Dawn of a new day for western wheat farmers 0
After years of legal battles to protect it, the Canadian Wheat Board was losing its monopoly on western wheat and grain sales August 1, allowing farmers to sell crops directly to buyers. The CWB will be a voluntary opt-in organization instead.
And Rolf Penner believes the end of a grain monopoly may be the start of bigger profits.
Penner, who grows wheat and other crops about 16 km east of Morris, said average CWB prices were about $1 less per bushel of wheat than what producers in the U.S. received.
Penner, who estimates he produces about 50 to 60 bushels per acre of his 500 acres of wheat, said that difference quickly adds up.
"I'm very happy to see the end of the monopoly," he said. "It means better prices and more opportunities."
Penner said most farmers already watch commodity prices but only now can take advantage of market dips and surges.
"Year in and year out, the old monopoly system would get you a below-market price," said Penner. "The old line was, 'Everything's good as long as we all go broke together.'"
The federal government cleared the way for private marketing through the Marketing Freedom for Grain Farmers Act.
Blair Rutter, executive director of the Western Canadian Wheat Growers Association, said strong wheat prices bode well for the switch.
"Grain prices are strong, so farmers are going to reap the benefits of this open market," said Rutter.
The price of wheat on the Minneapolis exchange for September delivery shot up from US$7.50 to US$10 a bushel over the past two months, in part due to a drought south of the border.
But those who supported the single-desk system fear farmers will lose income over the long run.
"If you are the only seller of a brand of product, you have market power," said Bob Roehle, co-ordinator of Friends of the Canadian Wheat Board. "That's Economics 101."
Even as a few court battles rage on, though, Roehle expects the clock can't be turned back to the CWB of the past.
"I think we've seen the end of the Canadian Wheat Board as we know it. I don't think you could revive it now," said Roehle. "What farmers might be able to do is claim some loss of income for perpetuity."
Despite the Canadian Wheat Board's monopoly ending on Wednesday, the legal battles raged on.
Friends of the Canadian Wheat Board announced plans to seek an appeal to the Supreme Court of Canada over a claim the government was legally required to hold a vote of farmers before ending the single-desk system. A class action suit will also attempt to force the government to re-establish the CWB with its previous resources and monopoly, or pay farmers $17.5 billion in damages.
Federal Agriculture Minister Gerry Ritz was confident the changes will stick.
"As far as I'm concerned, it's full steam ahead," said Ritz. "August 1, 2012, is the end of an era and the beginning of a new one. The class action lawsuits really have no basis on changes taking effect."
Ritz said he expects the wheat board to become viable as a private organization by its 2016 deadline to do so. In the meantime, he expects Western grain producers will profit from selling directly to buyers.
"I think the biggest benefit is it gives Western Canadian farmers the same rights and responsibilities as their Eastern Canadian cousins," said Ritz.
But Anders Bruun, the lawyer representing Friends of the Canadian Wheat Board, said the court battles could have a significant impact on farmers.
"The case we're trying to take to the Supreme Court will have an impact on governance in general and what this Parliament can and can't do," said Bruun of the plebiscite suit. "And the class action suit would have a real economic impact on farmers."
Bruun said it's unclear what chance single-desk supporters have to win either battle, since there's little legal precedent for this type of case.
"We're in entirely new terrain here," said Bruun.