A recent letter by Henry Vos presented how the Canadian Wheat Board (CWB) does not get premium prices on its sales. In most respects, Vos was correct. However, his argument does not apply to sales to Canadian domestic buyers.
Canadian value added processors buy from the CWB as they have no meaningful alternative supplies of grain. The CWB can — and does — extract premium prices from these customers. This may sound great for farmers, but these premiums come at a high price.
Think like a processor for a minute. Why would you build in Canada when you have no alternative but to deal with one seller who can change the rules whenever it wants? Most have determined that it’s better to build in other locations so they can buy from a number of sources, including Canada if they need to. When that happens, the CWB is forced to compete and does not get premiums. These companies need to compete in the global market so they need a reliable supply at a globally competitive price, something they don’t always get in Canada.
Look at the malting industry. There have been no investments in Canadian capacity for years. In fact, we may see a decrease in capacity as one plant could soon close. Not that many years ago, a number of firms considered Canada to either build or expand in. All three companies built new capacity in the United States. The reason for all this? The CWB’s single desk.
Now think like a farmer. Why should you care if a processor is available to you as a customer just around the corner? Some think that the only reason a processor will build close to you is because he thinks he can buy grain from you cheaper. If that were the case, companies would be lining up to build in the Peace — and they’re not.
When a processor locates in Western Canada, the local economy gains. They pay taxes, employ local people, add to the infrastructure and local creation of wealth. Farmers gain in other ways as well. They have options. They have a local buyer ready to compete with the other markets they serve. They have a buyer even when the local elevator is plugged or can’t get rail cars.
But none of this works if the processor can’t make a go of it. And that means selling globally. Farmers and processors enjoy a good relationship when price and service are world class. Just ask farmers close to Yorkton, Sask. where two world class canola processors have been built, just how good it is having local competition for their canola.
The CWB needs to rethink this short-sighted approach to domestic processing.
John De Pape, Winnipeg, Man.
