Viterra's Marketing Fellow Criticizes CWB

Column # 696 24/11/08

In the last week of the CWB director elections, the C.D. Howe
Institute issued a brief report arguing that the Canadian Wheat Board
does not do a good job marketing prairie grain. The main author of the
report is a University of Regina assistant administration professor,
Sylvain Charlebois.

The basis of the report was sharply criticized by the CWB. Ian White,
appointed CEO of the CWB by Stephen Harper, was blunt, "Farmers are
not well served by another report based on false assumptions and
oversimplified numbers."

In the never-ending line of studies for and against the CWB, it is
always interesting to look at the bias brought to the table by the
authors. In Charlebois' case, it is worth noting that he is not much
in favor of marketing boards of any type, having argued that Canadian
consumers and Canadian farmers are badly served by supply management.
(Supply management is a system that controls production in Canada of
dairy and poultry products, in order to allow farmers to make a decent
return from these industries.)

The C.D. Howe Institute, which commissioned Charlebois' study, is a
well-know think tank on the right wing of the political spectrum. It
has advocated for, among other things, the privatization of Canada
Post and a tax on Canadians based on their use of the medical system.

Charlebois' methodology in examining the CWB's performance is
problematic, but it may stem from a failure to understand the Board
and its function. In his opening paragraph, Charlebois describes the
CWB as "the sole buyer of Western Canadian wheat and barley". The CWB
is, in fact, a seller of wheat and barley on behalf of Canadian
farmers. Nor is the difference just a matter of language. A buyer pays
you for a product, markets it for a higher price and keeps the
difference as his margin. The CWB returns all monies from the sale of
farmers' wheat and barley to the farmer, minus selling and
administration costs.

In a brief review of some of Charlebois' other work, I found a similar
lack of care with language. In a 2007 paper on food borne illnesses,
he says, "While our food has never been safer, and is among the safest
in the world, we cannot deny that foodborne illness is a significant
public health issue for Canada. We estimate that one in three
Canadians gets sick from food poisoning every year."

But where, for an academic who should steer clear of unproven
statements, is the evidence that "our food has never been safer"?
Especially in light of Charlebois' statement that one in three
Canadians gets sick from food poisoning every year. If this is safe,
how bad would unsafe look?

In Charlebois' CWB study, he compared elevator prices in Montana to a
now defunct CWB program called the Daily Price Contract. He claims to
show that Montana farmers received better prices for grain than
Canadian farmers near the border. Problems with his methodology are
legion, but the most glaring is the assumption that American farmers
actually receive posted elevator prices. In the 2007/2998 crop year,
which Charlebois refers to, American farmers sold almost all their
wheat and barley early in the crop year, responding to what seemed
like high prices. Prices went much higher later on, largely because
U.S. farmers had no wheat to sell! Yet Charlebois assumes these prices
were achievable and fails to understand they would never have existed
if there was grain available in any quantity.

He also assumes that all Canadian grain could be sold for these
prices. In fact, only ten percent of our grain is sold to the U.S.
Eighty percent is sold to a variety of overseas markets, few of which
are as high priced as the U.S.

Charlebois' opposition to the CWB is known. Earlier this year, he
declared that, "The monopoly of the Canadian Wheat Board on the sale
abroad of barley and wheat should end. The current structure and
organization of this organization are incompatible with the economy of
the twenty-first century."

What is less well known is that Charlebois is the "Viterra Marketing
Fellow" at the University of Regina. Viterra, of course, is the grain
company that declared it would do better if the CWB were to lose the
single desk. Now the lack of rigor in Charlebois' study becomes more
interesting.

© Paul Beingessner beingessner@sasktel.net

Land Speculation Rises With New Found Wealth

Column # 695 17/11/08

I have never been a big fan of speculation, especially the kind that
drives up the price of things I need. Speculation is generally carried
out by folks with more money than they need looking for a place to
park it that will generate a bigger return than they can get in normal
investment activities. Speculators are different from investors in one
important way, though the results of their activities can often be the
same.

As I see it, a speculator is someone who jumps into a market they feel
is undervalued with the intention of making a quick buck when the
market begins to climb. A recent example would be the increase in
housing prices in Saskatchewan. Some of it resulted from the
province's economic boom, but a great deal came from out-of-province
speculators who saw the chance for a quick gain. Interestingly, if
there are enough speculators in the market, it becomes a
self-fulfilling prophecy. The attention to the market causes it to
rise, based on the anticipation of price increases.

Unlike speculators, investors might actually do something useful. A
friend of mine buys old houses, and lives in them while fixing them
up, then sells them at a profit. He is investing in the house, while
doing something to increase the value. He isn't just speculating.

Farm land prices have also risen lately, much of it based on
speculation. Rising commodity markets, especially those for food,
caused some speculators to conclude that farmland would be a good
place to park money. Higher crop prices would surely translate into
greater profitability from owning land. While this might be
pollyanna-ish, it does have the result of increasing the price of land
for legitimate farmers who wish to buy. When crop prices again fall,
the viability of the farm might come into question.

The havoc that speculation can play with farmland prices is one reason
many governments throughout modern history have restricted farmland
ownership to their own residents. While the problem in Canada might be
quite localized - restrictions have at times kept people from buying
land in other provinces - there is a whole new level of speculation
and investment occurring across the globe. This involves national
governments and private companies buying vast tracts of farmland in
other nations, in an effort to secure future and present food
supplies. Among these are China, Japan, Korea, Egypt, India and many
of the oil-rich Gulf states.

It has resulted in some strange and disturbing situations. For
example, countries such as Korea, Qatar and China are seeking land in
Cambodia to grow rice for export to their own countries. The Hun Sen
dictatorship in Cambodia is willing to oblige, while millions of
Cambodians struggle with malnutrition. Equally disconcerting, the
government of Jordan is cultivating land in Sudan to produce food to
ship back to Jordan. Sudan, of course, is home to one of the largest
and longest running famines in recent history - that of the Darfur
region.

There is some argument to be made that investment by these relatively
(and sometimes absolutely) prosperous countries will increase food
production and efficiency in less developed nations. But, depending on
the country, it is also possible that most of the benefits will accrue
to the investing nation. In the Sudan, ninety-nine percent of the land
is owned by the government, a government that cares little about a
substantial part of its population. It may simply use revenues gained
to further oppress those already in dire straits.

