| Subject: Open letter to Peter MacKay |
Author:
Roger Buxton
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Date Posted: 23:19:47 05/07/03 Wed
Author Host/IP: edtntnt2-port-380.dial.telus.net/161.184.179.126
Peter,
I was in the crowd in Calgary at the leadership debate last Sunday. I was very disappointed when you said that your government would move to a dual market for Canadian Wheat outside the Canadian Wheat Board. This is even more disappointing to me since I explained the need for the CWB remaining a single desk when I had the opportunity to talk to you at your reception several weeks ago in the Chateau Louis in Edmonton. Your opponent Mr. Chandler said basically the same thing as you did during the debate, but he only has 7 delegates so I am not as concerned about what he said as I am about what you said. No matter what happens in Toronto on May 31, you will play a very significant role in our country in the future.
At the time of our discussion, I said to you that Western Canadian Grain farmers are in an International grain trade war with countries including the USA and Europe that are subsidizing their farmers way more than our country can compete with. The CWB which is a single desk with tremendous trading leverage is the only weapon we have to get the maximum from the world market. Because farmers now elect the Board members of the CWB, they have an opportunity every time there is and election to elect Board members that can change the CWB mandate. Government does not and should not interfere with that mandate. Let the democratic process do it for the farmers.
The farmers that broke the law to export grain on their own are traitors to other farmers in this country who need to have all of the revenue that the Canadian Wheat Board can generate with no competition from individual farmer. Find enclose the words of Former "Farmer for Justice", Rod Flaman, after he got elected to the Board of CWB and found out what the Board was returning more to farmers than any open market system. The letters were in reply to some of his critics. I do not have the critics letters.
Roger C. Buxton, Pres., Wetaskiwin PC Association,
PH.: 780-387-5930
Cel.: 780-719-1031
Author: Rod Flamen, Member of the Canadian Wheat Board
The Wheat Board Monopoly is a misnomer. That is a negative term used to focus anger at the CWB. A monopoly works against you when you are buying from it, not when you were using it to sell your product. The CWB markets Canadian grain in a highly competitive international marketplace. We use the power of the single desk to extract premiums in that market place. I see an exact parallel when I take strawberries and raspberries to the Regina Farmers Market.
My Saskatoon and strawberries are both high value commodities. However, I have no serious competitors selling strawberries at the Regina Farmers Market. I sell my strawberries for whatever price I decide on and I sell them all with no difficulty. There many producers selling Saskatoon in the market. Some producers wanted to get $20.00 per pail for their Saskatoon, but somebody priced them at $18.00. Not many Saskatoon were sold at $20.00 until the vendor who was selling at $18.00 was sold out. We all lowered our price to $18.00 for the next couple of markets. Then someone lowered their price to $15.00 per pail. Now the people selling for $18.00 had to wait for the guy selling at $15.00 to sell out.
If your wheat was being sold at the Regina farmers market would you want one person selling it or five people selling it? What exactly do you mean by "stand against THE WHEAT BOARD MONOPOLY". Do you mean intentionally destroying it? I promised to provide a choice. Destroying the CWB will not give farmers choice. I am working hard to initiate change and provide more choices at the CWB. I am not happy with the status quo. Some changes have been introduced at the CWB to give
farmers choice, but more are needed. The fixed price contracts, basis contracts and early payment options gives farmers choice. The warburtons contract gives farmers choice and I think it is an indication of the direction the CWB should be going. The CWB should be looking closely at
identity preservation and containerization for a portion of our grain that has significant intrinsic value. These values may not be adequately represented by our KVD grading system and the pooling of bulk grains is preventing individual producers from being fairly compensated. Farmers should have the choice of selling their grain to the CWB while it is still in storage on their farm. Farmers providing storage for CWB grains as part of a disciplined marketing strategy should be compensated fairly for their ability to manage those assets while in storage. The system of pooling CWB grains needs to be restructured to give better price signals to farmers. The PRO does not fairly represent the highs and lows of the market nor does it give farmers enough information for them to assess the profitability of growing board grains. Can we provide farmers with the type of choice that Ontario has? Can we let 85,000 farmers compete in the US market? The US is the worlds largest exporter of wheat and they account for roughly 1/4 of world trade in wheat. The American farmer produces twice as much wheat as the American consumer needs. What happens when you or I sell just one bushel of wheat to the United States? One more bushel of American wheat enters the competitive world export market. The world export market can be depressed for many reasons including heavy international subsidies and oversupply. Do you think that makes American farmers angry? Maybe not all of them but look at the current challenge from the North Dakota Wheat Commission. They have said that they are concerned about the Canadian transportation system, the Canadian grading system and the Canadian
Governments cash advance program and various other aspects of support that Canadian farmers receive. They have stated that even in the absence of the CWB they would be mounting this challenge. The last challenge showed that in 59 out of 60 months the CWB priced durum wheat into US mills at levels higher than US grain going into those same mills. Obviously the CWB commands premium prices for Canadian Durum in US Mills. The US market only accounts for one eight of our durum wheat exports. North Africa accounts for about 50%. There is a real limit to how much Canadian grain can enter the American markets. Many forces are at work to prevent Canadian grain from moving freely into the US. The US market is one of Canada's most important markets. It is close by, and that provides us with significant freight advantages. The American consumer demands high quality and has the ability to pay for it. Can we market an unlimited amount of wheat into that market without attracting the
attention of the American farmer and his government. absolutely not! This is a very sensitive market run by very powerful people. I didn't jump ship. I steered it into calmer water. I am the same person I always was. I am honest and hard working. I am intelligent and thoughtful.
