Harper
Government Attempts to Lower
the Price of Barley and Destroy Collective Marketing in Western Canada
It has been a
busy few months in the Harper government’s campaign to destroy the Canadian
Wheat Board (CWB) and hand control of western Canada’s grain industry over to
American multinationals ADM and Cargill.
Within the space of six weeks it has moved from so-called consensus
building, to arm twisting, to name calling, to legislation.
On January 29,
Agriculture Minister Gerry Ritz convened a meeting in Ottawa to discuss his
proposal to remove farmers’ single desk on barley. Originally scheduled to meet for the first
time with the CWB’s farmer-controlled board of directors, Ritz cancelled that
meeting and instead invited two CWB representatives to Ottawa, along with
representatives of the malting barley industry and grain companies, as well as
a handful of farm groups, provincial agriculture ministers and some Ottawa
officials. The invited farm groups
represented about 500 of the 75,000 Prairie grain growers and, not
surprisingly, all opposed collective marketing. Other farm groups, including
the National Farmers’ Union and the Canadian Federation of Agriculture,
representing tens of thousands of Prairie farmers, asked to be given a seat at
the table but were refused.
The purpose of
the meeting, Ritz said, was to come to a solution on barley marketing and to
discuss the CWB’s proposal to resolve the current impasse. This proposed a new marketing program that
would, in essence, set up a cash market for malting barley operating within a
single desk system.
Barley marketing
on the Prairies has been a political “hot potato” since the elimination of the
Crow Rate in the early 1990s and subsequent explosion of a livestock industry
almost entirely dependent on access to the U.S. market. The livestock industry in Canada is highly
consolidated, with two meat-packing monopolies – Cargill and Maple Leaf -
controlling virtually the entire market.
With them both encouraging aggressive expansion, the need for feed for
cows and pigs has increased massively over the past 15 to 20 years. As a result
the cash price for feed barley in Western Canada is one of the highest in the
world while the CWB’s pooled price for malting barley is often only marginally higher
than the cash price available on feed barley, which the CWB does not
market. This has made operating a
pooling system for malting barley difficult.
The CWB proposal
addressed all the operational concerns raised by the malting industry while
still empowering farmers to keep marketing their barley collectively through a
single desk. Needless to say the
representatives of the monopolies were not pleased, particularly because the
proposed program was so well received by Prairie farmers. Accordingly, through
Ritz, they called on the CWB to simply withdraw from barley marketing all
together, by means of a series of procedural changes, and hand it over to
them. When the CWB representatives
protested that this would violate the legislation under which the CWB operates
– which requires the board to maximize returns to farmers – the minister is
reported to have dismissed their concerns as “nonsense” and instructed the CWB
to study his proposal for an open continental barley market.
Ritz next
summoned representatives of the CWB to Ottawa for another meeting on February
12. The CWB ended these talks when it
became apparent that there was no common ground on which to build
consensus. In what can only be described
as a fit of pique, the minister then used a February 13 news conference to
denounce the farmer directors of the CWB as obsessed with “preserving the
status quo”. His message to the
directors, who are elected by farmers in 10 districts across Western Canada,
was clear: “Lead, follow, or get the hell out of the way” in his government’s
efforts to destroy collective barley marketing.
Ritz went on to dismiss supporters of the CWB’s single desk – the majority of grain farmers on the Prairies - as the “tin-foil hat decoder-ring wearing crowd.” He followed this with a most shocking, if honest, declaration, stating that uncertainty over barley marketing is bad for the livestock industry and the agribusinesses which control it. Accordingly, more barley needs to be planted to “bring down the price of feed”. Reporters in attendance were seemingly stunned that he put it so baldly. During the same news conference Ritz also said that he would introduce legislation on barley marketing by the end of the month.
The standoff continued. On
February 29, three days after a federal court of appeal upheld the CWB’s
argument that the minister could not eliminate the single desk on barley
through regulatory as opposed to legislative change, Ritz told a rally on the
steps of the Saskatchewan legislature that he would deliver “barley freedom”
and introduce legislation on March 3.
However, on this occasion his media event - attended by agriculture
ministers from both Alberta and Saskatchewan, leaders of three of four of his
favourite fringe farm groups and a representative of the Canadian Federation of
Independent Business - did not unfold exactly as planned. Despite busing in supporters, Ritz and his
crew were still outnumbered by farmers defending their single desk, who crowded
around chanting “Our Board, Our Business”.
On March 3, Ritz introduced Bill
C-46, an act to amend the Canadian Wheat Board Act. The bill removes the requirement for the
government to consult with the CWB’s board of directors and then all farmers
through a plebiscite before removing barley from the single desk. In addition, the legislation goes further in
amending the Act by introducing an unprecedented dispute resolution mechanism
that would allow grain companies to take the CWB into arbitration.
Clearly the
government’s aim with Bill C-46 is both to weaken farmer control of the CWB by
removing the requirement to consult directly with farmers on barley marketing
and to weaken the CWB operationally by increasing the power of the grain
companies in the negotiation of commercial agreements.
Interestingly,
Minister Ritz, who was first elected as a Reform MP in 1993 on a platform of
increased referenda, argued that further consultation with farmers on barley
was unnecessary because he had already met with farm groups and his
predecessor, Chuck Strahl, had held a non-binding plebiscite with a
three-pronged question in 2007. On the
issue of the proposed dispute resolution mechanism, he claimed that it would
bring “balance” and “fairness” to the grain industry.
It is worth
noting that the CWB was created in the 1930s following a massive struggle by
Prairie farmers to provide themselves with some power in the face of the
dominance of the grain monopolies. This
dominance has increased dramatically over the past 75 years. Today just three
companies control over 90 per cent of the grain handling in Western Canada;
they are Cargill, Viterra (in which ADM has a controlling interest) and
JRI. There are less than 400 grain
elevators left, down from over 2,500 just 30 years ago. Yet somehow the Harper government believes
that the CWB has an unfair advantage in its commercial negotiations with grain
companies.
If Bill C-46
were passed, it would give a third-party arbitrator the unprecedented ability
to create commercial agreements which the CWB would be obliged to accept, even
if these agreements were not in farmers’ interests. In a March 4 news release, the CWB estimated
that this alone would cost farmers tens of millions of dollars in lost
efficiencies and cost savings a year, along with the $40 million in premiums
the single desk on barley earns farmers.
“This is a gift to the grain companies at farmers’ expense,” a CWB
spokesperson told reporters.
Bill C-46 has
not yet made it to second reading in the House of Commons and the question now
is whether or not the government will make it a confidence vote as Ritz has
threatened. It seems unlikely that the
Liberals, who have refused to defeat the Conservatives over their budget or
extending Canada’s military involvement in Afghanistan would do so over the
issue of collective barley marketing in Western Canada.
That being said, Ritz began backing away from his threat to make Bill C-46 a confidence vote shortly after claims surfaced about the Conservative Party attempting to “buy” independent M.P. Chuck Cadman’s vote in an effort to bring down the Martin Liberal government. Some now speculate that the government will let this current session of parliament come and go without forcing Bill C-46 through, although others believe that Harper and his team have promised results to their friends in the multinationals and cannot back down.
However,
whatever happens with barley marketing, it is clear that this is just the
rehearsal for wheat, which is the single largest crop grown on the
Prairies. The next few months may
determine whether or not there is a future for collective marketing in Western
Canada.