Thursday, June 2, 2011

For what it's worth

Everybody look what's going down
There's battle lines being drawn
Nobody's right if everybody's wrong
Young people speaking their minds
Getting so much resistance from behind
“For What it’s Worth”
Buffalo Springfield, 1967

Some people don’t know their stuff

There seems to be an onslaught of opinions expressed in letters to the editor in a number of papers – both rural and urban.  The common thread on many in support of the single desk is that they have no supporting evidence.  These fresh observers are wading into something they appear to know very little about yet make pronouncements as if they are an expert on the subject.  For the most part they are simply repeating what has been said many times before by the CWB or its supporters.  When you read them, look for the supporting evidence; it won’t be there.

For example:

1.       In the May 21st Regina Leader Post, Bruce Johnstone said:

“So why do farmers support the single desk? Because they derive an economic benefit from doing so, just like oil-producing countries that belong to OPEC, or potash producers that use Canpotex to market their potash offshore. As the NFU recently pointed out, every year, the CWB puts $1.5 billion into farmers' hands that they wouldn't otherwise have.”

How does Mr. Johnstone know farmers derive an economic benefit from the CWB?  What analysis has he done?  As I’ve shown before, the NFU “analysis” (and I use the term loosely) is badly flawed.  The CWB handles around 20 million tonnes of grain annually.  To say that the CWB is responsible for adding $1.5 billion to farm revenues, that works out to $75/tonne.  So, you’re actually saying that, without the CWB, wheat, durum and barley prices would be $75 per tonne lower.  Also, the NFU – like that of many other CWB-friendly analysts – makes unsound assumptions and doesn’t include additional costs brought by the CWB in any of their analysis.  Anybody that truly understands the grain business would know that $75 per tonne benefit is nothing more than a fairy tale. 

2.       In the Edmonton Journal (May 29th), Doug Hollands said this about the loss of the single desk:

“Surely there is no “net benefit to Canadians.” I suggest it would be a tremendous net loss to Canadians.”

Mr. Hollands volunteers no evidence to support what he is saying.  In fact, there is nothing to support the idea of better prices or value except that the CWB says it does; but it has never proven it.  So how can Mr. Hollands say that taking away the monopoly would be a “tremendous loss”?  What does he know that those of us much closer to the facts don’t know? 

3.       In the Regina Leader Post on May 28th, Morina Rennie wrote:

“The CWB's product differentiation strategy allows producers to obtain a premium price.”

Ms. Rennie does not share in her letter how she knows this to be a fact.  Since she is a professor of business administration, I would expect a more robust analysis, relying on facts and sound, irrefutable analysis, rather than just repeating CWB rhetoric.


Others that should know better

4.       Pat Martin is the Winnipeg Centre NDP MP who is the Opposition critic responsible for the wheat board.  In a May 31st Winnipeg Free Press article, he states:

"There is no business case for this.  In fact, it will take hundreds of millions of dollars out of the Prairie farm economy and put it in the pockets of the shareholders of the big grain companies like Cargill and Viterra."

Mr. Martin would gain a whole load of credibility if he referred to some substance to back up these claims.  I understand he believes this; but I’m more interested in what he knows, something he has kept from us.

5.       May 25th, Bill Gehl, President of the Canadian Wheat Board Alliance was interviewed on BNN:

“The board is very involved in transportation so we’re going to see some pretty big increases in transportation costs... obviously our returns are going to fall...obviously our customers are going to see big changes as well and that will be the loss of some of our quality assurance things that the wheat board does through the Canadian International Grains Institute...we’re going to see a weakening of the Canadian Grain Commission...

Let’s look at these items one at a time:

Transportation costs: removal of the CWB single desk will not change the fact that rail rates are regulated and the single desk has nothing to do with setting rail rates.

Falling returns: although this seems obvious to Mr. Gehl, he fails to acknowledge that the CWB’s reported costs are greater than their reported premiums.  Using the CWB’s own numbers, if nothing else changed, farmers will get higher – not lower – prices without the CWB single desk.  Either Mr. Gehl was not aware of this or he has chosen to ignore it.

Loss of quality assurance: based on what?  Canada has an excellent reputation on all grains – even non-board grains.  There is nothing to suggest that in an open market our wheat quality will be anything lower or less consistent than it always has been.

Mr. Gehl presents all these as problems with removal of the single desk – without a shred of supporting evidence.  I assume if he had evidence, he would use it.  

The power of fear

The common thread on all these CWB-supporting comments is fear.  Commentators are coming out of the woodwork, mostly saying that, without the single desk. the sky will fall.   Loss of quality assurances, loss of revenue, higher costs, no market development, loss of the Canadian brand, farmers getting ripped off by multinationals, poor service, and so on.  Not one CWB-supporting commentator offers any proof or evidence for their claims.  In fact, every one of their claims can be countered with real evidence or logic.  Nor are they being realistic by talking about the problems with the current CWB system – high costs, low returns, poor cash flow, negative impact on other crops, drain on the economy and so on. 

I have one question for them: Why not?

