there will be a lot of misery in Canada over the coming years due to the collapse of grain exports, but the proximate cause, as the lawyers would say, is the killing of the Canadian Wheat Board’s single-desk responsibilities by Ottawa.  Killing the Wheat Board killed our niche in the international grain market.

This organization and this blog have pointed out that without the CWB the private trade has no incentive to cooperate or try to eliminate shipping delays because they can simply download extra costs to their new captives: prairies farmers.  The railways have an interest in getting rid of the Grain Revenue Cap and have played the politicians and farm groups like a fiddle using their favorite AstroTurf groups.

In fact this situation is exactly what the private trade wants:  a large captive supply of grain sitting on the Canadian prairies hanging over the world market.  Their mantra seems to be “work less, make more.”  And now they can because western farmers have no power to take anybody to court for hurting them, unlike when their farmer-controlled CWB could and did defend them in both regulatory processes and the courts.

Saskatchewan Economy Minister Bill Boyd noted that elevator companies do not want to take on the railways by launching level of service complaints.  This is hardly breaking news.  The elevator companies will not do it because they don’t get hurt.  They profit off the spread between world prices and what they can get away with paying increasingly desperate prairie farmers.  Besides, with their Canadian facilities captive to one or the other of the railways, why offend them with costly complaints or legal actions when they can source grain from their US facilities? Bear Short Seller

The railways, as usual, are playing a long game to make sure that in the end they get to raise freight rates on grain, perhaps by as much as 40% just as Pershing Square Capital Management likely hoped when they bought an interest in CP Rail in late 2011 as the end of the farmer-controlled CWB was in sight.    For this windfall we can be confident a few darts sent in their direction by Conservative politicians and groups like the Grain Growers of Canada are of no great concern.

Federal and Provincial governments are besotted with market ideology and are thrashing around trying to find a market solution to a defective market place that does not involve the one obvious solution which worked extremely effectively for over 80 years in western Canada – a single-desk seller for wheat and barley with the clout to balance the power of the two railways and the elevator companies.  The single-desk was a market-based solution that worked.

There are other solutions that would work, although perhaps not quite as well, without creating a new Wheat Board.  Having gone most of the way back to 1900 in grain marketing, Canada could go all the way and nationalize the port terminals and run them as public utilities.  After all most of those structures were either built by the Federal Government in the first place or built by farmers.  A few years after the turn of the last century the Federal Government also nationalized all the railways not owned by CPR to create the Canadian National Railway.

Using the legal precedent so far established by the killing of the Wheat Board, this time the Government of Canada can simply seize the assets of the two railways and all the port terminals without any compensation to their owners.  This is a modest proposal that many farmers would agree with, especially if their first choice – their single-desk Wheat Board – isn’t returned.

Another year, another transportation study

by on Feb 20, 2014 in Blog | 1 comment

It is 18 months after Ottawa killed the CWB, grain is not moving and prairie prices have fallen by half on wheat and barley.

Farmers are no longer being paid for their high protein wheat;

Our major customers are complaining about delays and a lack of quality assurance so they’re going elsewhere.

Even the western Australians are eating our lunch on feed barley.  Could the fact they are on average less than 300 flat miles from deep water, as compared our almost 800 near vertical miles through three mountain ranges have anything to do with it?

Upwards of 40 giant grain ships have been waiting since before Christmas for the grain they ordered.  Demurrage on each vessel amounts to around half a million dollars a month and this comes out of farmers’ grain cheques.

When the farmer-controlled CWB faced a similar problem there were only a couple of ships a week waiting a month or so.  The farmer-controlled CWB successfully sued those responsible and recovered over $30 million for the Pool Accounts.  In most years after that an extra six to ten million a year went into the Pool Accounts as extra payment for getting the ships out ahead of time.

We know snow in the mountains is nothing new, but could it be all those oil cars we hear so much about?  Given that oil goes south and grain goes west, this is just more spin and nonsense.  However, if you want the detail of why, consider this article by Richard Dixon, Executive Director of the University of Alberta’s Centre for Applied Business Research in Energy and the Environment (CABREE)  where he  decimates the pathetic oil instead of grain argument Minister Ritz,  the Western Canadian Wheat Growers, and others have spouted as an excuse for the chaos at Vancouver.

A reasonable estimate for what killing the CWB has cost western Canada so far this crop year would be in the order of $2.8 billion dollars on wheat and barley.  Add in the masking effect of the declining Canadian dollar and this loss would easily top three billion dollars.  All of it is out of farmers’ pockets and spring seeding with its demands for costly inputs is around the corner.