Private companies that see the opportunity to invest in land have
little interest in the welfare of the country that opens its doors.
There goal is to cash in on rising prices.

Furthermore, this "investment" by other countries and private
companies is aimed at moving food out of the producing countries. It
is hard to defend food exports from countries that face massive food
deficits in their own populations. It smacks of a return to the
plantation era where land and food production accumulate in fewer and
larger hands while former landowners become low paid serfs on the land
they once owned. Their own food insecurity can increase substantially.

There is an argument to be made for foreign investment in agriculture
in developing countries. But Jacques Diouf, the director-general of
the Food and Agriculture Organization at the UN thinks it is a bad
idea for foreign investors to buy a bunch of farmland. He feels it
might create a backlash in local populations that would result in a
halt to all agriculture investment. And well it might, and perhaps it
should, if the only result is to move food to countries that should be
able to pay for it on the world's markets.

© Paul Beingessner beingessner@sasktel.net

Support Our Food Providers

I can only second Paul's request that you contribute to his CWB election fund.
His election could be essential to the survival of the Canadian Wheat Board.

The Harper government, despite the refusal of Canadans once again to give it a majority government, has still not given up it's campaign to eliminate all of our social protections fought for so hard over the years such as the Canadian Wheat Board and Medicare to the not-so-benign interests of free-booter US corporations. U.S. voters in the recent election also wisely gave a decided NO to the blandishments of these same corporations to continue giving them free reign and unbridaled monetary policy powers which has led to the present US economic melt-down putting so many american workers and farmers thru a nightmare of hardship. People like Paul Beingessner are at the heart of what has made our country great.

Little Muddy

Canadian Wheat Board Elections

Hi folks,

A while back I sent you a letter asking if you wished to donate to my
CWB director election coffers. Many thanks to those of you who did so.
It is only possible to run an effective campaign because of your
support.

The election is being fought very hard on all sides. I suspect the
result will turn on a few hundred votes. For those of you in District
8, your support in getting out the vote is greatly appreciated. If you
have friends or neighbours whom you think might not return their
ballots, please give them a call and urge them to do so.

If you still wish to contribute, or had planned on it but just didn't
get around to it, there's still time! We plan to keep campaigning hard
until the end of the time period (Nov 28) as ballots continue to be
returned right to the end.

Cheques can be made out to Paul Beingessner CWB election, and sent to
Paul Beingessner, Box 74, Truax, Sk. S0H 4A0

Sincerely,
Paul


Labels: Paul beingessner

If They Love The Open Market

Column # 694 10/11/08

My neighbour Pete is a cattleman to the core. Like his father and
grandfather before him, he knows cows like the back of his hand. But
his usual smile fades a bit these days when the discussion turns to
the cattle industry. Whose doesn't? Calf prices are as bad as they've
been since the beginning of the BSE crisis, and industry analysts
claim there is no good news in sight.

If Pete were into hogs, he would likely be even grimmer, especially if
he were unfortunate enough to be a weanling producer in Manitoba. A
few months ago weanling producers were talking of having to euthanize
piglets for which there was no market. And that was before Country of
Origin Labeling was implemented in the U.S. Now that hog packers in
the U.S. know the details of COOL, they aren't much interested in
Canadian born or raised pigs. This will only get worse as the April 1
date for full implementation of the rules approaches.

You have to give it to American farmers. They worked for many years to
persuade their lawmakers and citizens that COOL was indeed a cool
idea. Industry watchers in Canada spent those years alternating
between "it'll never happen" and "watch out for this one". Don't
expect COOL to disappear any time soon either. American politics is
likely to become more protectionist in the future, not less.

Opponents of the Canadian Wheat Board's single desk have seen the
domestic American market as their fairy-tale ending for years. Higher
American prices, derived from feeding that large population, have been
the lure that has convinced some that they would be better off if they
could go it alone and beat their neighbours to that lucrative, but
limited, market. Pete has some advice for these farmers, based on his
lifetime in the cattle industry. "If these guys are so fond of the
open market, they should get into the cattle business."

His pithy statement, repeated twice for emphasis, captured a real
insight. Without access to American grain markets, the idea of an open
market for wheat and barley loses an awful lot of luster. And anyone
who thinks that access isn't tenuous hasn't been watching for the past
two decades. American grain markets have remained available to the
CWB, in fits and starts, but only because of continual legal battles
fought by the CWB.

American farmers are acutely aware that prices often swing based on
very small changes in supply. Before BSE, Canadian beef was a very
small part of the American market, yet the border closure caused
cattle prices in the U.S. to soar to record heights.

While the amount of grain we send to the U.S. is small compared to
American production, its absence would no doubt cause their prices to
rise, as millers would have to scramble to find the high quality wheat
that is in short supply there. Most CWB wheat and durum moving to the
U.S. now goes down in rail cars, directly to mills. An open market
would see an influx of grain trying to move by truck into American
elevators when prices were high. Of course, that is also when American
farmers are trying to deliver into a constrained system. The visual
effect on American farmers would be powerful.

It took a long concerted effort to limit Canadian hogs and cattle
exports to the U.S., but for their farmers the taste of victory is
sweet. You can expect our herds to contract to a far greater extent
that theirs because of it.

You can also expect American grain farmers to continue to push in
every way possible to keep Canadian grain out. Up until now, farmers'
greatest defense has been the money they've spent through the CWB's
court challenges. Changes to the CWB's mandate would end such efforts.
The transnational grain companies that will control the Canadian grain
trade in that event have little interest in keeping the American
market open, since they get their pound of flesh no matter where our
grain ends up.

Pete knows that. That's why he says we need the CWB.

© Paul Beingessner beingessner@sasktel.net

Lies Someone Told Me

Column # 693 03/11/08

Of all the lies told about the future of the CWB if it loses its
monopoly, one of the biggest is the idea that producer cars and short
line railways will somehow survive this sea change. They won't. At
least not the ones in Saskatchewan, which is home to all the short
lines that exist on grain dependent branch lines. There are, in fact,
seven of these. They are the Great Western Rail, Southern Rails
Cooperative, Red Coat Road and Rail, Fife Lake Railway, Wheatland
Railway, Thunder Rail, and Torch River Rail.

Other short lines on grain dependent branch lines operated for a time
in Manitoba and Alberta, but eventually failed. The striking
difference was the fact that the railways that failed in
Saskatchewan's sister provinces were owned by private investors. The
seven short lines in Saskatchewan are all community owned. And, while
they do move other traffic, all are heavily dependent on producer cars
for the majority of their traffic.

