The Future of the CWB

The Canadian Wheat Board has been in operation for nearly 76 years.  It is controlled by western Canadian farmers and is the largest wheat and barley marketer in the world.  This Winnipeg based organization sells grain to over 70 countries around the world returning all the revenue, less the marketing costs, back to the farmer.  So then why is it that the federal government has stated plans to get rid of the CWB by August 1^st, 2012.  This is because of the thought that the CWB has outlived its usefulness.  A large reason for this is because ever since 1943 Canadian wheat farmers by law have had to sell their wheat to the board at a fixed price that is established by the board.  This law also came and went for oats between 1949 and 1989.  But barley destined for human consumption in Canada or for export has been legally forced to sell strictly to the board as well again at a fixed rate.  Also a concern for the government in trying to erase the deficit is that since 1943 the federal government has spent $1.3 billion cover the board’s deficits.  So why has all of this turmoil been caused by the government wanting to abolish it? 

Defenders of the CWB say that without the board grain prices would fluctuate day to day and farmers would have to negotiate their own price.  However this is exactly what opponents of the board want.  They argue that through the use of the internet farmers could monitor the price and negotiate accordingly, this would allow the farmers the opportunity to make more then they would be able to with the fixed rate used by the board.  There are also those that are in the middle and believe that pooling and negotiating a common price may be a good idea for some farmers, they should not be forced to sell their grain strictly to the CWB.  These farmers believe in a dual market system where they can sell their crops to the open market or to the board.  However this idea was already disposed of in 1997 when critics of the referendum said it wasn’t possible. 

I personally see more economic benefits to having a free market however I’m not the one selling my grain.  There is currently on online “vote” going on for farmers can determine the end result of the CWB.  What this will be interesting to see what is decided as most young farmers are determined to seek possible economic benefits of the board being gone, while the old die hards just want to have a secure market to sell their product to.  I guess time will tell.

Until next time,

Luke