With no Canadian Wheat Board to blame, our Conservative Agriculture Minister has few places to hide from his responsibility for completely wrecking a system that it took western farmers almost a century to build.  He should stand up, take responsibility, and resign, but Ministerial responsibility is no longer the Ottawa way.

Instead last month Minister Ritz announced yet another committee to examine rail problems.  This is the same thing he did in November of 2011 when he announced a “Working Group on Rail Transportation” at around the same time his handpicked group of AstroTurf representatives claimed the market could sort out the logistical problems so many had warned about growing out of the rubble of the CWB.

For this new so-called study the Minister is inviting more or less the same group of friends to wine and dine with him.  After its five year mandate is finished, how many farmers will be left standing on the prairies and how many over-seas customers will we have?

My far eastern friends tell me that a recent Canadian trade mission to Asia heard dissatisfaction expressed in almost every country they visited about the delivery failures and the poor quality control the private trade is providing on Canadian grain shipments.

Apparently one well turned out Western Canadian Wheat Growers Association member on this tax-payer-funded junket told our former Asian customers they should just complain to the people they bought the grain from.  Her amateur-hour “let them eat cake” attitude no doubt did further damage to our already soiled reputation.

Western Cdn Wheat Grower Assoc Member visits Asia - May not be exactly as illustrated -

Western Cdn Wheat Grower Assoc Member visits Asia
- May not be exactly as illustrated -

Western farmers need a resolution to the mess Minister Ritz is responsible for now, not five years from now when his latest committee is due to report.

We know this mess is a logistical problem caused by the loss of orderly marketing by the CWB, and giving the railways more money out of farmers’ pockets will not help.

Restoring the single desk farmer-controlled CWB would be the most efficient way to solve these problems.  The only other alternatives are draconian regulations imposed from above or being prepared to see the collapse of Canada’s niche in the global grain market for reliably supplying the highest quality grain.  As the weeks pass it is painfully clear Ottawa has thrown western Canada’s grain farmers and its economy to the wind.

Chaos at Port

by on Feb 4, 2014 in Blog | Comments Off

Turning the coyotes loose

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

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.

Robbie Burns Day

by on Jan 25, 2014 in Blog | Comments Off

January 25 celebrates the birth of the great Scottish poet Robert Burns and all things Scottish.  Since people of Scottish origin played such a large role in Canada’s history it is no surprise they played an important role in the development of grain and grain marketing in Canada.

Wheat growing in North America was made possible by the work of Sir Charles Saunders, Canada’s Dominion Cerealist, who followed up on the work of David Fife to develop Marquis Wheat.

My favorite story of the Scots and the Canadian Wheat Board comes from just after its formation in 1935.  Canada had huge stores of wheat which it could not sell after the collapse of the economic system in 1929.

After his appointment as the CWB’s first Chief Commissioner, James R. Murray started an aggressive campaign to promote Canadian wheat in Europe.  In 1936 he sent Assistant Commissioner George H. McIvor to London, England to meet with the Scottish Canadian newspaper baron “Max” Aitken, better known as Lord Beaverbrook, to seek his help in promoting the sale of Canadian wheat.

McIvor had strict instructions, relayed from Prime Minister King, under no circumstances were they to run down any other country’s wheat.

The Morris history of the CWB explains the meeting.  After McIvor had presented the press baron with a paper outlining the virtues of Canadian wheat – a paper incidentally that has vanished along with thousands of other documents since the Harper appointees now running the  Wheat Board have dismantled the CWB library:

Winnipeg Book Burning by Ottawa

Winnipeg library tossed in dumpster by Ottawa

Beaverbrook read over [the material prepared by the CWB] and remarked that it appeared to be all right.  McIvor then carefully explained that if used in the paper the material should be used as written or not at all.  “You can leave everything to me,” said Beaverbrook.

The next morning when McIvor and his assistant were having breakfast they were greeted with the following blaring headline in Beaverbrook’s Daily Express:  “Warning to housewives, Within A Few Weeks Millions of Bushels of Argentine Wheat Will Be Pouring Into This Country:  Watch Out for Holes In The Bread.”

This opened the door to Canadian wheat in Europe.  It continued the successful work of the Canadian Wheat Board to establish our reputation and market niche for reliably supplying the highest consistent quality of milling wheat and durum around the world.

With the chaos at Canadian ports this year and the moves by Ottawa to take Canadian wheat breeding away from farmers and give the genetics to the private sector, Canada has now lost its reputation as a reliable supplier of milling wheat and, if things run true to form, Canada will soon lose its distinction for growing the highest quality milling wheats in the world too.

One of the traditions in celebrating Robbie Burns days is reciting his poem The Louse about parasites – a problem with which western farmers are now becoming familiar.