Putting A Price Tag On The Canadian Wheat Board

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“I have a hard time believing the world would walk away from a good (WTO) deal just because Canada wouldn’t give up the single desk.”

– Larry Hill

A former chair of the Canadian Wheat Board says work should begin now on a compensation package for farmers if a World Trade Organization (WTO) agreement kills the board.

Ken Ritter says he is convinced there will be a WTO agreement, given most nations’ desire to stimulate the world economy. The current WTO proposal singles out the CWB among so-called State Trading Enterprises for elimination by 2012. It therefore makes sense to prepare, says Ritter.

If there’s no deal, or a deal allows the CWB to continue, there’s no harm, the Kindersley, Sask. farmer said. And if the CWB is eliminated, then the federal government will know how much it owes farmers for their loss.

“My point is let’s get things started,” Ritter said. “Let’s have a review by an impartial group of people and find out what the value of the CWB is.”

The proposal raises the spectre of the battle over the “Crow” grain transportation subsidy and subsequent compensation after it was scrapped in 1995.

FOCUS

Current CWB chair Larry Hill wants farmers and the Canadian government to instead focus on protecting the CWB at WTO talks.

“Any energy taken away from that is just lessening that effort,” Hill said in an interview in response to Ritter’s proposal.

National Farmers Union president Stewart Wells was less diplomatic.

“This is the same idiotic nonsense that cost the farmers the Crow, laid out exactly the same way,” he said.

The livestock industry wanted the Crow grain transportation subsidy removed, believing it would make grain cheaper to feed, boosting its profits, Wells said. The same argument, by the same people is made about getting rid of the CWB, he added.

“But where are we now? The livestock industry is in the worst shape it has ever been in,” Wells said.

Western farm landowners received acreage payments totaling $1.6 billion after the loss of the Crow (Western Grain Transportation Act [WGTA] subsidy) ended. Some farm groups and the federal government had been pushing to end the subsidy anyway, but its demise coincided with a WTO trade agreement. But according to Ritter, farmers only received one-third to one-quarter of the money that had been available as at one point.

(This claim is disputed. The Mulroney government and some farm groups mused about converting the annual WGTA payments to the railways, which ranged from $721 to $561 million, to the into a $6 billion bond, but a formal proposal was never made public.)

CANADIAN DECISION

Agriculture Minister Ritz didn’t respond directly to Ritter’s proposal. However, he repeated the government’s position that it favours eliminating single desk selling, but that such a decision should be made domestically.

“We’re going to continue to stand up for Canadian farmers at the WTO and work hard to deliver a deal that’s good for all of our producers,” he said in an email.

Ritter suggested a panel to valuate the CWB could include experts from Europe or Australia that haven’t been involved in the debate over the CWB. Given the European Union and Australia compete with Canada for grain exports that idea might not fly.

Ritter said single-desk selling brings farmers additional revenue.

“I sat at a luncheon table with a European Union Agricultural Commissioner who said Canadian farmers got a benefit of $10 to $15 a tonne from the wheat board,” he said. “So it is a real value that Canadian farmers receive.”

Ritter didn’t offer any suggestions on how much Western Canadian farmers should be paid if they have to give up the CWB or how the money should be distributed.

“I think this is the beginning of a long process,” he said. “First you need to convince government money needs to be set aside for this and this is not the most auspicious time for budgets (given a recession and growing budget deficit).”

Canada has already agreed if a WTO agreement is struck that the Canadian government will no longer guarantee the CWB’s borrowings or initial payments to farmers.

Hill said the CWB shouldn’t be up for negotiation at all, as it does not distort trade. “I have a hard time believing the world would walk away from a good (WTO) deal just because Canada wouldn’t give up the single desk,” Hill said. “The single desk doesn’t matter one bit to other farmers in the world. It’s something that matters to Canadian farmers.”

Canadian farm groups such the Grain Growers of Canada, which want the CWB to lose its single desk are also pushing hard for a WTO agreement, hoping it will include improved access to export markets.

But according to Hill the current proposal doesn’t deliver that, nor would it do much to rein in subsidies paid to European Union and American farmers. [email protected]

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