Text of Wheat Growers Presentation to Senate

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Kevin Bender
President, Western Canadian Wheat Growers Association

Presentation to the
Senate Committee on Agriculture and Forestry

December 8, 2011


Thank you for the opportunity to appear before you today. For 42 years, the Wheat Growers have been strong proponents of open and competitive markets, free trade and innovation.

The Wheat Growers urge Senate members to pass Bill C-18 into law as quickly as possible.

Ensuring early passage of this legislation will give farmers an opportunity to lock-in forward prices if they wish to do so. It also means the Canadian grain trade, including a voluntary Canadian Wheat Board, will have the opportunity to capture sales to customers that might otherwise go to competitors in other countries.

There are several reasons the Wheat Growers support marketing freedom for wheat and barley. I will highlight a few.

• First and foremost, we believe it will lead to higher farmgate prices. Over the past few years, returns to farmers in the U.S. open market have been much higher than the returns provided to prairie farmers under the CWB monopoly.

• The benefits of marketing freedom go far beyond price. The delivery restrictions and payment delays under the monopoly impose additional storage and interest costs on our farms. It also affects our cashflow and forces many farmers to sell their canola and other crops much earlier than the market is telling them to, which again, negatively affects our income.

We believe an open market will result in much greater private investment in processing in western Canada. We’ve already seen Alliance Grain Traders, a Canadian-owned company based in Regina, announce the construction of a $50 million pasta and pulse processing plant. This is the first major pasta plant announcement on the prairies in decades. It is the first step in reversing Canada’s huge trade deficit in pasta. It will give Canadian farmers a local outlet for their durum. It will also give Canadian consumers greater ability to buy home-grown pasta, rather than importing it from afar.

We also believe an open market will result in much greater private investment in wheat research. This will give prairie farmers the ability to have access to improved genetics and more choices to grow those varieties that are best-suited to each individual farm.

In short, we believe the creation of an open market will significantly increase farmer incomes and contribute to much greater prosperity on the prairies. We urge all Senators to ensure this legislation is passed as quickly as possible.

Before concluding, I would like to comment on yesterday’s federal court decision. While some have argued that the current government should be obliged to follow the previous Liberal government policy and hold a producer vote, we do not agree. The Wheat Growers maintain that in a democracy, how any person disposes of his property should not be subject to a vote.

How one farmer markets his grain should not depend on the preferences of his neighbour. We believe each and every farmer should be able to decide what is right for his or her farm, and have the freedom to sell their grain on their own or in co-operation with others. They should not face jail time if their wishes do not subscribe to the wishes of others.

In summary, the Wheat Growers ask you to provide prairie grain farmers with the same marketing freedom that other Canadian farmers now take for granted, and ensure speedy passage of Bill C-18.

Again, thank you for the opportunity to appear before you.

Kevin Bender

Supplementary Notes

• Plebiscite was a sham. Over 68,000 ballots sent out. Statscan numbers confirm there are about 20,000 commercial grain farms on the prairies. Many people (including non-farmers) rec’d multiple ballots. About one-quarter of all ballots were sent to landlords (note: this is based on permitbook holder numbers found in CWB statistical report). Alberta farmers rec’d only 25% of the ballots yet produce 39% of the wheat and barley. Plebiscite was skewed against AB farmers where support for an open market is by far the greatest.

• Plebiscite asked the wrong question. It did not include the option (i.e. a voluntary CWB) that is most preferred by farmers. For example, according to the CWB’s latest producer survey (released in June),only 41% of farmers support the monopoly, compared to 45% who want a voluntary CWB and a further 13% who want no CWB at all. Again, the survey was biased against AB farmers, but still, it shows that a total of 58% of respondents no longer support the monopoly. Goes to show how much the plebiscite was a sham result.

• Young farmers in particular do not support the monopoly. According to the CWB survey, only 24% of farmers under age 45 (which is hardly young) support the monopoly, whereas 57% of farmers over age 65 support the monopoly.

• Wheat acreage in Australia has climbed since that country eliminated the single desk for wheat three years ago. In fact, this year, Australian farmers planted RECORD wheat acreage. If Australian farmers are unhappy with the marketing change, they have an odd way of showing it. Australians are capturing wheat market share at the expense of Cdns.

• Canada’s share of the world wheat trade has declined from 22% twenty years ago to about 12% today. Australia surpassed us in 2010 and now has 13% market share.

• Wheat acreage in Ontario has increased significantly (about 50%) since the end of the monopoly 8 years ago. In our view, acreage shifts are the best indicator of the effects, positive or negative, of a policy change. We expect a significant rebound in prairie wheat and barley acreage in western Canada once we obtain an open market.

• We also expect growth in processing. In addition to Alliance (which I mentioned),Rahr malting recently announced a $5 million expansion in storage at its plant in Alix, Alberta. They are adding 27,000 tonnes of storage. It means they will carry more of the storage risk, rather than the farmer. We expect to see many more such announcements once we obtain an open market.

• We have seen the value of investments in non-board crops. Currently, we process about 50% of our canola on the prairies and 15% or our oat production. In contrast, we process about 10% of our barley, 5% of our wheat and only 1% of our durum on the prairies. There are 10 canola crushing plants in western Canada, and not a single major pasta plant. In North Dakota, there are 5 good-sized pasta plants. One of those plants produces almost as much pasta as all of Canada.

• Our trade deficit in durum has grown from $67 million in 2005 to $223 million in 2009. In contrast, our trade surplus in canola oil has increased from $600 million to $1.4 billion over the same time frame.

• Canada ranks 16th in the world in terms of our pasta production, despite being the world’s largest producer of durum wheat. Only 6 or 7% of our durum wheat is processed here in Canada. We want to see more durum processed here at home, so Canadian consumers have greater opportunity to buy Canadian-produced pasta.

• Price differences. Year-to-date, average U.S. prices have averaged almost $2.00 per bushel greater than what I can expect to receive from the CWB.

• We see the creation of an open market as the end of this divisive debate, which has been detrimental to our industry. We expect to see a new era of co-operation once this corrosive debate is behind us.
 
 
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