This is a very important event in Western Canadian history.  We have the responsibility to get it right.  I challenge all single desk supporters to prove their arguments.  And challenge the facts you don’t agree with, with real evidence, not blind rhetoric.  If you can’t do that, at least get your facts right. 

“Paranoia strikes deep
Into your life it will creep
It starts when you're always afraid...”


  1. I spent the day driving in central Saskatchewan and saw flooded land,land so wet that farmers were bypassing areas and seeding high ground. Do you single desk supporters purport to say that people with these managing skills have no ability to market their product? If you have never drug a log chain to a stuck tractor in the dark then you can shove your ideology in one of the drawers of your desk. Of course, I mean this in a respectful way.

  2. A wise man once said,
    "before you gain anything you must first lose everything".

    I chose not to grow wheat and durum for the year(rotation allowing),and I hope to market my next CWB grain without the CWB even if this means not selling my next years crop until the following year. I'm not a big farmer just one who makes a differnce.

  3. Hey John DePape: What is your interest in trying to abolish the CWB? And don't give me some crap about altruism. You stand to make considerable money consulting if the CWB is gone, correct? So you have a very large vested interest, correct?

  4. Anonymous:
    Are you suggesting I should defend the CWB? Or that I should just butt out?

    Thanks for your interest and concern for my futures earnings potential but, be assured, my income is not a function of the existence of the single desk. Granted I will have to do things differently without it because there won't be much of a business reporting on the weaknesses of the single desk.

    My focus is risk management; CWB, no CWB, grains, FX, financials, whatever. That will not change.

    Charlie Mayer once told me "Once they start coming after you personally, you know you've got them beat."

    Since we're talking motivation, what's yours?

  5. Mr. De Pape, all you give sir is misdirection. Your facts do provide a back up to your side of the arguement, yet you never provide answers to the realities that farmers fight everyday. (Though I guess if as a farmer, you lose sleep over having someone else market a portion of your grain for you, Mr. Depape speaks your mother tongue).

    I would think that the loss of the single desk is the final realigning that the world grain giants have been waiting for. Now you can show me a handful of quotes I'm sure that'll prove me wrong but I would like you remind farmers of some events that I know are true.

    A few years ago sask farmers will remember that Con Agra( one of the world's largest grain handlers) built three termninals here. Their idea was that they wanted to get in on the floor so when the Cwb was gone they would have a presence here. They ran here for a few years and then pulled out when this did not happen, selling their assets to Richardson.

    Now fellow farmers I ask you this: Why did a grain giant like Con Agra not continue in this market? Could it be that the margins they were seeking were not there under a Cwb single desk system? They initially came here with the assumption the single desk would be gone quickly - that is a fact, as many of you will remember. Though I suspect Mr. Depape will try to fog your memory on the issue.

    I assume that most who read this blog are in the camp of removing the Cwb altogether and that is your right to hold that belief. It is the people who think they can have both CWB and open market that I want to think carefully about what is happenning. The dual is not an option. These huge(and they are huge, right Mr. Depape?) companies have been held out of the Canadian wheat markets for years and they are ready to get back in. That is the scenario. Fear or no fear that is reality.

    The fact we are not ready for an open market western candadian wheat scenario is also a concern. Seeing as we have no commodity trading in Winnipeg for Canadian wheat it will be quickly folded into Minneapolis or some other american price where our western canadian quality is not valued. The grain companies will have to decide what premiums to give us for this quality. Hows that gonna go? I assume it'll be something like the "honest" trucking premiums that get handed out. The changes proposed to the Canadian Grain Comission are will make it hard for that organization to stand up for us in such scenarios. Read the articles in the producer, these things are coming. But here I am spreading fear again. I'm sure Mr. Depape will have soothing facts and words to calm us all down.

    We need a two question vote. Single desk or open market. Farmers need to vote. (And I agree, no landlords or multiple names on a permit book should vote) If we decide open market, then as dissapointed as I would be, I would accept the outcome. But if it goes the single desk way, would not the rest of you farmers accept the democratic choice that we as farmers will have made?

  6. Anonymous,I read your comment objectively and consider it nothing but rhetoric, philosophy and weak ad hominem comments. Nothing based on empirical evidence. Your two question vote suggestion reminds me of a schoolyard bully, using intimidation, yet you are dead on accurate about the farmer vote qualifications.

  7. None of you seem to realize or acknowledge the role the CWB has played in pressuring CN and CP to provide timely, good service - or the role it plays in securing cars for producer loading facilities. These represent more savings to farmers.

  8. It isn't rhetoric. These are issues that no one is giving explanations for. There is no option for a dual market. If there is tell me how it could effectively work. The way I see it, at best, it would be the farmers who would sell through the board competing for market share with ones who chose open market. How is that helping farmers? By making them undercut each other? One or the other is what it has to be. No lingering of the voulentary Cwb. Not sure how that is bullying. I don't like it but its reality. I would think bullying is denying farmers the right to choose for themselves.

  9. Anonymous: Isn't it ironic? You defend the single desk which denies farmers the ability to choose how to market their wheat, yet you argue that not having a farmer vote is "denying farmers the right to choose for themselves".

    If you're right about the vote, then you must agree that the single desk also denies farmers the right to choose for themselves (your words).