Thursday, June 30, 2011

When is a plebiscite not a plebiscite?

When it’s a survey.

Unless you’re living under a rock, you’ve heard the arguments almost every day – the CWB Act requires a producer vote to make any changes to the CWB and not allowing farmers to vote in a plebiscite is taking away their democratic rights. 

Take a close look at Section 47.1 of the Act:

Minister’s obligation

47.1   The Minister shall not cause to be introduced in Parliament a bill that would exclude any kind, type, class or grade of wheat or barley, or wheat or barley produced in any area in Canada, from the provisions of Part IV, either in whole or in part, or generally, or for any period, or that would extend the application of Part III or Part IV or both Parts III and IV to any other grain, unless

(a) the Minister has consulted with the board about the exclusion or extension; and
(b) the producers of the grain have voted in favour of the exclusion or extension, the voting process having been determined by the Minister.

This says that if the Minister wanted to exclude any grain from the control of the CWB, there are things he must legally do, including provide a vote for producers.

The CWB and its friends keep harping on this “requirement” for a vote.  But they’re either misinformed or misleading.  The Minister has made it clear; he is not excluding anything from the Act, he is not making a change to the Act, he is shutting down the Act completely.  This is what governments do from time to time; they change the law.  Nothing in the Act can supersede the government’s authority to change the law.

Let’s be clear; this “plebiscite” is nothing more than a survey.  Not only is it not required, it doesn’t even comply with the Act that it’s relying on; according to Section 47.1 of the Act, the voting process has to be determined by the Minister.  You can be certain that he is not determining anything here except that this plebiscite is irrelevant.

Besides that, there are some serious problems with the CWB’s own plebiscite:

1.       The voter’s list will be defined by the CWB.  Even with the CWB elections, the voters list is fraught with problems.  This one will be no different.  If you’re not a CWB supporter, you may not even be on the list.
2.       The CWB has said it will be a vote of wheat and barley producers only.  All crops suffer from the single desk, and therefore, if you must have a vote, all producers should have a voice – not just wheat and barley producers.  If you don’t support the CWB and show it by what you choose to grow, there’s a good chance you’re not on the list.
3.       The questions presented by the CWB do not even contemplate a role for a voluntary CWB.  The CWB’s own surveys over the years have shown that many, many producers believe there is a role for a voluntary CWB.  Excluding this option disenfranchises all those farmers that would look forward to a voluntary CWB.  Because some of the board members don’t believe in a voluntary CWB, those producers that do, don’t get a voice.

Fundamentally, the whole idea is counter intuitive.  What the CWB is saying is the majority of farmers should decide for everyone.  Even if 90% of farmers want the single desk, it makes no sense that they should dictate how the other 10% manage their affairs.

Bottom line: the CWB’s “plebiscite” is nothing more than a survey, is not binding and fraught with bias. It is a complete and utter waste of time and money.

If you like what Minister Ritz is doing, if you are looking forward to the open market – with or without a voluntary CWB – then show your support of an open market by NOT voting in the CWB “plebiscite” (survey).  In the infamous words of Allen Oberg, “Why bother?” 

The most powerful statement a producer can make is to say nothing at all.

The future looks bright without the single desk

I liked this so much, I'm sharing it here.

The future looks bright without the single desk

by Brian Otto
Farmer at Warner, AB and
President of Western Barley Growers Association

The Canadian Wheat Board, at the direction of its board of directors, has been spreading fear among farmers about what will happen when the single desk control over wheat and barley is gone.  In their narrow view of the world, the sky will fall without the CWB.  They want us all to join in their fear that the CWB will not survive without the single desk. This is a last ditch effort to convince farmers that they are right and the federal government is wrong. 

Well, I for one don’t buy into their fear at all.  In fact, I am extremely excited about what is about to emerge in Western Canada, thanks to the Harper government.

I see a future where producers will be able to manage their cash flow needs and delivery opportunities in a way that fits their individual farm’s needs.  Farmers will have prices transparency which will allow them to make better decisions to manage their farm businesses.  This will lead to more successful farmers.

I see a future for young farmers.  Currently, we have an aging farming population with few younger operators willing to invest in developing a farm business. With a commercial market place, young farmers will have the tools to manage their risk and create wealth, for themselves and for their communities.  We will finally have an environment that will attract young people back to the farm.

I see a future for investment in Western Canadian agriculture.  I’m told that there is already a steady stream of inquiries from a wide variety of firms wanting to invest in a commercial market in Western Canada, once the single desk is gone.  Under this new commercial system I see job creation and the revitalization of rural communities.