I sleep fine at night. If I allowed myself to be pressured along some course of action, against my better judgement, then I would certainly have trouble sleeping. Farmers deserve more from their policy makers at every level than blind adherence to ancient ideology. Further those policy makers who follow their hearts and minds and stand up to personal threat and harassment certainly do deserve respect. There are those who would destroy something out of hate and spite because of some past wrong doings, but not I. The CWB is a powerful tool but it has not been without fault. I have studied the history of the CWB and I understand it better than most. I was told early on by one of the Farmers for Justice that their worst fear was that I would fix the Canadian Wheat Board. If that is your worst nightmare also well guess what....... Here's Johnny!!
Please read the attachments I have provided. If you hate the CWB and the power it represents in the hands of farmers, then we will agree to disagree. If you truly want to move ahead in a constructive manner, then I welcome your thoughts.
Rod Flaman
I believed in the Farmers for Justice because they convinced me that wheat prices should arbitrage up to what the spot price was in the USA which is where I was hauling my wheat back in 1996. I thought that a dual market would bring higher prices for wheat and barley. I thought the CWB was a buyer of my wheat and that competition would make them sharpen their pencils. I thought that the CWB was a poor marketer of wheat and that I could do better by simply driving my truck down to Minot, North Dakota. I note that you were not very supportive in that fight. Where were your "colors" Yes you gave me a "one time grant" towards the destruction of the CWB. Obviously it was not a donation to the Farmers for Justice Movement. I would hope that you saw me as a credible candidate who would use his knowledge and skills to work for improvements in the system. If I "flipped" it is because I was given a whole lot of information that I did not have before. Perhaps it is comparable to the "flat worlders" before the discovery that the world was round and that the earth was not the center of the Universe. I regret that you see this simply as a matter of politics. I regret that you choose to reference my standing amongst former "friends" I see this as a matter of economics and survival of the farm community. I don't think that anyone would reduce this argument to the point of suggesting that the demise of the CWB would cause the "downfall of farming as we know it". Perhaps those are simply your words or rhetoric that you choose to repeat.
Why do the pricing mechanisms for non-board crops provide farmers with profits? One reason is that they are not subsidized to the degree that wheat is. The latest OECD numbers show that Europe and the US are subsidizing wheat at levels in excess of $100.00 per tonne while Canadian subsidies are around $30.00. I would think that a spread of almost $2.00 per bushel has a significant impact on the difference between wheat and other crops. It will be interesting to watch pulse crops over the next few years now that the US Farm bill will allow subsidies to be paid out on those crops as well. You might want to take that into consideration in your cropping plans. Perhaps we will see a shift away from pulse crops as a result of the US Farm Bill. Perhaps this also accounts for some of the movement away from wheat over past years as opposed to your contention that it was the fault of the CWB. Another factor which distinguishes wheat from the non-board crops is the number of countries competing in the world market for wheat sales and the magnitude of the oversupply in a normal year. If you are interested in the magnitude of these numbers just say the word and I will dig them up for you. This aspect of world trade in wheat will become increasingly negative for Canadian production as companies like Louis Dreyfuss build infrastructure in the Ukraine and Russia. These two countries are expected to surpass the United States as the largest exporter of wheat when the reconstruction is complete. Mexico, Khazakistan and other minor players are also becoming significant players in the world wheat market. Canada can no longer boast of being "King Wheat" because the world has changed forever. We are no longer the "bread basket" of the world. Instead of having a competitive advantage we now have distinct disadvantages. We have high land costs, high labor costs, and high freight costs, compared to other countries that produce wheat for world markets. Certainly this high cost structure also applies to non-board crops but luckily we do not have the same level of competition in most of those crops with perhaps the exception of canola. Certainly canola is part of the vegetable oil complex but Canada has successfully differentiated canola from the other vegetable oils to maintain premiums against soy. This is what we try to do with wheat through our grading and handling system. Consider what might happen to that differentiation if significant quantities of our wheat were co-mingled with wheat from the US. Our two systems would eventually become one with the likelihood that the larger American system would predominate. Canadian quality would no longer be differentiated. I have convictions about the system. I am willing to put those convictions out for public scrutiny. I accept challenge and public debate. I would characterize that as "living" with my convictions. If that does not earn your respect then you must question your own values. In logic 100 I learned that when all else fails you resort to an "argument ad homonym". In layman's terms this is name calling. There have personal threats to me and my family. I derive some degree of consolation when people resort to this tactic because it tells me that they have run out of legitimate arguments.
Rod Flaman
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