Thursday, June 2, 2011
Everybody look what's going down
There's battle lines being drawn
Nobody's right if everybody's wrong
Young people speaking their minds
Getting so much resistance from behind
“For What it’s Worth”
Buffalo Springfield, 1967
There seems to be an onslaught of opinions expressed in letters to the editor in a number of papers – both rural and urban. The common thread on many in support of the single desk is that they have no supporting evidence. These fresh observers are wading into something they appear to know very little about yet make pronouncements as if they are an expert on the subject. For the most part they are simply repeating what has been said many times before by the CWB or its supporters. When you read them, look for the supporting evidence; it won’t be there.
1. In the May 21st Regina Leader Post, Bruce Johnstone said:
“So why do farmers support the single desk? Because they derive an economic benefit from doing so, just like oil-producing countries that belong to OPEC, or potash producers that use Canpotex to market their potash offshore. As the NFU recently pointed out, every year, the CWB puts $1.5 billion into farmers' hands that they wouldn't otherwise have.”
How does Mr. Johnstone know farmers derive an economic benefit from the CWB? What analysis has he done? As I’ve shown before, the NFU “analysis” (and I use the term loosely) is badly flawed. The CWB handles around 20 million tonnes of grain annually. To say that the CWB is responsible for adding $1.5 billion to farm revenues, that works out to $75/tonne. So, you’re actually saying that, without the CWB, wheat, durum and barley prices would be $75 per tonne lower. Also, the NFU – like that of many other CWB-friendly analysts – makes unsound assumptions and doesn’t include additional costs brought by the CWB in any of their analysis. Anybody that truly understands the grain business would know that $75 per tonne benefit is nothing more than a fairy tale.
2. In the Edmonton Journal (May 29th), Doug Hollands said this about the loss of the single desk:
“Surely there is no “net benefit to Canadians.” I suggest it would be a tremendous net loss to Canadians.”
Mr. Hollands volunteers no evidence to support what he is saying. In fact, there is nothing to support the idea of better prices or value except that the CWB says it does; but it has never proven it. So how can Mr. Hollands say that taking away the monopoly would be a “tremendous loss”? What does he know that those of us much closer to the facts don’t know?
3. In the Regina Leader Post on May 28th, Morina Rennie wrote:
“The CWB's product differentiation strategy allows producers to obtain a premium price.”
Ms. Rennie does not share in her letter how she knows this to be a fact. Since she is a professor of business administration, I would expect a more robust analysis, relying on facts and sound, irrefutable analysis, rather than just repeating CWB rhetoric.
4. Pat Martin is the Winnipeg Centre NDP MP who is the Opposition critic responsible for the wheat board. In a May 31st Winnipeg Free Press article, he states:
"There is no business case for this. In fact, it will take hundreds of millions of dollars out of the Prairie farm economy and put it in the pockets of the shareholders of the big grain companies like Cargill and Viterra."
Mr. Martin would gain a whole load of credibility if he referred to some substance to back up these claims. I understand he believes this; but I’m more interested in what he knows, something he has kept from us.
5. May 25th, Bill Gehl, President of the Canadian Wheat Board Alliance was interviewed on BNN:
“The board is very involved in transportation so we’re going to see some pretty big increases in transportation costs... obviously our returns are going to fall...obviously our customers are going to see big changes as well and that will be the loss of some of our quality assurance things that the wheat board does through the Canadian International Grains Institute...we’re going to see a weakening of the Canadian Grain Commission...
Let’s look at these items one at a time:
Transportation costs: removal of the CWB single desk will not change the fact that rail rates are regulated and the single desk has nothing to do with setting rail rates.
Falling returns: although this seems obvious to Mr. Gehl, he fails to acknowledge that the CWB’s reported costs are greater than their reported premiums. Using the CWB’s own numbers, if nothing else changed, farmers will get higher – not lower – prices without the CWB single desk. Either Mr. Gehl was not aware of this or he has chosen to ignore it.
Loss of quality assurance: based on what? Canada has an excellent reputation on all grains – even non-board grains. There is nothing to suggest that in an open market our wheat quality will be anything lower or less consistent than it always has been.
Mr. Gehl presents all these as problems with removal of the single desk – without a shred of supporting evidence. I assume if he had evidence, he would use it.
The common thread on all these CWB-supporting comments is fear. Commentators are coming out of the woodwork, mostly saying that, without the single desk. the sky will fall. Loss of quality assurances, loss of revenue, higher costs, no market development, loss of the Canadian brand, farmers getting ripped off by multinationals, poor service, and so on. Not one CWB-supporting commentator offers any proof or evidence for their claims. In fact, every one of their claims can be countered with real evidence or logic. Nor are they being realistic by talking about the problems with the current CWB system – high costs, low returns, poor cash flow, negative impact on other crops, drain on the economy and so on.
I have one question for them: Why not?
This is a very important event in Western Canadian history. We have the responsibility to get it right. I challenge all single desk supporters to prove their arguments. And challenge the facts you don’t agree with, with real evidence, not blind rhetoric. If you can’t do that, at least get your facts right.
“Paranoia strikes deep
Into your life it will creep
It starts when you're always afraid...”
Posted by John De Pape at 7:08 PM