The removal of the Canadian Wheat Board’s single-desk marketing authority cost western farmers billions in lost income, while benefiting the railways and private grain trade, says a research paper commissioned by the Canadian Wheat Board Alliance.
The paper by Laura Larsen, a PhD candidate in the University of Saskatchewan’s history department, argues that the elimination of the CWB’s monopoly on export sales of western wheat and barley by the Harper government in August 2012 reduced farmers’ market power, resulting in lower prices and higher costs for western farmers.
“For Prairie farmers, the present state of the grain handling, transportation and marketing system is not working in their favour,” the study said.
Far from benefiting western producers, so-called ‘marketing freedom’ has resulted in farmers receiving 40 to 60 per cent of the world grain price today, versus more than 90 per cent under the CWB.
“Farmers do not have market power anymore because they’ve been reduced to individuals,” Larsen said on a teleconference call with CWBA officials and reporters Wednesday.
“The railways and the grain companies both have more market power to take a bigger proportion of that world price. That’s really why we’ve seen the farmers’ share go down is because they’ve lost their market power.”
And the study suggests the $6.5 billion in foregone income in the 2013-14 and 2014-15 crop years, as calculated by U of S agricultural economist Richard Gray, probably underestimates the impact of the loss of the single desk.
“It’s clear that there’s been significant decreases in the prices that farmers are getting over the past two years and it’s not reasonable to attribute that solely to transportation (issues) because it’s a very big and complex system.”
Source : Leaderpost