The short lines in Saskatchewan started life as attempts to retain
grain handling options for farmers. They were seen as means to an end.
Maintaining the railway would not only allow farmers the option of
loading producer cars, it would also allow for the possibility of
other economic development initiatives in the community. Alberta's and
Manitoba's grain dependent short lines were started and owned by
private investors wanting to make a buck. Without a substantial grain
elevator presence, which the short lines do not have, there is no buck
to be made owning a grain dependent short line.

There may be, however, survival, if the short line attracts enough
producer cars and other traffic to pay the bills and maintain the
track. While it has been a tough business, the older short lines,
Southern Rails, Red Coat and Great Western, have been able to do just
that. They have also succeeded to some extent in the economic
development game. Red Coat garnered a rail car repair facility,
Southern Rails gained a pulse processor, and Great Western operates
its neighbouring short lines - Red Coat and Fife Lake. The latter has
a kaolin mine.

But producer cars remain critical to their survival, and survival is a
year-to-year thing. Producer cars themselves depend entirely on the
CWB. Ten or twelve thousand producer cars of CWB grains move each
year, mostly from short lines. Though farmers grow millions of tonnes
of canola, peas, flax and lentils in Saskatchewan, virtually none of
these move in producer cars. Nor will they, since the grain companies
that control these crops don't want to lose the lucrative handling
charges they make by moving them through their country elevators.

With the CWB, producer cars work for two reasons. One is price
pooling. Price pooling works because the CWB has a monopoly over
export sales of wheat and barley. Its overwhelming position in the
market means it makes sales year round, into all available markets.
This allows farmers to have confidence in a pooled price. Without the
single desk, the CWB's dominance disappears, as it has to rely on its
competitors to handle grain for it both inland and at port. Its sales
would be limited and price pooling would be a scary prospect for
farmers who wouldn't know how large or small the pool might turn out
to be.

The second reason producer cars work now is the CWB's ability to take
part in the railways' car ordering systems. Small blocks of cars have
a low priority for the railways, but the CWB's size gives it
flexibility to allocate cars to producers. Without the CWB, a farmer
wanting to load his own car could still get one, if he could find a
terminal that would take his grain and allow him the advantage
producer cars currently allow (not something they do now). But he
would get that car at the railway's leisure. This is not a happy
prospect for someone selling into a spot market that needs timely
delivery.

Without a dominant CWB, producer cars might exist in theory. Their
practical use would be almost non-existent. And without virtually all
the producer cars they now obtain, short lines would rapidly fail.
Their debts and high track maintenance costs would ensure this. And
with them would go other community investments on their tracks and any
future economic prospects that depend on rail. That, sadly, is an
economic certainty.

© Paul Beingessner beingessner@sasktel.net

Greenspan was "Partially Wrong"

Column #692 October 26/08

It was heartwarming, last week, to see Alan Greenspan, the former head
of the Federal Reserve in the United States, admitting he was wrong.
The Federal Reserve is the American equivalent of the Bank of Canada.
Greenspan was its master through four American presidents, over a span
of 19 years. The trademark of Greenspan's tenure was his unflinching
belief that free markets, and the freer the better, would ensure the
U.S.'s fiscal health and world dominance in things financial.

Not that Greenspan didn't believe in regulation. He did, but his
version was called self-regulation. He believed that the financial
industry was capable of self-regulating since it would never do
anything that would adversely affect shareholder and company value.
The banks were full of wise people, like him, who would know when to
say giddyup and when to say whoa.

Unfortunately it turned out that the banks were full of greedy people,
not wise ones, who took massive risks with other people's money so
they could enrich themselves. And Alan Greenspan, the
once-unassailable demi-god whose decisions affected the lives of
hundreds of millions of people now is in a "state of shocked
disbelief" as he told the U.S. Congress.

Thanks Al. I'm sure all the newly-homeless in the U.S. can take that
one to the bank. And they, of course, are only a fraction of the
people across the globe in rich and poor nations whose lives are being
shattered by the collapse of markets, which began with the financial
meltdown.

Sometimes it astonishes me, how yesterday's hero can become today's
goat, and yesterday's brilliant idea can become today's laughingstock.
Greenspan's brilliant idea was to allow the banking sector to do
anything it pleased. Unfortunately, no one is laughing today, and
conservatives in the U.S. who decried the idea of restraining markets
are now nationalizing banks and screaming for rules to be put in
place. It would be hilarious if it weren't so tragic.

It bears a striking resemblance to the brilliant idea in Canada that
food manufacturing companies, like Maple Leaf, would be amply able to
regulate themselves, while government inspectors were relegated to
inspecting the reports turned out by the companies. Unlike Greenspan's
wholehearted confession that he may have been "partially wrong",
Canada's food regulators have neither accepted responsibility not
indicated they would make any changes. Can we look forward to the day
when enough people have died that the government decides cutting
inspectors and kicking them to the back rooms was at least "partially
wrong"?

Similarly, Stephen Harper is telling farmers his brilliant idea - that
they can have an open market and a strong Canadian Wheat Board at the
same time. The nonsense of the strong CWB as a grain company with no
assets, relying on its competitors to handle its grain is apparently
lost on him.

So when the dust has all settled, and when Steve finally gets his way,
and when the CWB is gone and the producer car loading facilities that
rely on the CWB are gone, and when the short line railways that rely
on the producer car loading facilities are gone, and when farmers'
investments in these are gone, who will finally do the Greenspan-like
thing and admit that they may have been "partially wrong"?

Not, I think, Mr. Harper. Farmers, like homeless ex-homeowners, will
wear the results of our blind faith in the markets. And by then, it
will be far too late for any good to come from admitting they may have
been partially wrong.

© Paul Beingessner beingessner@sasktel.net

Begging

October 21, 2008

Dear friends,

I have a tough time with a letter like this. Beingessners are so
miserably self-sufficient and independent we hate to ask for help from
anyone. But, desperate times demand desperate measures, I guess, so I
will swallow my pride.

I am running in the current Canadian Wheat Board director election.
The CWB is governed by a 15 person board of directors. Five are
appointed by the government and ten elected by farmers. The
Conservative government has appointed directors who want to get rid of
the CWB's single desk for selling wheat and barley. This move will
effectively end the CWB as an effective tool for farmers. Without the
single desk, the CWB becomes an insignificant grain broker, with no
assets, and dependent on its competitors to give it terminal space.

