Canadian producers aren’t alone in watching the end of the Canadian Wheat Board’s single desk – many American farmers are, too.
Despite the fact the end of a CWB marketing monopoly would mean more Canadian grain flowing into American markets, U.S. grain industry officials and farm leaders aren’t worried.
“We have always supported the end of Canada’s single-desk trading system,” said Lola Raska, executive vice-president of the Montana Grain Growers Association (MGGA).
“Commodity-wise, we feel Canada’s system allows unfair competition (for export markets). Since the CWB has control over all the commodity in their country, they can enter into agreements when they sell into another country that we can’t match.
“The perception down here is that, whenever we go to one of our buyers that is a common buyer with Canada, Canada can come in at a lower price because of their pool. This change would make for a more level playing field.”
MGGA’s concern about exports isn’t surprising, given that about 80 per cent of the grain grown on their members’ 5.5-million-plus acres is destined for overseas markets. However, export opportunity isn’t the only potential positive for the American grain industry, should the CWB lose its monopoly.
“Expanding that market up there (in Canada) to down here (in the U.S.) will help everybody,” said Brandon Abel, barley merchandiser for Cenex Harvest States (CHS), the biggest grain co-operative in the U.S.
“Prices have been held up by the CWB. The more movement we have with grain marketing, the better – it would make things a lot more interesting.”
Barley flowing south?
From a merchandising standpoint, additional grain from Canada would give CHS “more options,” said Abel, which would be good for both growers and companies such as CHS.
CHS operates elevators in several towns near the Canada/U. S. border, and Abel said he expects a flow of Canadian product, particularly barley, across the line as soon as producers are allowed to do so. Corn and wheat prices are currently high enough to elbow barley out of many American acres, which means that unless Canadian barley fills the void, domestic barley prices in the U.S. will remain under pressure and marketing opportunities may be missed.
“If we had more product, we could look at loading vessels out of Washington and Oregon,” said Abel.
Raska and Abel both say that some of the most northern American grain producers may feel what Raska called the “growing pains” of a marketing change over the short term. On the one hand, northern Montana producers are concerned that increased shipments of Canadian grain will negatively affect local basis. On the other hand, they wonder if trade will be truly free enough to allow their product equal opportunity to flow north to Canadian delivery points, particularly lower-quality product to southern Alberta feedlots.
“Over time prices will equalize to where they’re comparable on both sides of the border,” said Raska. “But, over the short term, those producers are really concerned.”
While Raska said opening up of the Canadian marketing system is a “high priority” for American grain producers, few are holding their breath in anticipation.
“We’ve been hearing about it a number of years. But, we’re waiting like everyone else,” she said. “We saw the demise of the Australian Wheat Board. It’s been an ongoing issue at WTO talks. We know it’s coming, but we’re waiting until the ink is dry.”
Added Abel, “From what we can tell down here, it still has some hurdles. I’ll believe it when I see it.”
MONTANA GRAIN GROWERS ASSOCIATION