Monday, June 20, 2011
Allen Oberg, Chairman of the CWB, spoke about the future of the CWB at the Western Canadian Farm Progress Show in Regina last week. While reading and listening to his presentation online, I was struck with just how much this debate is now focused on the plight of the reformed CWB, and not about marketing freedom.
This whole process started by the federal government isn’t about the future structure of the CWB – it’s about providing marketing freedom to Western Canadian farmers. Why are we spending so much time on what the CWB will be able to do – or not do – in the absence of the single desk?
The Conservatives main objective is not to reform the CWB into some form of “voluntary marketing agency”; that part of this exercise emerged because it appeared that a portion of the farming community wanted a voluntary CWB. And since this exercise is about giving choices, it makes sense to consider a voluntary CWB as one choice.
But now the debate is about jobs in downtown Winnipeg, whether the port of Churchill will survive, whether the federal majority government has the mandate to provide marketing freedom, and most of all that farmers should get to vote on the future of the CWB. Add that to the drone of more NFU and CWB rhetoric about the value of the single desk – all unproven and, quite frankly, using analysis that is hard to believe that any reasonable person would believe. (The NFU allegation that the CWB is responsible for adding $1.5 billion to farmers’ incomes would be laughable if it weren’t so serious. $1.5 billion works out to about $75/tonne on CWB grains only; do they really think that net returns to farmers would be that much lower without the CWB?)
In Regina, Allen Oberg made his views clear; he said “the CWB cannot survive without the single desk”. He says the CWB is not a grain company yet will be expected to compete as one, relying on its competitors. The CWB has no capital base for borrowing money or financing its operations, it relies on government guarantees; it will be too small; it doesn’t matter how good the CWB is at marketing, it won’t survive without physical assets; even with a large base of farmer support, the CWB won’t survive in a competitive world. What is the business plan of the new CWB? Who are its shareholders? Are they farmers? What are its assets?
None of this has anything to do with marketing freedom; it’s all about the organization.
The CWB has failed to prove its relevance. They argue that the single desk needs to remain because farmers benefit from it. However, they have never proven it. Read back through all the press releases and public comments by the CWB; you will not find one shred of irrefutable proof that the single desk provides a net benefit. Don’t just say “because it’s been good to farmers” – tell us how. When you don’t provide hard evidence, we can only assume it’s because you can’t.
Oberg has stated that, if the “new model” of the CWB cannot provide additional value, then why bother. And he says he can’t think of a better model than the single desk. About the government, Oberg said, “I do not believe they have a vision for how the CWB could function in an open market. They simply want the single desk dismantled.” I think he’s right; the government’s focus is on providing farmers with marketing choice. I think it’s up to those that have an interest in the CWB to put some effort behind making it work.
If those who are in the best position to lead change within a voluntary CWB – the directors and the senior staff – don’t think they can create a meaningful and successful marketing organization for farmers, then I say we should believe them.
Minister Ritz should take this as a strong message, rescind the CWB Act, and move all non-marketing activities to a newly minted Canadian Wheat Commission (CWC). Funded by a voluntary check-off, the CWC could be used to administer cash advances on wheat and barley, support the Canadian International Grains Institute (CIGI), support wheat and barley breeding programs, market development – and anything else its management feels compelled to get involved in – except grain marketing and regulations.
If those wanting the CWB to be remain active in grain marketing in some form, I suggest they work toward creating an organization that – quite frankly – does not market grain nor regulate. The CWB says it can’t compete as a grain company, so take that one off the table; let’s all agree it won’t be a grain company. It would be a mistake to have them regulate anything, so turf that one too.
However, under the right leadership, the CWB could become a very important risk management tool for farmers, providing optional price pooling (yes, through the grain companies), other pricing options and market-based resources to enhance cash flow. It could even administer cash advances (which could be imbedded in other cash management tools).
If those leading the CWB can’t see a future for a voluntary CWB of any description, even one providing risk and cash management, I guess it has no future. But that’s OK - in a free market there will be others willing to step in to offer whatever farmers need and the market can provide.
It’s time to move on.
Posted by John De Pape at 3:46 PM