CWB bill will require sober thought
By Ken Rosaasen, The StarPhoenix December 2, 2011
The following is the opinion of the writer, a professor in the University of Saskatchewan college of agriculture and an active farmer.
Bill C-18 passed third reading in the House of Commons on Monday.
The bill that ends the CWB single desk now proceeds to the Senate. There are many long-term impacts that will arise from this bill's implementation and there will be gainers and losers - but perhaps not the gainers and losers suggested by the federal government.
Removing the single desk takes income away from farmers. Studies conducted by reputable economists estimate the annual loss of revenue to the farm sector between $400 million to $600 million per year. This loss will accrue largely to consumers in other nations who will benefit from lower prices. There are also greater opportunities for increases in the margins of domestic railways and grain handling companies because of their market power versus farmers.
The Canadian federal government strongly supported the maintenance of a single desk for potash, Canpotex, as did the government of Saskatchewan. Conceptually, the economics are similar. Saskatchewan potash received the deserved federal recognition as a strategic resource. Are not food production resources as important to Canada?
When legislation is changed, compensation is sometimes negotiated and paid to those who are losers. The termination of the Western Grain Transportation Act paid out compensation to Prairie landholders because of the loss of the rail freight payments. The tobacco buyout by the Canadian government recently paid compensation to tobacco farmers for their quota termination. Sometimes compensation is part of the process. In other cases it has to be sought through the courts.
The CWB has no facilities, such as elevators or terminals at ports. Without the ability to physically control the product, blending revenues will accrue to the handling companies whose facilities it will have to use. Clearly, one should not be surprised that the grain trade is clamouring to achieve these additional marketing margins from people who might deliver to this new grain marketing agency of the government.
The survival of this new government marketing agency is highly unlikely.
The Australian Wheat Board had a much longer transition period. It also had assets and was given substantial legislative support in terms of delivery and access to rail and port facilities. Yet, it no longer exists. The remains of the AWB have been sold to Cargill.
The CWB has been a defender of wheat, durum and barley farmers in countervail actions launched by the U.S.
Who will do that now? The U.S., EU and others have sought the elimination of the wheat board. The U.S. tries to beat it up as a state trader, implicitly recognizing its value to Canadian farmers. When I asked a Canadian government negotiator what Canada will receive for giving up the CWB single desk, the answer suggested it's very hard to negotiate for anything when the Canadian government is giving it away.
I have followed the legislative debates about the Crow Rate, feed grains policy, GRIP and many others. Nothing has been rushed through like Bill C-18. Andrew Coyne in the Dec. 5 issue of Maclean's states that "Parliament is dying."
On the farm where I grew up, my father and uncle gave me some advice: "Measure twice, cut once." A more precise long-term plan than outlined in Bill C-18 is needed to foster a smoother transition of the Prairie grain marketing and transportation system with reduced uncertainty and long-term costs. On our farm, we have locked up some canola sales into September 2012, but cannot do the same for wheat due to the dismantling of the CWB and the lack of a functioning futures market for wheat in Canada.
If the government is determined to proceed, it should begin with a continental barley market in August 2012, with wheat and durum delayed for at least one year because of all the uncertainty and the potential for undue transition costs.
One hopes that the Senate will prove to be the chamber of sober second thought. I have found some of the Senators and staff with whom I have met to be very concerned with both the provisions and the process used to pass Bill C-18. They are open to a discussion of the economic outcomes of the changes as proposed. Amendments are needed, and I believe some will be made.
As Canadians, we need an informed decision, not an inflamed decision
Read more: http://www.thestarphoenix.com/news/bill will require sober thought/5799799/story.html#ixzz1fVYuynm1
By Ken Rosaasen, The StarPhoenix December 2, 2011
The following is the opinion of the writer, a professor in the University of Saskatchewan college of agriculture and an active farmer.
Bill C-18 passed third reading in the House of Commons on Monday.
The bill that ends the CWB single desk now proceeds to the Senate. There are many long-term impacts that will arise from this bill's implementation and there will be gainers and losers - but perhaps not the gainers and losers suggested by the federal government.
Removing the single desk takes income away from farmers. Studies conducted by reputable economists estimate the annual loss of revenue to the farm sector between $400 million to $600 million per year. This loss will accrue largely to consumers in other nations who will benefit from lower prices. There are also greater opportunities for increases in the margins of domestic railways and grain handling companies because of their market power versus farmers.
The Canadian federal government strongly supported the maintenance of a single desk for potash, Canpotex, as did the government of Saskatchewan. Conceptually, the economics are similar. Saskatchewan potash received the deserved federal recognition as a strategic resource. Are not food production resources as important to Canada?
When legislation is changed, compensation is sometimes negotiated and paid to those who are losers. The termination of the Western Grain Transportation Act paid out compensation to Prairie landholders because of the loss of the rail freight payments. The tobacco buyout by the Canadian government recently paid compensation to tobacco farmers for their quota termination. Sometimes compensation is part of the process. In other cases it has to be sought through the courts.
The CWB has no facilities, such as elevators or terminals at ports. Without the ability to physically control the product, blending revenues will accrue to the handling companies whose facilities it will have to use. Clearly, one should not be surprised that the grain trade is clamouring to achieve these additional marketing margins from people who might deliver to this new grain marketing agency of the government.
The survival of this new government marketing agency is highly unlikely.
The Australian Wheat Board had a much longer transition period. It also had assets and was given substantial legislative support in terms of delivery and access to rail and port facilities. Yet, it no longer exists. The remains of the AWB have been sold to Cargill.
The CWB has been a defender of wheat, durum and barley farmers in countervail actions launched by the U.S.
Who will do that now? The U.S., EU and others have sought the elimination of the wheat board. The U.S. tries to beat it up as a state trader, implicitly recognizing its value to Canadian farmers. When I asked a Canadian government negotiator what Canada will receive for giving up the CWB single desk, the answer suggested it's very hard to negotiate for anything when the Canadian government is giving it away.
I have followed the legislative debates about the Crow Rate, feed grains policy, GRIP and many others. Nothing has been rushed through like Bill C-18. Andrew Coyne in the Dec. 5 issue of Maclean's states that "Parliament is dying."
On the farm where I grew up, my father and uncle gave me some advice: "Measure twice, cut once." A more precise long-term plan than outlined in Bill C-18 is needed to foster a smoother transition of the Prairie grain marketing and transportation system with reduced uncertainty and long-term costs. On our farm, we have locked up some canola sales into September 2012, but cannot do the same for wheat due to the dismantling of the CWB and the lack of a functioning futures market for wheat in Canada.
If the government is determined to proceed, it should begin with a continental barley market in August 2012, with wheat and durum delayed for at least one year because of all the uncertainty and the potential for undue transition costs.
One hopes that the Senate will prove to be the chamber of sober second thought. I have found some of the Senators and staff with whom I have met to be very concerned with both the provisions and the process used to pass Bill C-18. They are open to a discussion of the economic outcomes of the changes as proposed. Amendments are needed, and I believe some will be made.
As Canadians, we need an informed decision, not an inflamed decision
Read more: http://www.thestarphoenix.com/news/bill will require sober thought/5799799/story.html#ixzz1fVYuynm1
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