That ‘market freedom’? What a surprise, it’s wiping out farmers and enriching the 1%!

Posted on February 10, 2014, 12:21 am
10 mins

Prime Minister Stephen Harper takes a group of Canadians for a ride on his fully privatized model railroad. This doesn’t actually work in real life, though. Actual Canadian prime ministers may not appear exactly as illustrated, although, if I may say so, the number on the engine comes close to getting it right! Below: Canadian Wheat Board Alliance President Bill Gehl; Alberta Tory MP Leon Benoit; and blogger and Wheat Board supporter Ken Larsen.

Remember the “market freedom” the Harper Government was congratulating itself so heartily for delivering to Western Canada’s grain farmers a few weeks ago?

To create that “freedom,” Prime Minister Stephen Harper, Agriculture Minister Gerry Ritz and the trained seals in the federal Tory caucus have all but killed the Canadian Wheat Board. Now the freedom they boast about is killing the prices farmers get for their grain and enriching railroads and multinational food corporations.

Gee, who’d have predicted that?

An editorial last Monday in the Saskatoon Star Phoenix quoted Vergreville-Wainwright Tory MP Leon Benoit complaining that wheat that sold a year ago for $9 a bushel is now fetching less than $4 for the farmers who grow it.

Indeed, right at the moment you could argue the price of wheat on the Prairies has for all intents and purposes fallen to zero, because privately owned inland terminals aren’t even accepting the stuff at the moment.

Alas, Mr. Benoit, loyal Harperite that he is, didn’t quite connect all the dots. Still, his lament is a good starting point for a discussion of what the heck’s going on in the grain-growing regions of Western Canada.

How do we explain the gap between the low farm-gate prices Mr. Benoit has rightly identified and world prices for wheat and barley that are both higher and stable? This is a particularly good question in a year when crops on the Canadian Prairies are relatively good in both volume and quality, if not quite the bumper crop the media has claimed – and crops are lousy in lots of other places, including the United States, which is still recovering from the drought of 2012.

If Canadians have a good product in sufficient quantity, and there’s a worldwide shortage of the same thing, shouldn’t the prices Canadian farmers’ products fetch be going up?

If you believe the mainstream media, it’s all because of a shortage of grain cars. A recent story in the Globe and Mail even suggested that there aren’t enough grain cars because so many rail cars are being used to ship oil, leastways, that’s the way I read it.

But you can set your minds at ease, readers: oil and grain aren’t shipped in the same kind of rail cars, and even die-hard advocates of the petroleum industry will probably agree that’s just as well! As an aside, if you’re going to use the Globe as your prime source of agricultural news, you should probably stick to its stories about pigs with diarrhea and the porcine antics of Toronto’s mayor!

The tank-car explanation doesn’t really hold water either – or maybe that should be crude oil. At present, there are only limited numbers of tanker cars in use by the railways anyway, and most of them are going south loaded with light crude, not west full of bitumen. So they can hardly be blamed for problems on the lines to Vancouver and Prince Rupert just yet.

Which is not to say that the grain transportation system isn’t pretty chaotic right now, just not for the reasons you’ve been told.

The real problem, as farmer Bill Gehl, chairperson of the Canadian Wheat Board Alliance, a group representing farmers who tried to save the board, said last November is that “without the farmer-controlled single-desk Wheat Board, nobody is coordinating grain sales, transportation logistics, and the efficient use of port terminal facilities.”

That, in turn means “port terminals are now competing with each other to use rail transport capacity just to generate grain handling revenue.

“The result is they do not always have the right grade and type of grain in place so ships either cannot get a full load at one terminal, as they could when our Wheat Board arranged deliveries, or ships have to wait for more of the correct grade and type of grain to arrive,” Mr. Gehl said. “The result is too many ships waiting much too long and that means farmers get less money.”

Naturally, this isn’t something we should expect Mr. Benoit to point out.

As explained by Ken Larsen, a CWBA supporter and the author of an indispensible blog on this issue, back in the day farmers could tell the farmer-owned Wheat Board the type, quality and amount of the crop they wanted to sell. The Wheat Board would sell it directly to end-use customers around the world and negotiate efficient rail delivery to the best terminal for the shipment.

Since the Wheat Board had the “single desk” it was the de facto manager of the port terminals that shipped wheat and barley. It also matched the grain ship to the overseas customer’s terminal since not all terminals can handle all ships. In addition, it made room in the system for canola sales at good prices.