Farmers have always voted overwhelmingly for directors who support the
CWB. Currently, eight out of ten are strong supporters. That also
means that the anti-CWB side only needs to win one more position,
because of the five government appointees to have a majority on the
board. It is important to know that of the five districts involved in
elections, only two have pro-CWB incumbents. In the other three
districts, the incumbents were not able to run for another term due to
the limits set in the CWB act. Hence, the CWB is at increased risk. We
can't afford to lose any of these.

My district is represented by Rod Flaman from Edenwold. Rod has
supported the CWB and has been a good director. So why am I running?

Several reasons:

a.. Rod recently ran for the Liberals in the federal election. This
may have hurt his chances for re-election to the CWB. We need strong
candidates in case he is not electable. b.. Since the ballot is
preferential, having multiple candidates who support the single desk
will increase the voter turnout and increase the chances of pro-CWB
candidates. c.. Ian McCreary is no longer eligible to run in
district 6. Ian was the board's expert in transportation. I have
been encouraged by people who feel my expertise in this area would
be important to the board.

So, now to the tough part. Running a campaign costs money. Individual
candidates are allowed to spend $15,000 according to CWB election
rules. I know that some of you have been involved in other recent
election campaigns, and I sure don't expect you to contribute to mine
as well. Others on this list are not involved in agriculture, and may
not see much point in being involved in this election. But for the
rest of you, if you are able, and if the CWB matters to you, your
support would be much appreciated.

Contributions can be mailed to Paul Beingessner, Box 74 Truax,
Saskatchewan. S0H 4A0

Cheques should be made out to "Paul Beingessner CWB Election".

Many thanks,

Paul

Bush League Elections

Column # 691 20/10/08

The scene at my local polling station in last week's federal election
would have been comical if it hadn't been so serious. In this rural
area, where everyone knows everyone else, voting is usually a pretty
casual affair. You go in, wave at everyone, get you ballot while the
scrutineers and poll clerks mark your name off the list, and vote. You
wave again and leave.

This time, on my way in, I stopped to chat with a 90-year old lady who
had spent all of her 9 decades in the community. She was on her way
out, because she had forgotten her photo i.d., and wasn't allowed to
vote, until she tottered back home to get it.

When I approached the table where the Returning Officer sat, we
greeted each other by name and made small talk for a few seconds. Then
she asked to see my driver's license, complete with photo, telling me
she had to see both sides, to ensure it was current. I handed it over,
laughed, did my civic duty and left. But I left with a funny feeling.
Yes, there was something ludicrous about having to show photo i.d. to
people I've known all my life. And I wondered how this foolishness
came about. I've lived long enough to know nothing in politics is by
accident.

A day or two after the election, stories began to leak out about
people unable to vote because they didn't have photo i.d. These would
typically include the elderly, who might no longer drive, and the
poor, who don't own cars. My wife worked for a time in a remote
northern community. Only a few people there had driver's licenses.
There were no roads out!

I began to wonder why anyone would want to restrict people from
voting. Shows how naïve I am!

Voter manipulation likely reached its zenith in North American in the
2004 American presidential election. It featured Republican George W.
Bush seeking re-election to a second term against the tall,
sepulchral-looking Democrat John Kerry. Polls before the election
declared that Kerry would easily end the Bush dynasty. Exit polls,
those taken as people leave voting booths, showed a virtual landslide
for Kerry. But Bush won! While the media never got too interested in
the implications of this, Robert Kennedy Jr. did. He wrote a book
detailing how Republicans stole the election.

One of the main ways to steal an election is to disenfranchise people
likely to vote against you. The American federal election system is
rife with opportunity to do this. Rather than one body that sets the
rules and oversees the election, the voting system in the U.S. is
determined by individual states, municipalities, or cities. As a
result, the party that controls the state, city or municipality can
set its own rules for who gets to vote.

In American presidential elections, the overall vote isn't important.
What matters is who wins each state, and the votes that state has in
the Electoral College. In the 2004 election, key states showed
extensive signs of vote rigging. Areas that usually voted democrat
weren't given enough voting machines. Voters were challenged if their
address or name on the voters list failed to match their i.d. in even
the tiniest way. Some polls showed more votes cast by far than
registered voters. All these "errors" favored George Bush.

Paul Weyrich, an architect of the modern Republican Party, said in
1980 before he helped Ronald Regan win election, "I don't want
everybody to vote. Our leverage goes up . as the voting populace goes
down". Small wonder that disenfranchised voters tend to include large
numbers of Hispanics and Blacks.

It is all eerily similar to the games that Steven Harper has played
with the voters list for the CWB election. In 2006, his government
removed 16,000 names from the voters list, in "an attempt to clean it
up". The rule was that anyone who hadn't sold grain in the last 15
months wasn't entitled to vote. In some areas, crops in 2005 were very
poor. Some would have had little, if any grain to sell. 2006 brought
better crops, but many farmers hadn't sold anything by that early date
in the crop year when the voters list is set.

In 2008, Harper tried to change the act to restrict voting to those
who sold at least 120 tonnes of CWB grains in the last crop year. That
bill died on the order paper. The old rule, however, remains in place,
with a new twist. If you do not get a ballot, you can still vote if
you grew any of the six major grains, but only if the land where you
grew them is not listed on a permit book. This has created the bizarre
situation where you can vote if you grew 20 acres of flax, and had no
CWB permit book, but you couldn't vote if you grew 1,000 acres of
durum, had a permit book and hadn't sold any last year.

Equally strange, and it has always been like this, if you have
multiple permit books you can vote multiple times. A fellow I know has
six or seven permit books. He has one, his wife has one, they have one
together, the corporation has one, the son has one, etc. He likes to
have lots of delivery opportunity early in the crop year. He gets
seven votes, I get one.

Harper's shenanigans are currently the subject of a lawsuit by a group
of farmers. I am one of them. When I signed on to the lawsuit, I was
concerned about continued attempts to get around the CWB act. What I
didn't realize at the time was that the government was simply using
one of George Bush's tactics - the way to win the election is to
control who gets to vote. You simply disenfranchise people likely to
vote against you.

