Hey there, time traveller!
This article was published 10/12/2012 (1656 days ago), so information in it may no longer be current.
There’s no love lost between the Canadian Wheat Board’s former monopoly over Prairie wheat, barley and grain trader Allan Johnston.
“It’s been extremely positive,” said Johnston, who owns Johnston’s Grain in Welwyn, Sask., about the abolishment of the CWB’s monopoly.
“All of the scare tactics that the Wheat Board and Wheat Board lovers were using for the last year — that the grain was going to be sailing into the States and American farmers would be blocking the border and the borders were going to be shut down — none of them have come true.”
The fact that Johnston is happy with the end of the CWB’s monopoly, which officially came to an end on Aug. 1, should come as no surprise as Johnston personally flew to the Parliament buildings in Ottawa to witness the passing of the bill on Nov. 28, 2011.
Johnston believes that day was a “big win” for western Canadian producers.
“Farmers have more options,” Johnston said. “And a lot of guys really liked the bids they were getting in the fall for their wheat and they’ve unloaded it all and that’s something that couldn’t be done in previous years under the monopoly.”
And that’s the biggest win for farmers, according to Johnston, that they can now take advantage of spikes in the marketplace instead of a systematic pooling and selling of grain that might have reduced risk, but also capped reward.
“I think overall even the guys that fought against (the elimination of the CWB monopoly) are quite happy with the open market situation,” Johnston said.
While they couldn’t have forecasted it, the government also picked a good year to eliminate the monopoly. A drought in Eastern Canada and across the U.S. Midwest wiped out millions of acres of productive crop land, and as a result grain prices have been at all-time highs across the board.
Johnston is under no illusion that the prices aren’t reflective of the drought and subsequent lower supply with continued demand, but what he does believe is that the elimination of the CWB’s monopoly allowed farmers to capitalize on those prices.
“If we had the Wheat Board, farmers wouldn’t be able to take advantage of it, they couldn’t jump all over it,” Johnston said.
“We never did see the high prices in 2008 because it was all manipulated and controlled by the Wheat Board. Now, when there is fluctuation like that, we’re going to see it immediately and farmers can jump on it and sell all of their production if they want.”
Friends of the Canadian Wheat Board, a coalition of farmers that support the CWB, are currently suing the government for passing Bill C-18, which eliminated the CWB monopoly.
The group calls the decision “illegal,” believing that farmers were not given the right to vote on the issue, which they believe is required by law.
Larry Bohdanovich, a Grandview area farmer and FCWB supporter, still wants that vote to be held.
“We will live and die by the vote, but we were denied that right,” Bohdanovich said.
“The federal government has also confiscated assets that belong to farmers. We owned 3,000 railcars, a building in Winnipeg and two ships and the government just scooped it up. The best adjective to use is they acted as thieves.”
He also believes that farmers aren’t being adequately compensated for higher protein grains in the new marketplace and in many cases selling wheat when the market is in decline.
“The open market provides you with a snapshot price and the Wheat Board’s pricing was based on the premise that they were selling grain each and every day of the crop year and farmers could receive an average price,” Bohdanovich said.
“More farmers than not were in favour of the single desk for the simple reason that most farmers did not market their grain. They were great producers, but in some cases their marketing didn’t parallel their production.”
“You’re never going to predict the highs, you’re always going to pick a price as the market is coming down,” Bohdanovich said.
For its part, the CWB is still active in the marketplace and the vice-president of grain procurement for the CWB, Gord Flaten, said the transition has been smooth.
“One of the impacts of the high prices is that farmers are feeling very optimistic of where prices are going therefore haven’t committed as many tons to either cash or pool contracts as they might in a normal year,” Flaten said.
While some farmers are sitting on bins full of wheat and barley, Flaten said it was important to create an incentive for producers to bring their grain to the marketplace.
Two new programs — the Winter Pool and Futures Choice Winter Pool — are both designed to capture some of the uncommitted grain that is still out there.
The Winter Pool program will allow farmers to receive an average of late-season prices over the time period from February until July.
“We don’t try to time the market, we get a good average price for the pooling period,” Flaten said.
The second program, Futures Choice Winter Pool, has some similarities, but the main difference is that “farmers can choose the day or days that the futures portion of their total price to be fixed,” according to Flaten.