Wheat futures
Neville Nankivell
National Post
Saturday, March 22, 2003
The Wall Street Journal reported yesterday that Australia's wheat board, AWB Limited, is lobbying the United Nations and the U.S. government to insure Australia will retain its market share of the post-war Iraqi wheat supply. U.S. wheat suppliers are also anxious to get in on the business.
Last August, Iraq lifted its boycott of Canadian wheat and said it was considering cutting Australian wheat imports in half because of Australia's support for a U.S. attack on Iraq. Wheat Board officials said at the time it was unlikely Canadian wheat would be sold to Iraq, however. What will Canada's role be? It's a fascinating question in view of Canada's touchy relations with the United States over wheat.
The U.S. decision in early March to slam countervailing import duties of nearly 4% on certain kinds of Canadian wheat was called "indecent" by Trade Minister Pierre Pettigrew. Hypocritical would be more apt, considering the generous subsidies the U.S. government doles out to its farmers. But the penalty was no surprise.
Our grain marketing practices have been under U.S. attack for a long time now. They are also under fire from Canadian farm groups and provincial governments such as Alberta.
These disputes will go on and get uglier unless the Canadian Wheat Board's near monopoly in Western wheat and barley sales is loosened -- as it should be. The Winnipeg-based organization is considered by many to be, in effect, a state trading enterprise. It is backed by the federal government and has a dominant role in Canadian grain marketing and grain transportation. This is at heart of the present rows.
Curiously, Mr. Pettigrew suggested that because the U.S. tariff was only 3.94% this was some kind of victory for our side. A much higher rate of 14%-25% had been recommended by the North Dakota Wheat Commission, which initiated the complaints of unfair trading. But the duty is preliminary. It could end up being more when the U.S. Department of Commerce makes a final decision this summer on whether U.S. producers have been materially injured. Additional tariffs could also be imposed when a ruling is made on a separate anti-dumping action now before the department.
The U.S. government also has filed a challenge with the World Trade Organization over what it alleges are illegal Canadian grain export subsidies. Its list of unfair practices includes Ottawa's financial guarantees for Wheat Board payments, the government's cap on railway grain-freight revenues, use of government-owned hopper cars by the railways at no charge and government support for branch lines.
Our government claims these are not subsidies. It will counterchallenge under the WTO and the North American Free Trade Agreement.
Meanwhile, Prairie wheat farmers ultimately will have to foot the costs of these actions. These are estimated at around $10-million for the Wheat Board. The Western Canadian Wheat Growers Association (WCWGA) points out that this will come directly out of the board's pool accounts, which is the same as out of farmers' pockets.
Bonds equal to the preliminary U.S. duty will have to be posted on shipments of Canadian durum and hard red spring wheat. These have averaged about $400-million annually in recent years. While this is only a small proportion of the Wheat Board's sales, any new trade hurdle hurts. Our farmers are up against depressed world grain prices and prospects of poor crops because of the severe drought situation.
The WCWGA doesn't consider the lower-than-expected U.S. duty a win for its members or the board's so-called "single-desk" selling system. It has long advocated allowing Western farmers to opt out of the board's compulsory marketing scheme and sell their wheat and barley independently as they do canola, oats and other crops.
"Canada's main problems in agricultural trade almost invariably involve those areas where there is heavy government intervention," the WCWGA says. By contrast, it notes, Canadian producers sell freely traded canola and cattle into the U.S. market without any problems.
Western Canadian farmers must by law sell wheat and barley destined for human consumption or export markets to the board. This is not the case for farmers in other parts of the country. Ontario, for example, has a voluntary system for its wheat marketing board.
Dozens of Prairie grain growers have been fined because in protest they took wheat into the United States without a board permit and sold it or gave it to a charity. Some were even jailed for a while, which is astounding in a country such as Canada. This doesn't seem to bother the federal government. But it has rightly upset the government of Alberta, which sided with the protestors.
Ottawa has been trying to distance itself from the board, which it says is now farmer controlled and is no longer a government agency. Under governance changes made a few years ago, farmers now elect two-thirds of the board's directors. But the government still appoints the others and, in effect, the chief executive officer. The board could decide to change its status to a voluntary co-operative marketing organization. This seems unlikely. After the last elections, the board remained firmly in the hands of "single-desk" supporters. Producers with small farms mostly favour the status quo. Those with large-scale operations mostly want a change.
Ottawa should give Western farmers freedom of choice in dealing with the board or not. It also should reduce the board's involvement in domestic grain transportation. Two major government-commissioned reports have recommended this.