© Paul Beingessner beingessner@sasktel.net

Transportation Agency Demand Performance Benchmarks of CN

Column # 690 13/10/08

For years now, CN has been tightening the noose around the necks of
small shippers in the grain industry. In re-shaping the grain
transportation system to meet its needs, CN began with incentive rates
some years ago. These refunded a portion of the freight rate when a
grain company loaded blocks of 18, 25, 50 or 100 cars from a single
origin to a single destination. Incentive rates gave an obvious
advantage to large elevators and soon caused a major change in the
prairie landscape. Large concrete elevators sprang up on the horizon
while the small wooden sentinels were rapidly demolished.

As the system consolidated, so did incentive rates. The 18-car
incentive went quickly, followed by the 25-car rebate. This
effectively ended the day of the wooden elevator, since almost none of
these could spot and load 50 cars at a time. The 50 car incentive
declined in value and the advantage went to elevators that could load
100 cars in 24 hours, as these incentive rates increased.

Large incentive rates gave a competitive advantage to elevators that
could attain them. They provided revenue that could be passed back to
farmers in the form of trucking subsidies, thereby luring grain to
these elevators. However, smaller elevators still played on a somewhat
level playing field where car supply was concerned. And the
availability of space at an elevator is often as important in
determining where a farmer will haul as the trucking incentive that is
available.

Smaller elevators lost this advantage when CN unilaterally implemented
its car ordering system in 2000. This replaced the collaborative
approach to car allocation that had existed for decades. Under this
previous system, the grain companies, railways, CWB and farmers all
had some input into the allocation of cars on a weekly basis.

CN and CP unilaterally ended this allocation mechanism, and
implemented their own systems for distributing cars among the
competing interests that wanted them. Much of the new allocation was
done on a bid system. As a general rule, the larger the elevator, the
easier it was to obtain cars. And having a network of large elevator
made it easier than having a single one, as is the case for the
independent "inland terminals" found mainly in Saskatchewan.

CN continued its relentless march in this direction. Small shippers
found it more and more difficult to get enough cars, while large
shippers gained both from increased car supply and incentive rebates.

The most obvious shipper recourse against situations like this is to
take a complaint against the railway to the Canadian Transportation
Agency. Shippers, especially small ones, are often reluctant to do
this, since the cost is high and, more importantly, they fear
retaliation from the railway and even worse service as a result. Large
shippers like Viterra and Pioneer were relatively happy with CN's
allocation system. They have enough large terminals that they were at
an advantage in obtaining cars. Thus, when Great Northern Grain lodged
a complaint against CN's 100-car shipper program, the big grain
companies were there arguing on CN's side.

A further reason shippers are reluctant to appeal to the CTA is
because even if they win a judgement, there is no guarantee it will
result in any change in behavior on the part of the railway. Naber
Seeds of Melfort found this out the hard way. Naber filed successive
level of service complaints in 1998, 2000 and 2001. It "won" each
complaint but was out of business shortly after the final complaint.

In the first Naber complaint, the Agency ruled that CN had failed to
provide adequate service, but it refused to grant any specific relief
other than telling Naber and CN to negotiate a service agreement.

In the second case, the Agency again "ordered" CN to negotiate a
service plan with Naber but refused to be more specific than to say it
would monitor the situation.

The third ruling against CN, in 2001, was more specific. It required
certain numbers of cars to be supplied and specified some of the
conditions of service. It may have been years too late, as Naber was
soon gone.

Following Naber's complaints, there was a period of six years with no
formal level of service complaints being filed. In March 2007, Great
Northern Grain of Nampa, Alberta filed and won the aforementioned
complaint. In this ruling, the Agency was much more specific than it
had been previously, requiring delivery of certain numbers of cars on
a specific schedule.

In September 2007, the CWB and five grain companies filed level of
service complaints against CN. The final rulings on these complaints
came out September 25. While the CWB and Providence Grain were not
successful, North East Terminal, North West Terminal, Paterson Grain
and Parrish and Heimbecker were. These rulings were unique in that the
Agency set specific performance benchmarks for the railway to meet.

It is clear that the Agency has finally realized it needs to be
specific in its rulings - specific enough to actually make a
difference to shippers. Shippers should be heartened by this. Many of
them believe that CN's service has declined year after year as it
continually changes its car allocation programs to the detriment of
smaller grain companies. It appears the Agency now may be prepared to
yield the big stick it should have picked up long ago.

© Paul Beingessner beingessner@sasktel.net

Conservative Have No Platform, Farmers Don't Care

Column # 689 05/10/08

A friend mentioned to me the other day that the Liberals had promised
in their campaign platform that if elected they would conduct a
costing review of the freight rates western farmers pay to ship grain.

Since the end of the Crow benefit, freight rates have continued to be
regulated, but they have increased steadily, more than the railways'
cost to move grain. This is because each year they are adjusted to
account for increases in inflation but not reduced for railway
efficiencies. These include the vast reduction in grain shipping
points and technological improvements that have lowered railway costs.
Farm groups have asked for a recosting (the last one was done in 1992)
but the Conservatives, and the Liberals before, ignored these
requests. Estimates are that doing a costing review would save prairie
farmers about 100 million dollars a year. This is hardly chump change.

Apparently someone in Dion's campaign team has managed to convince the
party that this is a good idea. The platform also says a Liberal
government would put a halt to rail line abandonment, strengthen
safety nets and do a host of other things. It got me wondering what
the Conservative platform was promising to farmers, so I went to the
internet and booted up the Conservative party website. It was then I
found out, like other Canadians, that the Conservatives have no
platform, or at least none that they are giving out publicly. Rather,
their website focuses a lot, as has their campaign, on criticizing the
Liberal leader.

I also checked out the NDP platform. They have a section on
agriculture, though less detailed than the Liberals.

In the past, prairie farmers have voted overwhelmingly for
Conservative candidates. A recent poll cited in the Western Producer
indicated this would continue this election. I have to admit it leaves
me a bit baffled. While the Conservative government hasn't done
farmers a lot of harm yet (it hasn't managed to destroy the CWB) it
has done them very little good. Safety net programs have been changed
in name but not really improved. Money is still short for programs
like those that assist farmers to build dugouts and provide emergency
water supplies in drought affected areas. More liberalized trade,
which the Conservatives put so much stock in, died with the end of the
Doha round. Even gun control, a favorite gripe among prairie
residents, hasn't changed, despite Conservative fervor on this issue.

