Grain Prices and Transportation
Until August 1, 2012, the Canadian Wheat Board (CWB) sold wheat, durum (pasta wheat) and barley for export and for human consumption within Canada on behalf of farmers, returning all proceeds less operating costs. It supplied Canadian millers and food processors fairly and reliably.
When the “Marketing Freedom for Grain Farmers Act” became law, it immediately dismissed the ten farmer-elected CWB directors, ended the single desk authority of the Canadian Wheat Board (CWB) on August 1, 2012, and compelled the government-appointed directors to privatize or liquidate the CWB’s assets by 2017. This spring the federal government gave the CWB to G3, a partnership of the multinational grain company, Bunge and the Saudi Arabian agriculture investment company SALIC, in return for a promise that the new owners would invest $250 million in the company.
Agriculture Minister Ritz broke his election campaign promise that the CWB would not be changed without first holding a farmer vote. The CWB held a non-binding plebescite in which farmers clearly showed their support for the single desk, which the Minister also disregarded. Farmers initiated a legal action to challenge the government’s actions and recover losses caused by ending the single desk. The legal action is still underway.
Today, prairie farmers must sell directly to grain companies, a sector dominated by three giant multinationals: Cargill, Viterra (now owned by Glencore) and Richardson International. These companies buy low (from farmer) and sell high (on the world market). Their profits are enhanced by increasing the margin (the gap between buying and selling price) and volume sold. In contrast, the single desk CWB maximized returns to farmers by developing and serving premium markets that would pay high prices for Canadian wheat. Since 2012, farmers’ prices have dropped to 60% or less than what they would have been if the CWB was still operating, which has taken as much as $7 billion out of Canada’s economy so far.
When the single-desk CWB was selling prairie grain, its audited financial statements were presented to Parliament every year. No financial information has been released since the single desk ended. The private grain trade does not reveal export price information, so there is no longer any meaningful price transparency.
Unlike individual farmers, the single-desk CWB had status as a “shipper” under the Canadian Transportation Act. It could (and did) advocate for farmers to obtain proper service from the railways. The CWB also coordinated grain shipments from the country elevators right through to the loading of sea-going vessels. Without its coordination, bottlenecks and inefficiencies seriously hamper movement of the crop. International customers are unhappy with the poor service, and the costs of delays are offloaded to farmers through reduced prices. Grain companies take advantage of the situation by charging excess basis (an arbitrary discount on prices) to farmers, while railways lobby for an end to the Revenue Cap (regulated, but profitable, limits on grain freight rates). Railways and grain companies give priority to their most profitable routes and customers, resulting in poor service and worse prices for the rest.
The Canadian Grain Commission, established in 1912, looks out for farmers’ interests by upholding the Canada Grain Act. In 2012 the Act was changed to eliminate inward inspection, a method of ensuring grain companies did not cheat farmers by downgrading grain in the countryside then selling it as high-grade grain to export customers. Additional major amendments detrimental to farmers’ interests were proposed in 2015 in Bill C-48, which died on the order paper when the election was called.
These changes to the grain transportation and marketing system have been very costly to farmers, rural residents, the Canadian economy and purchasers (domestic and international) of Canadian wheat and barley.
What will the next federal government do to improve the grain transportation and marketing system so that it better serves farmers, rural communities, our food system and the Canadian economy?
For more information, see the Canadian Wheat Board Alliance election fact sheet: CWBA 2015 Federal Election: Facts Harper is Hiding
|Election 2015 - Grain.pdf||663.93 KB|
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The National Farmers Union is a direct-membership voluntary organization made up of Canadian farm families who share common goals. It is the only farm organization incorporated through an Act of Parliament.
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