The export activities of government-backed trading enterprises will face increasing trade challenges and tougher scrutiny in the years ahead over what's legal under WTO rules. The likely result will be limitations on their operations. This is already happening. It's time to end the Wheat Board's legislated monopoly.
source: National Post, March 22, 2003
Free wheat in the west
Neville Nankivell
National Post
Saturday, March 22, 2003
The Wall Street Journal reported yesterday that Australia's wheat board, AWB Limited, is lobbying the United Nations and the U.S. government to insure Australia will retain its market share of the post-war Iraqi wheat supply. U.S. wheat suppliers are also anxious to get in on the business.
Last August, Iraq lifted its boycott of Canadian wheat and said it was considering cutting Australian wheat imports in half because of Australia's support for a U.S. attack on Iraq. Wheat Board officials said at the time it was unlikely Canadian wheat would be sold to Iraq, however. What will Canada's role be? It's a fascinating question in view of Canada's touchy relations with the United States over wheat.
The U.S. decision in early March to slam countervailing import duties of nearly 4% on certain kinds of Canadian wheat was called "indecent" by Trade Minister Pierre Pettigrew. Hypocritical would be more apt, considering the generous subsidies the U.S. government doles out to its farmers. But the penalty was no surprise.
Our grain marketing practices have been under U.S. attack for a long time now. They are also under fire from Canadian farm groups and provincial governments such as Alberta.
These disputes will go on and get uglier unless the Canadian Wheat Board's near monopoly in Western wheat and barley sales is loosened -- as it should be. The Winnipeg-based organization is considered by many to be, in effect, a state trading enterprise. It is backed by the federal government and has a dominant role in Canadian grain marketing and grain transportation. This is at heart of the present rows.
Curiously, Mr. Pettigrew suggested that because the U.S. tariff was only 3.94% this was some kind of victory for our side. A much higher rate of 14%-25% had been recommended by the North Dakota Wheat Commission, which initiated the complaints of unfair trading. But the duty is preliminary. It could end up being more when the U.S. Department of Commerce makes a final decision this summer on whether U.S. producers have been materially injured. Additional tariffs could also be imposed when a ruling is made on a separate anti-dumping action now before the department.
The U.S. government also has filed a challenge with the World Trade Organization over what it alleges are illegal Canadian grain export subsidies. Its list of unfair practices includes Ottawa's financial guarantees for Wheat Board payments, the government's cap on railway grain-freight revenues, use of government-owned hopper cars by the railways at no charge and government support for branch lines.
Our government claims these are not subsidies. It will counterchallenge under the WTO and the North American Free Trade Agreement.
Meanwhile, Prairie wheat farmers ultimately will have to foot the costs of these actions. These are estimated at around $10-million for the Wheat Board. The Western Canadian Wheat Growers Association (WCWGA) points out that this will come directly out of the board's pool accounts, which is the same as out of farmers' pockets.
Bonds equal to the preliminary U.S. duty will have to be posted on shipments of Canadian durum and hard red spring wheat. These have averaged about $400-million annually in recent years. While this is only a small proportion of the Wheat Board's sales, any new trade hurdle hurts. Our farmers are up against depressed world grain prices and prospects of poor crops because of the severe drought situation.
The WCWGA doesn't consider the lower-than-expected U.S. duty a win for its members or the board's so-called "single-desk" selling system. It has long advocated allowing Western farmers to opt out of the board's compulsory marketing scheme and sell their wheat and barley independently as they do canola, oats and other crops.
"Canada's main problems in agricultural trade almost invariably involve those areas where there is heavy government intervention," the WCWGA says. By contrast, it notes, Canadian producers sell freely traded canola and cattle into the U.S. market without any problems.
Western Canadian farmers must by law sell wheat and barley destined for human consumption or export markets to the board. This is not the case for farmers in other parts of the country. Ontario, for example, has a voluntary system for its wheat marketing board.
Dozens of Prairie grain growers have been fined because in protest they took wheat into the United States without a board permit and sold it or gave it to a charity. Some were even jailed for a while, which is astounding in a country such as Canada. This doesn't seem to bother the federal government. But it has rightly upset the government of Alberta, which sided with the protestors.
Ottawa has been trying to distance itself from the board, which it says is now farmer controlled and is no longer a government agency. Under governance changes made a few years ago, farmers now elect two-thirds of the board's directors. But the government still appoints the others and, in effect, the chief executive officer. The board could decide to change its status to a voluntary co-operative marketing organization. This seems unlikely. After the last elections, the board remained firmly in the hands of "single-desk" supporters. Producers with small farms mostly favour the status quo. Those with large-scale operations mostly want a change.
Ottawa should give Western farmers freedom of choice in dealing with the board or not. It also should reduce the board's involvement in domestic grain transportation. Two major government-commissioned reports have recommended this.
The export activities of government-backed trading enterprises will face increasing trade challenges and tougher scrutiny in the years ahead over what's legal under WTO rules. The likely result will be limitations on their operations. This is already happening. It's time to end the Wheat Board's legislated monopoly.
source: National Post, March 22, 2003
Free wheat in the west