“That is all gone now,” says Mr. Larsen, who farms near Sylvan Lake, Alberta.

“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,” Mr. Larsen wrote in a recent post on his blog. That is, “the railways and the small number of companies with terminal elevators in ports.”

Naturally, companies owning both inland terminals and port terminals are more interested in keeping grain moving through their own systems than looking out for the overall performance of the system and customer service as the Wheat Board did, Mr. Larsen explains.

There are other factors at play as well. With the ports in a mess, and not enough places to store the stuff on the Prairies, private-sector grain buyers can offer what they like and farmers don’t have much choice but to take it.

Added together, Mr. Larsen says, “this is truly a train wreck of immense proportions. If we assume last year’s western crop was worth about $7 billion, it means more than $2.8 billion has been taken out of the west’s economy!” Include the effect of the drop in the U.S. dollar, since most grain is sold in that currency, the actual decline has been more than 50 per cent.

Another thing Canadian farmers will soon be free of is the excellent reputation Canadian wheat and barley had with buyers abroad – Japanese and Chinese end users are already complaining the new privatized Canadian system isn’t delivering the quality they’ve expected for generations from the Wheat Board.

Over time, this too will reduce the prices farmers get for Canadian grain.

Back in the day, as the SP editorial also pointed out, “western farmers who wanted to export grain relied on the Wheat Board to pool their production and profits, make the international sales and secure fairer shipping terms with the rail companies. Mr. Ritz and the Stephen Harper government freed them from all that.” (Emphasis, as always, added.)

Ah yes, freedom.

Messrs. Harper and Ritz gave them farmers “freedom,” of course, as part of the government’s continuing campaign to eliminate all co-operative ventures and hand over the work they did to the for-profit, globalized corporate sector – leaving all of us a little poorer except about, oh, 1 per cent.

This post also appears on Rabble.ca.

10 Comments to: That ‘market freedom’? What a surprise, it’s wiping out farmers and enriching the 1%!

  1. jim

    February 10th, 2014

    Of course this was predictable, and I hope that you and others will continue to hold the ‘marketeers’ accountable and not let them squirm out of responsibility for destroying the biggest advantage western farmers had.

    The Liberals and Conservatives both have a lot to account for. The Liberals did their best to drive small farmers off the land to ‘rationalise’ the system, and that did away with a lot of support for the CWB/

    Reply
  2. Robert Sampson

    February 10th, 2014

    Harper has no original ideas, nor do any of the Tory caucus. They simply make conservative decisions simply to appease conservative voters, knowing very well the consequences but do so to stay in government. only decisions they make are politically motivated with little foresight. Any economist out of school with any knowledge of business would have known that.

    Reply
  3. Jan Johnstone

    February 10th, 2014

    thank you for the great well put article

    Reply
  4. February 10th, 2014

    Ken Larson said more than $2.8 BILLION has been taken out of Western Canada’s economy. This appear as “million” in the initial version of the story. It has been corrected in the text.

    Reply
  5. Filostrato

    February 10th, 2014

    The number on the train certainly shows where we’re headed under this regime.

    I seem to remember that the farmers, in a majority vote, turned down the dismantling of the wheat board. Who cares about a majority vote in this “government”? Vote how you like. The Harperites couldn’t give a damn. Who cares about a quality product? Who cares about the livelihoods of farmers on the prairies? Not the Harperites. Corporations, especially those who make BIG donations, are the gods they bow and scrape to.

    When I saw this particular piece of idiocy by a sitting – and sleeping – member of the ‘government’ this morning, I thought my heart, already at subterranean levels, couldn’t sink any further. I was wrong.

    Reply
  6. Lars

    February 10th, 2014

    Mr. Benoit, loyal Harperite that he is, didn’t quite connect all the dots…

    I met him a few years ago at one of the Prairie Conservation (please note, Conservation, not Conservative) meetings, and when he found out that I was a zoologist who worked on reptiles he immediately told me about a road in his riding where large numbers of garter snakes got run over regularly in the spring and fall, in the spirit, I guess, of offering me something in my parish. A few minutes later, apropos of nothing that I could see, he remarked, as if it somehow illustrated the capriciousness of nature, that you didn’t see many garter snakes in that area any more, without many any connection between this observation and the one he’d made previously. So not connecting the dots is a talent he’s had for some time.

    Reply

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