national
farmers union
GANANOQUE, Ont-"Creating a dual market for wheat in Ontario will destroy the Ontario Wheat Producers Marketing Board OWPMB) and depress prices for all Ontario wheat producers," said NFU Region 3 (Ontario) Coordinator Peter Dowling. Dowling was commenting on plans to allow Ontario farmers to sell wheat outside of the OWPMB pooling system, in effect, setting up a dual market system. OWPMB delegates will vote on the dual market proposal at their meeting on March 5 & 6.
"The first effect of a dual market will be to end the premium that domestic millers pay under the current single-desk system. Millers currently pay Toledo prices minus 15" (converted to Canadian funds). In a dual market, low off-board prices at harvest will allow Canadian millers to buy a large portion of their stocks at that time. The dual market will lower prices to all farmers, even those who choose to continue marketing their wheat through the OWPMB. Pooling was designed to maximize producers' returns and protect them from the need to sell grain at harvest time at low prices. The proposed dual market experiment will destroy those advantages," said Dowling.
"Over the longer term, the dual market experiment will likely mean the end of the Board. 'Pre-harvest commitments' or contracts will not prevent farmers from playing one system against the other. If prices are rising throughout the year, farmers have a strong incentive to sell into the open market either through spouses or other family members or by simply breaking contracts. If the markets are falling, farmers will almost surely attempt to market into the higher priced pools in much the same ways. The result: the Board will be unable to either predict or control its supply," said Dowling.
"In a dual market, the OWPMB will have no security of supply and little influence on prices . There would be an increased risk of pool-account deficits and, thus, little chance of maintaining government-guaranteed initial prices. Ontario wheat producers are in for a shock if they think they can maintain government-guaranteed prices in a dual market," stated Dowling.
Dowling pointed out that "western Canadian farmers have long debated the feasibility to a dual market and the vast majority agree that it cannot work. No cooperative in the U.S. has successfully operated a voluntary wheat pool of any major size for any substantial period of time during the last 30 years. Between 1935 and 1943, when the Canadian Wheat Board operated within a 'dual market,' it incurred losses of $1.4 billion (1996 dollars) due to variability and unpredictability of supply."
In his decision of the Alberta Barley Charter Case which challenged the constitutionality of the Canadian Wheat Board, Federal Judge Muldoon quoted Dr. Murray Fulton, saying: "a dual market would mean the end of the Canadian Wheat Board as we know it." Muldoon also quoted Dr. Andrew Schmitz who said that a 'dual market' would merely be "a transition to an open market."
Dowling concluded: "This 'dual market' experiment is ill-conceived and bad for farmers. It will mean lower prices and--because it endangers both pooling and the government guarantee of prices--it will almost surely mean the end of the Board. What Board-critics could not do with a vote, they are now attempting to do by other means."
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