So with grain prices falling like a stone in the wake of the U.S.
financial crisis (soon to be the world economic crisis) what do the
Conservatives have to offer farmers? Well, if you go by their
platform, apparently nothing.

The Conservative's failure to post a platform is rooted in their
belief that Stephen Harper's sterling personality is the key to
electoral victory. Their failure to mention agriculture in the
campaign is also rooted in their conviction that prairie farmers will
elect Conservatives no matter what they do to them or how little they
do for them. Harper's attitude to farmers is, as he told those who
opposed his moves to emasculate the CWB, that those who oppose him
will be walked over.

The Progressive Conservative party once paid a lot of attention to
prairie agriculture. Changes to the transportation act, conceived
while Don Mazankowski was Transport Minister, paved the way for short
line railways. Aid to agriculture flowed freely while Maz was in
Ottawa.

Maybe farmers still remember that and have the same expectations from
today's Conservative party. The evidence to support this belief is
scant. The ideologues that run the party today have little in common
with the PC party of that time. Nor is Gerry Ritz, Saskatchewan's
contribution to the federal cabinet, on the same level as a
Mazankowski. Ritz is a bully, and not a very astute one at that. His
disappearing act (the Saskatoon Star Phoenix reported that even Harper
said he doesn't know where Ritz is) should earn the contempt of
voters. However, they will likely elect him, despite his dismal
performance.

Unfortunately, that doesn't say much for us as farmers. We could do
better.

© Paul Beingessner beingessner@sasktel.net

Election Especially Important to Farmers

Column # 688 29/09/08

The federal election poses some interesting dilemmas for westerners
and farmers in particular. Farmers have little reason to be happy with
the Harper government. The livestock industry has been largely
ignored, despite its wretched state. The Conservative's vaunted new
generation of business risk management programs have turned out to be
warmed over versions of the ones that garnered the Liberals so much
disdain. Changes to the Canadian Grain Commission, though not all
completed in the last parliament, were proposed with little
consultation with farm groups and less support. Even the grain
companies were against the changes enacted to KVD.

Grain transportation continues to be a problem. A long, drawn-out
review is underway but there is no certainty that the structure of
this will bring positive results. Early in their minority government,
the Conservatives gave the hopper cars to the railways and thumbed
their noses at the Farmer Rail Car Coalition. In fact, the government
has thumbed its nose at most major farm organizations, including KAP,
APAS, WRAP and SARM. It prefers to talk to the like-minded.

Farmers who support the CWB have even less reason to like Harper and
his pair of Agriculture Ministers. From unwarranted firings to gagging
to disdainful treatment, the Harper government has thrown it all at
the CWB.

The dilemma for farmers is that they may not have fully recovered from
their anger at decades of being ignored by the Liberals to want to
give them another chance. When last in power, the Liberals didn't show
much interest in agriculture. Nevertheless, there are some Liberal
candidates with excellent credentials in this area. If the Liberals
were to form government, it would be great to have the likes of Bob
Friesen in Manitoba and Rod Flaman and Duane Filson in Saskatchewan in
that parliament. Maverick Liberal David Orchard should be elected just
for the color he would provide in parliament.

Farmers have mostly written off the NDP in federal elections, but
Nettie Wiebe, former president of the National Farmers Union stands a
reasonable chance of taking Saskatoon-Rosetown-Biggar from the
Conservatives. Wiebe is a veteran of farm politics, and smart as a
whip.

If all the federal parties can be accused of paying too little
attention to agriculture, farmers might be tempted to shrug their
shoulders and vote Conservative out of habit. The consequences of that
may contain some elements farmers haven't thought through.

A majority Conservative government will beyond a doubt move quickly to
eliminate the CWB in all but name. The single desk will be removed,
along with government guarantees. What would remain would be a small
grain broker with a decimated sales force, relying on its competitors
to source and handle grain. Price pooling will also end, as no pool
has survived long without a single desk mandate to back it. Without
price pooling and without the clout of a strong CWB to ensure rail
cars, the use of producer cars will also end. Those who doubt this
could give Pollyanna a run for her money.

Even a minority Conservative government will generate the same
results. The Conservatives came across the strategy of making all
motions confidence motions in the last parliament. Opposition parties
will not risk triggering an election by defeating a motion with
limited relevance in the rest of Canada.

When it comes down to it, farmers who load producer cars or live near
short line railways stand to lose the most. Almost all short lines in
Saskatchewan depend on producer cars for the bulk of their business.
Without the CWB to facilitate these, the small railways and the
communities that benefit from them will have a short future.

If any farmers are happy with the Harper government, it would be the
handful that belongs to the Western Canadian Wheat Growers and the
Western Barley Growers. In addition to harassing the hated CWB, the
government that decried handouts to special interest groups turned
over a cool half-million dollars to the Barley Growers in 2007 to
"facilitate the development of new private sector risk management
solutions". That would come to about 10,000 bucks per Barley Grower. Is
it possible some of this money will end up in CWB candidates' coffers?

By contrast, the Wheat Growers much have felt monumentally slighted.
For them, Harper only managed to cough up a measly $110,000 to
"facilitate the development of new private sector risk management
solutions". A problem like that apparently requires the combined
brains of both groups.

Farmers have some important choices to make in the election. If they
do so without careful consideration of the consequences, they will
have a long time to regret it.

© Paul Beingessner beingessner@sasktel.net

Civil Servants Are Not the Minister's Flunkies

Column # 687 22/09/08

One of the problems with writing a weekly newspaper column is timing.
If a story occurs just after you've sent in a column, your version,
should you choose to write it, won't appear until about ten days
later. Not so timely in some cases.

So I write about Gerry Ritz's controversial comments about listeriosis
with some trepidation. By the time you read this, Gerry and his
comedic performance will have faded from the news, replaced by the
ongoing stream of promises from the political parties. But this one is
too important to let go just yet. Like editorial writers across
Canada, I want to have my say.

By now everyone has heard the story. Gerry Ritz, failed ostrich farmer
and Agriculture Minister joked that the listeriosis crisis originating
at Maple Leaf Foods was "death by a thousand cold cuts". He further
bleated that he hoped a reported case in PEI was Liberal ag critic
Wayne Easter. Ritz made the remarks on a conference call with an
assortment of ministerial office people and bureaucrats from the
Canadian Food Inspection Agency and other departments.

