By Markham Hislop, publisher
The Canadian Wheat Board is on life support and Prime Minister Stephen Harper is gleefully rubbing his hands at the thought of pulling the plug. His government tabled legislation Oct. 19 that will see the historic institution eventually privatized.
“An open grain market will attract investment, encourage innovation, create value-added jobs, and build a stronger economy for all Canadians,” says Alberta MP Ted Menzies, who seconded the motion by Agriculture Minister Gerry Ritz.
Harper is rolling the dice with this move. And he could well succeed.
Historically, much of Canadian wheat was destined for Europe or even the old Soviet Union, but now Asia accounts for half of all exports, where it is used to make high-end noodles. Research is under way to improve noodle-making varieties, which should lead to even greater sales.
But selling more unprocessed wheat isn’t the end game; Canada’s been doing that for more than a century and has an excellent international reputation as a grain exporter. The real goal is value-added processing. The Conservatives are aiming to move the Canadian grain industry higher up the value chain, with the attendant benefits of more jobs, more investment in technology and spin-offs to local economies, especially those of rural communities (who, not coincidentally, usually vote Conservative).
When Alliance Grain Traders announced a $50 million pasta plant for Regina earlier this month, both Harper and Agriculture Minister Gerry Ritz were on hand for the festivities. The prime minister made it clear that more processing is Ottawa’s objective.
“This significant investment in Regina is positive proof that the government’s commitment to opening Canada’s grain markets is attracting investors that are generating new jobs and economic growth,” Harper said.
The business community, not surprisingly, was on board with the Prime Minister.
“This is a positive sign that changes coming to wheat and barley marketing in Western Canada will stimulate investment in value-added processing in these crops,” said Virginia Labbie, CFIB’s senior policy analyst for Saskatchewan and Agri-business. “Farmers in Southern Saskatchewan are pleased that there will be another marketing opportunity for their durum wheat and another business entity competing for their product outside of the Canadian Wheat Board.”
But what if this strategy doesn’t pan out? What if Asian markets don’t grow as expected and investment doesn’t pour into the Western Canadian food processing industry?
Under that scenario, farmers could be in trouble.
Allen Oberg, a farmer from Forestburg, AB and chair of the Wheat Board, accuses Harper and his government of not doing their homework.
“They have done no analysis of the effect their decision will have on farmers and Canada’s grain industry. We sent crucial business information to them in July, but have yet to receive any meaningful reply. Canada’s milling and baking industries have also expressed concerns,” Oberg said in a recent press release.
Oberg’s accusation reminds me of a similar situation in Saskatchewan almost 30 years ago. Conservative Grant Devine was partly elected on an ideological platform of privatization. He sold the Prince Albert pulp mill to American forestry giant Weyerhaeuser for a pittance ($50 million), hoping to revolutionize the provincial forestry industry. Weyerhaeuser added a paper mill a fews later, but five years ago shuttered the entire complex, throwing hundreds of people out of work. And other improvements to the industry were not forthcoming because Devine had given the Americans a sweetheart forest management agreement that effectively tied the government’s hands for decades.
The fate of the of the P.A pulp mill, and Saskatchewan forestry more generally, is a lesson in unintended consequences of ideology-driven public policy.
So which scenario is more likely, Oberg’s or Harper’s? Who knows?
If Asian economies continue to expand, as seems likely, demand for Canadian grains and food stuffs could skyrocket, leading to the investment and jobs Harper is predicting.
But Oberg warns of another scenario. By ending the Wheat Board’s grain marketing monopoly and not providing the resources needed for the organization to make it as a voluntary marketing organization, the federal government has likely handed that business to private companies, which are predominately American.
“Canada is the last country left in the world where giant multinational grain companies cannot source wheat,” he said in a news conference last week. “For no reason, beyond an ideological crusade, the government will hand the Americans what they want on a silver platter, and get nothing in return. We will see the Americanization of our grain marketing and grain quality systems. And farmers will be the big losers.”
Will Cargill, the giant American food conglomerate, build more processing plants in Canada? Only time will tell.
But if Harper’s strategy fails, there is no going back for Canadian farmers. The Wheat Board was exempt from the North American Free Trade Act. If it’s dismantled, NAFTA rules will prevent it from being rebuilt. Farmers will once again be at the mercy of a grain marketing system controlled outside Canada.
Which brings us to why the Wheat Board was created in the first place. Minister Menzies echoes many in the Conservative Party and Canadian business when he says the CWB was “imposed” on farmers. A bumper sticker popular in Alberta for many years asked that the West be protected from Kyota, the gun registry and the Wheat Board, as if an organization that advanced payments to cash-strapped producers, developed and maintained international markets, and generally supported an industry to prone weather and market catastrophes, was an invention of the Devil himself.
This is simply not true.
Farmers got a taste of single desk selling toward the end of WW1 and clamoured throughout the next decade and into the Great Depression before Conservative Prime Minister R.B. Bennett granted their wish and established the Wheat Board. The war government of Liberal Mckenzie King made membership compulsory. Farmers have been big supporters of the CWB ever since, with the exception of some along the U.S. border for whom it was cheaper to truck their product to market.
Farmers had better hope Harper doesn’t roll snake eyes, because if he does they’ll be paying the bank long after the Prime Minister has retired from the game.
About the Author (Author Profile)
Markham began his journalism career writing columns in the mid-1980s for Western People Magazine, then reported for a small Saskatchewan daily. He has spent most of his career in media and communications, likes to dabble in politics, was actively involved in economic development for many years, thinks that what goes on in the community is just as important as what happens provincially and nationally, and has a soft spot for small business (big business, not so much). Markham is a bit of a contrarian and usually has a unique take on the events of the day.