SEPTEMBER 19, 2000
SO MUCH FOR COMPETITION
ALLAN, Sask.--"Willard Estey and Arthur Kroeger's vision of grain companies competing has proved dead wrong, just months into the newly-deregulated transportation environment," said NFU Transportation Committee Chair Terry Boehm.
Boehm was commenting on the major grain companies' refusal to submit tenders for grain supply and movement to the Canadian Wheat Board to move a portion of the 250,000 tonnes the CWB offered for tender. Of the 250,000 tonnes offered, only 17,000 tonnes were awarded and it was awarded to two farmer-owned high-throughput elevators--North West Terminal at Unity and Mid Sask. Terminal in Watrous.
"As the NFU predicted, the grain companies are not anxious to compete and they don't really want a competitive environment. They want a stable, predictable, non-competitive system that delivers large profits to them. The companies want the CWB to agree to set up a tendering system that will ensure the companies of low risks and high profits. Such a system is not in farmers' interests and the CWB has refused to cater to the grain companies. The companies' refusal to tender is part of a power struggle over who sets the rules for tendering, and whose interests those rules serve," said Boehm.
"It was easy to predict that rather than competing, the grain companies would act as a block. That is exactly what happened in this first tender. It is clear that the grain companies, collectively, decided not to tender in order to make a political point. This sort of grain company collusion is the opposite of competition and will almost certainly cost farmers money," said Boehm. He continued: "This clear lack of competition is not just an academic point: the government took the rate cap away from farmers and deregulated the system. The government claimed that competition would replace the protections we enjoyed under a regulated system. Now that competition has predictably failed to materialize, farmers are left with few protections and the result will be higher costs."
In addition to refusing to tender themselves, the major grain companies initially refused to allow one of the independent grain elevators that did win a tender to access terminal space at port. The CWB has since helped that elevator secure terminal space.
Boehm concluded: "All the evidence from the U.S. indicates that a deregulated grain handling and transportation system does not work for farmers. We are now piling up Canadian evidence that points to the same conclusion."
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For More Information:
Terry Boehm, NFU Trans. Committee Chair: (306) 255-2880 or 257-3689
Darrin Qualman, Executive Secretary: (306) 652-9465