The content of the call was leaked to the media by an anonymous
participant, drawing a veiled threat from Stephen Harper. Woe to the
fellow if found.

Calls for Ritz to resign or be terminated both as Ag Minister and as
candidate were swift. Most centered on his insensitivity at a time
when people were dying (eighteen to date) from the bacteria, including
ultimately an elderly woman in Ritz's constituency. Ritz issued the
obligatory apology, while Steven Harper focused on the embarrassment
to Ritz, whom he described as the best Ag Minister ever. Secretly,
Harper must have been wishing he had put the gag order on Ritz, rather
than on the CWB.

Unlike those calling for Gerry Ritz to resign due to insensitivity, I
don't think this is reason enough to get rid of the Minister. After
all, Harper can't remove every insensitive clod in his government. The
ranks would be too thin. I suspect Ritz was only practicing for a
second career as stand-up comic after his political life is over. I
mean, there's no future in ostriches to return to.

Don't get me wrong though. I do think Ritz should be removed from the
Ag Minister post. He should be removed for incompetence. He apparently
has no idea how government works, nor of the seriousness of his job.

Ritz's lack of understanding of government stems from his belief that
the government of the day can do whatever it pleases. That Stephen
Harper has this attitude is undeniable. Key civil servants, like the
Chief Electoral Office or the head of the Canadian Nuclear Safety
Commission or the CEO of the CWB are terminated because they won't do
what the government wants. Ritz blustered and fumed because the CWB
directors and management wouldn't follow his commands. He ordered, as
one example, that he be given the names of organic farmers who
participated in a CWB program. When told that was contrary to privacy
laws, and would not be done, he demanded the list twice more.

The Conservative government seems to believe the job of civil servants
is to carry out the political agenda of the Conservative party. It is
decidedly not. The job of civil servants, like those at the CFIA, is
to follow the laws and regulations that are laid out in statute for
the department. Ritz's ministerial officials, his political hacks, are
there to do his personal bidding, however ludicrous. But there is a
major distinction between his office staff and the Agriculture
department. Civil servants are there to do their jobs, not to protect
the Minister's behind or carry out his political whims. God help us if
a government had no civil service to buffer the idiocies of members
without a grain of common sense.

Not understanding this, Ritz thought he was among friends in his
conference call. When he should have been receiving a briefing on the
state of the listeriosis outbreak, he was obsessed with worry about
the political fallout. The "death by a thousand cold cuts" remark
referred to the damage to the government, which had cut inspection at
meat plants. This was the focus for Ritz, who should have been
concerned with dying Canadians and how to deal with and prevent such
outbreaks.

His failure to understand this, to realize the life-and-death
seriousness of his job is why Gerry Ritz is not fit to be Minister of
Agriculture.

© Paul Beingessner beingessner@sasktel.net

Conservatives Change Regulations, Avoid Parliamentary Scrutiny

Column # 686 15/09/08

Most of us don't pay a lot of attention to laws. I don't mean we don't
obey laws, or that we don't know what they are. We generally have some
idea of the laws that are obvious - like prohibitions against murder,
or parking without plugging the meter. We may be less aware of other
laws. How was I to know that U-turn on Albert Street was illegal?

Laws don't just involve things that we should or shouldn't do. Laws,
or legislation, concern just about every aspect of government's
involvement in our lives. Legislation, for example, defines the
responsibilities of organizations like the PFRA. Legislation
determines the functioning of the Canadian Wheat Board. Legislation
spells out the way elections are run - like legislation setting fixed
election dates.

Now, the part most people may not be aware of is the regulations that
accompany legislation. In many cases, legislation spells out the broad
framework for something. Regulations are then written that fill in the
specifics. For example, in Saskatchewan we have had a railway act that
governs the operations of short line railways since 1989. It
determines, for example, that railways must operate in a safe manner.
The specifics of safety, track maintenance, etc. would normally be
spelled out in regulations. The Saskatchewan government, however, has
never gotten around to writing regulations for the railway act.

The interesting part about regulations is that, unlike the acts they
pertain to, regulations are not vetted by parliament or the
legislature. Changes to regulations can be made by Order-In-Council.
This means that the Cabinet of the government of the day can change
regulations simply by announcing that it is are going to do so, and
publishing that announcement in the Canada Gazette.

This is good news for minority governments. Minority governments can
have problems getting legislation passed. Stephen Harper's
Conservatives ran up against this problem in trying to emasculate the
Canadian Wheat Board. It had legislation to end the single desk of the
CWB, but never tried to pass it, knowing it would not get through
Parliament. Instead, the government tried to do the same by changing
the regulations concerning barley marketing through the CWB. Sadly for
the Conservatives, the federal court declared that this had to be done
through legislation, not through changes to regulations, since it
violated the spirit and intent of the CWB Act.

The Conservatives have used regulation changes, though, in their
ongoing vendetta against the CWB. Recently, Agriculture Minister Gerry
Ritz changed the regulations to the CWB Act to allow any third party
to spend unlimited amounts of money to influence director elections.
Regulation changes are nifty for governments like the Conservatives.
Rather than have to debate the proposed changes in Parliament, they
can simply make them, and ignore all questions about why the heck you
would do this in the first place.

Ritz made another recent change by regulation. This was to the
regulations governing Farm Credit Canada. In considering applications
for FCC loans, lending officers will now be required to assess the
"personal integrity" of the client. The regulation change drew
immediate fire from the Canadian Federation of Agriculture. Rather
than explain the reason for this odd move, Ritz's office said no
explanation would be forthcoming. It appears the move could be used by
the government to get back at political enemies, or perhaps some
farmers it doesn't like.

Gerry Ritz has a habit of doing things like that. He requested
repeatedly, for example, the CWB's records of dealings with organic
farmers, despite being told the CWB could not legally supply those.
Woe to any foes of the government who request FCC loans. Merely
opposing the Conservative agenda could cast doubt on your personal
integrity.

In addition to changing regulations, the Conservatives had another
successful way to overcome their minority status in the last
Parliament. They simply made every vote they wanted to win a
confidence measure, thus calling the bluff of a Liberal party not
ready to enter an election. Make no mistake about it, if the
Conservatives are elected with another minority, they will use this
mechanism again. And I am willing to bet that one of the first pieces
of legislation they will use it for will be the changes to the CWB Act
that would end the Board's status as single desk seller of wheat and
barley. In this, and in any other matters, a shrewd and conniving
government will find a way to overcome minority status.

