Tuesday, June 21, 2011
A foundation of the CWB’s message about the future without the single desk is that it won’t be able to compete with the grain companies that it will be forced to rely on to handle its grain. Allen Oberg recently said:
If the CWB were to continue its grain-marketing role in an open market, it would need to operate as a grain company. A grain company that would need to rely on competing grain companies in order to carry out its business. ...
...You will drive to your local elevator, which is now competing with the CWB. This elevator is run by a company with no incentive and no requirement to handle CWB grain.
In fact, the CWB has said – over and over for some time – they will not be able to compete while relying on their competitors to handle their grain. Those of us on the other side of this debate have said – over and over for some time – this happens all the time; the grain business is a volume business – bring them volume and they will be eager to negotiate to get your business.
Yesterday, the Western Grain Elevator Association (WGEA) released a statement on the subject:
"The insinuation is that grain handling companies would not be interested in continuing to partner with the Canadian Wheat Board as suppliers of handling services," said Wade Sobkowich, Executive Director of the WGEA. "It's unfortunate that members of the WGEA have not yet been approached by the CWB to discuss maintaining its strong partnership in an open market. Grain companies would certainly be prepared to negotiate handling or marketing agreements with the CWB on standard commercial terms. Our members look forward to entering into discussions with the CWB to ensure an orderly transition to marketing choice in a way that is in the best interest of all participants, including producers."
Sobkowich adds that handling grains and oilseeds for third parties is commonplace in the grain handling system and would continue with marketing choice. "Grain companies currently offer handling services to third parties who do not own elevators or port terminals, many of whom are direct competitors. It makes good commercial sense for grain companies to provide services to the CWB, especially in circumstances where the volume of wheat and barley to be handled is significant."
So where is the CWB leadership? They’ve taken this position without even discussing any of this with the grain handlers. And the grain handlers “look forward to entering into discussions with the CWB”.
It would make much more sense to approach the members of the WGEA (and other grain handlers) and negotiate commercial terms. Only after trying sincerely and failing, should you come out and say “it won’t work.”
This approach by the CWB board is the epitome of arrogance. There are many things the CWB could be and do; this kind of opportunity is rare. But let’s face it; they don’t want a voluntary CWB to work and have failed to even try. Many, many farmers, expecting them to work on their behalf, should be very disappointed in the CWB board right about now.
My guess is that the majority of CWB directors are still in a mindset where they are not going to accept the removal of the single desk and, unfortunately, all their efforts will be going into fighting change rather than pursuing opportunities on behalf of farmers. Like the playground brat, since they aren’t getting their way, they’re threatening to take their ball home.
I’m sorry to say that we are likely faced with the prospect of a summer and fall of the CWB making resistant “why bother?”type of statements, only to be corrected – over and over – eroding any confidence the board leadership might have had. Unfortunately, the end result may be a completely impotent CWB, not able to provide value in a voluntary market, or no CWB at all – simply because its leadership failed.
Posted by John De Pape at 3:46 PM