CROSSING THE BAR
Stand by for cross-border selling of barley
(excerpt from Agriweek - 06/30/2008)
It appears that some time this fall a few western farmers may attempt to test the Wheat Board's blockade on barley sales to the U.S. by hauling token amounts across the border without benefit of Canadian Wheat Board export permits. The theory is that since it is clearly government policy to end the monopoly, they are unlikely to be prosecuted.
It is a permanent part of western folklore that farmers have been convicted, fined and jailed for doing the same in the 1990s. However the government of the day was rabid in support of the wheat and barley monopoly. Prosecution was unbelievably aggressive and was probably directed from the political level. No one was ever charged or convicted under the Canadian Wheat Board Act; the actions were actually under the Customs Act.
The prospective border-runners have a point. The Harper government, unlike the Chretienistes, will not put western farmers in jail for 'illegally' exporting barley if it can help it, especially after its own attempts to remove the monopoly have so frustratingly failed.
The incentive is certainly there. Elevators in North Dakota and Montana consistently post cash prices higher than the Board's pool return outlooks, higher than 2007-08 pool prices and double the Wheat Board initial payment. Last week North Dakota elevators were offering $275 to $285 a tonne on the driveway for malting barley, for which the Board intends to pay about $230 after freight and elevator deductions. The difference to the grower is around $60 an acre.
It happens that because of the looming U.S. corn shortage, Canadian feed barley could also be of interest to feed mills and livestock operators in the northern states in 2008-09. Corn prices affect the off-Board barley market in Canada to the extent that barley prices have to be competitive with corn. The Board may or may not be interested in this business. But large amounts of partly-processed cracked barley could be exported by Canadian feed and grain companies. Also fusarium could be a big problem in malting barley in the northern states, raising prices further. If this occurs and farmers find out, the incentive to try direct exports will become irresistible.
If token border runs are made (say 10 bushels in a 1980 pickup) and do not bring on prosecution, they could soon escalate to B-trains. It is unpredictable what would happen next. The Harper government would as soon not prosecute, but it could be forced to do so. It could be, among other things, sued by the Wheat Board for failing to enforce the Customs Act. Any resulting decision could apply retroactively.
Before this goes too far someone should get a high-test legal opinion on the chances that the part of the Customs Act requiring export permits for Board grains can be changed by regulation.
Stand by for cross-border selling of barley
(excerpt from Agriweek - 06/30/2008)
It appears that some time this fall a few western farmers may attempt to test the Wheat Board's blockade on barley sales to the U.S. by hauling token amounts across the border without benefit of Canadian Wheat Board export permits. The theory is that since it is clearly government policy to end the monopoly, they are unlikely to be prosecuted.
It is a permanent part of western folklore that farmers have been convicted, fined and jailed for doing the same in the 1990s. However the government of the day was rabid in support of the wheat and barley monopoly. Prosecution was unbelievably aggressive and was probably directed from the political level. No one was ever charged or convicted under the Canadian Wheat Board Act; the actions were actually under the Customs Act.
The prospective border-runners have a point. The Harper government, unlike the Chretienistes, will not put western farmers in jail for 'illegally' exporting barley if it can help it, especially after its own attempts to remove the monopoly have so frustratingly failed.
The incentive is certainly there. Elevators in North Dakota and Montana consistently post cash prices higher than the Board's pool return outlooks, higher than 2007-08 pool prices and double the Wheat Board initial payment. Last week North Dakota elevators were offering $275 to $285 a tonne on the driveway for malting barley, for which the Board intends to pay about $230 after freight and elevator deductions. The difference to the grower is around $60 an acre.
It happens that because of the looming U.S. corn shortage, Canadian feed barley could also be of interest to feed mills and livestock operators in the northern states in 2008-09. Corn prices affect the off-Board barley market in Canada to the extent that barley prices have to be competitive with corn. The Board may or may not be interested in this business. But large amounts of partly-processed cracked barley could be exported by Canadian feed and grain companies. Also fusarium could be a big problem in malting barley in the northern states, raising prices further. If this occurs and farmers find out, the incentive to try direct exports will become irresistible.
If token border runs are made (say 10 bushels in a 1980 pickup) and do not bring on prosecution, they could soon escalate to B-trains. It is unpredictable what would happen next. The Harper government would as soon not prosecute, but it could be forced to do so. It could be, among other things, sued by the Wheat Board for failing to enforce the Customs Act. Any resulting decision could apply retroactively.
Before this goes too far someone should get a high-test legal opinion on the chances that the part of the Customs Act requiring export permits for Board grains can be changed by regulation.
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