I see a future where competition for farmers’ grain will drive marketing costs lower.  Canadian maltsters will need to sharpen their pencils as US maltsters will be buying from us in direct competition.  Canadian millers will have the opportunity to develop niche contracting programs to satisfy needs for specific traits; the Warburtons program will no longer be unique in Western Canada.  Minor classes of wheat will find new, robust markets that were ignored under the single desk because they were too small.

I see a future where farm entrepreneurs establish and grow significant agri-businesses, vertically integrating in a way that only makes sense from the farm.  Imagine, growing wheat and selling bread!

We do not have to look very far to see what an open and commercial market place can do for the whole grains industry.  Over the last decade or more, we have seen a constant increase in canola crushing capacity with a steady growth in acreage to support it. And we likely haven’t seen an end to it; the Canola Council of Canada has a goal of reaching 15 million acres by 2015 and the markets to support it; I think it will happen.  The wheat and barley sectors will learn from this model; by everyone working together – farmers, seed companies, grain handlers, and processors – a great deal more will be accomplished than we ever did under the current single desk system.

The fear mongers will have you think that when Australia closed down its single desk, it was only a short time before farmers lost the AWB as it was sold to Agrium and Cargill.  What they don’t tell you is that it was farmers who owned it and chose to sell it.  Nor do they tell you that there is now more wheat acres, more wheat buyers and more wheat pools offered in Australia than ever before.  The commercial system is thriving down under; I want that for our industry too.

I see a pretty darn good future without the single desk.  But this future also includes a voluntary wheat board. If the current CWB board puts their minds to it, I believe they can establish a world class, farmer-run organization dedicated to assisting farmers to get the most out of the market.  They will need to change the way they currently think about the organization, and I recognize that can be a challenge.  But the challenge is theirs and we can only hope that they are up to the task.  Running a meaningless survey they want to call a plebiscite isn’t going to cut it. 

It is time the CWB board showed leadership and moved forward with a plan to operate under a new structure.  This is not about fewer options for producers; it is about the creation of new markets and the expansion of choices for farmers.  It’s about wealth creation. 

It is time to move our industry into the twenty first century.

Tuesday, June 21, 2011

Take my ball and go home: CWB style

A foundation of the CWB’s message about the future without the single desk is that it won’t be able to compete with the grain companies that it will be forced to rely on to handle its grain.  Allen Oberg recently said:

If the CWB were to continue its grain-marketing role in an open market, it would need to operate as a grain company. A grain company that would need to rely on competing grain companies in order to carry out its business. ...

...You will drive to your local elevator, which is now competing with the CWB. This elevator is run by a company with no incentive and no requirement to handle CWB grain.

In fact, the CWB has said – over and over for some time – they will not be able to compete while relying on their competitors to handle their grain.  Those of us on the other side of this debate have said – over and over for some time – this happens all the time; the grain business is a volume business – bring them volume and they will be eager to negotiate to get your business.

Yesterday, the Western Grain Elevator Association (WGEA) released a statement on the subject:

"The insinuation is that grain handling companies would not be interested in continuing to partner with the Canadian Wheat Board as suppliers of handling services," said Wade Sobkowich, Executive Director of the WGEA. "It's unfortunate that members of the WGEA have not yet been approached by the CWB to discuss maintaining its strong partnership in an open market. Grain companies would certainly be prepared to negotiate handling or marketing agreements with the CWB on standard commercial terms. Our members look forward to entering into discussions with the CWB to ensure an orderly transition to marketing choice in a way that is in the best interest of all participants, including producers."

Sobkowich adds that handling grains and oilseeds for third parties is commonplace in the grain handling system and would continue with marketing choice. "Grain companies currently offer handling services to third parties who do not own elevators or port terminals, many of whom are direct competitors. It makes good commercial sense for grain companies to provide services to the CWB, especially in circumstances where the volume of wheat and barley to be handled is significant."

So where is the CWB leadership?  They’ve taken this position without even discussing any of this with the grain handlers.  And the grain handlers “look forward to entering into discussions with the CWB”. 

It would make much more sense to approach the members of the WGEA (and other grain handlers) and negotiate commercial terms.  Only after trying sincerely and failing, should you come out and say “it won’t work.”

This approach by the CWB board is the epitome of arrogance.  There are many things the CWB could be and do; this kind of opportunity is rare.  But let’s face it; they don’t want a voluntary CWB to work and have failed to even try.  Many, many farmers, expecting them to work on their behalf, should be very disappointed in the CWB board right about now. 

My guess is that the majority of CWB directors are still in a mindset where they are not going to accept the removal of the single desk and, unfortunately, all their efforts will be going into fighting change rather than pursuing opportunities on behalf of farmers.  Like the playground brat, since they aren’t getting their way, they’re threatening to take their ball home.

