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You Can’t Manage What You Won’t Measure

Posted on August 1, 2012

Sixty-nine years of history come to an end today. The single-desk marketing system of the Canadian Wheat Board, which started in 1943, is now officially dead.

Few farmers were ever asked about this change. There was no producer-vote, no public hearing, no respectable debate in Parliament. There was no cost-benefit analysis. There’s not even a business plan to guide the process.

An entity called the “CWB” continues to exist, but without single-desk authority, it’s now just one of many wheat and barley sellers in a marketplace with no more buyers than before. That’s a formula for lower prices. Moreover, with no grain collection facilities of its own, this much-diminished CWB is available to farmers only in a subordinate way – through handling agreements with private sector competitors.

Farmers’ costs will go up, for such things as administering cash advances and financing grain payments on delivery. Farmers will also have to pick up part of the tab for initial payment guarantees.

Logistically, without the Wheat Board as a watchdog, grain companies and the railways are now in full control of the handling and transportation system. They have no incentive to service farmer-owned terminals, community-based short-lines or producer-loaded rail cars. There’s no one in the system with either the will or the clout to challenge excessive rates or charges.

Internationally, without the Board, Canada’s distinctive “brand” in world grain markets is slashed. This is compounded by the totally predictable sell-off of domestic firms like Viterra to foreign commodity traders like Glencore.

With the Wheat Board out of the way, global grain buyers expect they’ll get Canadian grain at cheaper prices. Value-added processers expect the same. Railways and grain companies expect to extract higher margins. If that’s all true, you can imagine who gets stuck with the short-end of the stick.

For the next two or three years, the impact of killing the single-desk will be camouflaged by droughts and other global production problems which are cutting supplies and pushing grain prices to record levels.

In the longer term, whether farmers will actually be better off will never be known with hard facts and figures, because the government refuses to measure (or even monitor) the full consequences of its changes.

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