I’m sorry to say that we are likely faced with the prospect of a summer and fall of the CWB making resistant “why bother?”type of statements, only to be corrected – over and over – eroding any confidence the board leadership might have had.  Unfortunately, the end result may be a completely impotent CWB, not able to provide value in a voluntary market, or no CWB at all – simply because its leadership failed.

Monday, June 20, 2011

It's time to move on

Allen Oberg, Chairman of the CWB, spoke about the future of the CWB at the Western Canadian Farm Progress Show in Regina last week.  While reading and listening to his presentation online, I was struck with just how much this debate is now focused on the plight of the reformed CWB, and not about marketing freedom.

This whole process started by the federal government isn’t about the future structure of the CWB – it’s about providing marketing freedom to Western Canadian farmers.  Why are we spending so much time on what the CWB will be able to do – or not do – in the absence of the single desk?

The Conservatives main objective is not to reform the CWB into some form of “voluntary marketing agency”; that part of this exercise emerged because it appeared that a portion of the farming community wanted a voluntary CWB.  And since this exercise is about giving choices, it makes sense to consider a voluntary CWB as one choice. 

But now the debate is about jobs in downtown Winnipeg, whether the port of Churchill will survive, whether the federal majority government has the mandate to provide marketing freedom, and most of all that farmers should get to vote on the future of the CWB.  Add that to the drone of more NFU and CWB rhetoric about the value of the single desk – all unproven and, quite frankly, using analysis that is hard to believe that any reasonable person would believe.  (The NFU allegation that the CWB is responsible for adding $1.5 billion to farmers’ incomes would be laughable if it weren’t so serious.  $1.5 billion works out to about $75/tonne on CWB grains only; do they really think that net returns to farmers would be that much lower without the CWB?)

In Regina, Allen Oberg made his views clear; he said “the CWB cannot survive without the single desk”.  He says the CWB is not a grain company yet will be expected to compete as one, relying on its competitors.  The CWB has no capital base for borrowing money or financing its operations, it relies on government guarantees; it will be too small; it doesn’t matter how good the CWB is at marketing, it won’t survive without physical assets; even with a large base of farmer support, the CWB won’t survive in a competitive world.  What is the business plan of the new CWB?  Who are its shareholders?  Are they farmers? What are its assets?

None of this has anything to do with marketing freedom; it’s all about the organization.

The CWB has failed to prove its relevance.  They argue that the single desk needs to remain because farmers benefit from it.  However, they have never proven it.  Read back through all the press releases and public comments by the CWB; you will not find one shred of irrefutable proof that the single desk provides a net benefit.  Don’t just say “because it’s been good to farmers” – tell us how.  When you don’t provide hard evidence, we can only assume it’s because you can’t.  

Oberg has stated that, if the “new model” of the CWB cannot provide additional value, then why bother.  And he says he can’t think of a better model than the single desk.  About the government, Oberg said, “I do not believe they have a vision for how the CWB could function in an open market. They simply want the single desk dismantled.”  I think he’s right; the government’s focus is on providing farmers with marketing choice.  I think it’s up to those that have an interest in the CWB to put some effort behind making it work.  

If those who are in the best position to lead change within a voluntary CWB – the directors and the senior staff – don’t think they can create a meaningful and successful marketing organization for farmers, then I say we should believe them.

Minister Ritz should take this as a strong message, rescind the CWB Act, and move all non-marketing activities to a newly minted Canadian Wheat Commission (CWC).  Funded by a voluntary check-off, the CWC could be used to administer cash advances on wheat and barley, support the Canadian International Grains Institute (CIGI), support wheat and barley breeding programs, market development – and anything else its management feels compelled to get involved in – except grain marketing and regulations.

If those wanting the CWB to be remain active in grain marketing in some form, I suggest they work toward creating an organization that – quite frankly – does not market grain nor regulate.  The CWB says it can’t compete as a grain company, so take that one off the table; let’s all agree it won’t be a grain company.  It would be a mistake to have them regulate anything, so turf that one too.  

However, under the right leadership, the CWB could become a very important risk management tool for farmers, providing optional price pooling (yes, through the grain companies), other pricing options and market-based resources to enhance cash flow.  It could even administer cash advances (which could be imbedded in other cash management tools).

If those leading the CWB can’t see a future for a voluntary CWB of any description, even one providing risk and cash management, I guess it has no future.   But that’s OK - in a free market there will be others willing to step in to offer whatever farmers need and the market can provide.   

It’s time to move on.