© Paul Beingessner beingessner@sasktel.net

Two Elections Bring CWB Issue Into Focus

Column # 685 08/09/08

Farmers in western Canada are currently confronted with not one, but
two elections that could seriously affect their grain marketing
practices and options. The call had scarcely gone out for candidates
to come forward for the Canadian Wheat Board director elections when
Prime Minister Stephen Harper announced he would be ignoring his own
legislation calling for fixed election dates and calling a federal
election.

The importance of the election for CWB directors is obvious. Since the
government appoints five of the fifteen CWB directors, and these are
now all opposed to the single desk for wheat and barley, the ten
farmer-elected directors remain the bulwark against Harper's intent to
dismember the board. Two of these ten are now opposed to the single
desk. A shift that produced one more would likely lead to major
changes in the mandate of the CWB.

Likewise, the federal government had as one of the main planks in its
agriculture platform in the last election that it would end single
desk selling. It has been unable to do so only because it lack a
majority in Parliament. Should that change, the end of the CWB's
single desk would be swift and complete.

Those who oppose the single desk argue that farmers have been
successfully marketing their other crops for decades, and could do the
same for wheat and barley under the CWB jurisdiction. There is no
doubt they could sell their own wheat and barley. And they could
likely do it as successfully as American farmers who last crop year
averaged about $6 per bushel of wheat while the CWB's pooled price was
several dollars better. Still, there is an argument to be made here.
Some would be more successful than others.

There is one area, however, where farmers could not replace the CWB,
even inadequately. This is in the CWB's connection to producer cars.
Without the single desk, the number of producer cars would shrink to
insignificance.

Now, I know this is hard for some people to accept. Even the president
of one of Saskatchewan's largest short line railways can't wrap his
head around it. When I suggested that the demise of the CWB would
deprive his railway of most of its traffic, his response was that
farmers would find a way. Small comfort, that.

I recently heard a neighbour of mine, a stalwart user of producer cars
say the same thing. He had been told by the grain terminal that
handles his grain that it would still be looking for producer cars if
the federal government succeeded in ridding the world of the error of
single desk selling.

This is a fine belief if one thrives on fairy tales and rural legends,
but believing it in the real world just means you don't understand how
grain marketing and transportation work. Producer cars work for two
simple reasons. One is price pooling. The other is the CWB's ability
to secure cars for its movements.

Price pooling would end with the end of the single desk. No one has
ever run a successful price pool outside the single desk, though it
has been tried. Producer car shippers are most able to get cars at two
times: early in the crop year and in June and July. The majority of
elevator grain is gone by late in the year and the railways will more
readily allocate cars for smaller movements at this time. Without the
price pool, farmers will try to price their grain either when they
badly need cash, or into price peaks. This would mean getting producer
cars precisely when they are needed. Any producer car shipper can tell
you this won't happen.

The other issue will be car supply. The CWB has huge clout with the
railways because it ships such a vast amount of grain, but it still
bargains for cars like the grain companies. Part of the allocation it
secures goes to producer cars. Without the CWB, grain companies would
always allocate cars to their large elevators to capture incentive
rates when cars were in short supply. Cars would be in short supply
when prices were high because that is when everyone wants movement.
Producer car shippers would not get cars and would miss these price
peaks. The producer car would soon look very unattractive.

If you still need further convincing, look at producer car movements
for canola, our other large acreage crop. Despite complaints for years
about an unreasonably high basis, canola does not move in producer
cars. Yes, the grain company would take your car of canola, but the
basis would be the same as if you shipped through the elevator. It's
been tried.

Most short line railways in Saskatchewan would fail without producer
cars, so the federal and CWB elections are even more significant in
these areas.

By the way, farmers should soon receive a confirmation that they are
eligible to vote in the CWB election. If you don't get this when your
neighbours do, you should call the election co-ordinator.

© Paul Beingessner beingessner@sasktel.net

Agriculture Policy Increases Food Insecurity

Column # 684 01/09/08

When I was a kid, the flavor of the day in schoolyard humour was Polish jokes. Though I didn't understand it at the time, these nasty little bits of racism arose from the wave of Polish immigration into Canada that occurred following WWII. Established societies tend to look unfavorably on recent immigrants and target them as scapegoats for society's ills – hence the Polish jokes. No doubt these were prevalent on the prairies because that is where 60 percent of Poles ended up.

Since that time, the idea has always lurked in the back of my head that Poland is something of a backward and pathetic nation. The Poles were slaughtered by Russians and Germans in the big wars, and Poland became a Russian satellite until Lech Walesa and the Solidarity movement rose up. Apparently the Polish government and the European Community also think Poland is backwards, at least the agriculture sector. Poland is undergoing a "modernization" of agriculture, courtesy of its agriculture policies and the EU's wad of cash.

Polish farms are presently small by North American and European standards, at 25 to 50 acres. The EU and Poland's government believe increasing production and hence exports depends on farms being large enough to employ modern technologies. As a result, the EU is offering huge subsidies to farms that expand to larger than 450 acres. Land, machinery and building purchases can receive from 50 to 75 percent subsidy. The results are predictable, and what has happened in Canada over many decades in terms of farm consolidation and migration to the cities will happen in Poland in short order.

International agencies tend to see this as a good thing. Quasi-governmental organizations like the World Bank and International Monetary Fund have worked hand in hand with governments in developed countries to change the agriculture policy of nations around the world. For many countries, the result has been increased exports and less food production for local consumption. Honduras is a good example.

In return for loans from the World Bank in the 1990s, Honduras was required to cut tariffs that protected its domestic rice producers. The government was told to abandon grain reserves that were used to stabilize prices. Production of other goods for export was encouraged and reduction of tariffs allowed cheap American rice to displace local rice in Honduras. Once self-sufficient, Honduras now imports a staggering 83 percent of rice consumed. This was a disaster for rice farmers, but in the short run, reduced local prices for consumers. Unfortunately for the many poor in this impoverished country, the recent boom in commodity prices drove up the price of rice to the point where people could no longer afford it. Hunger and malnutrition rose dramatically.

The same scenario has been repeated in many poor countries. To make things worse, some rice producing countries, like Vietnam, China and Cambodia, have stopped exports of rice to stabilize prices at home. Thus, other poor nations that need to import can scarcely find supplies, even at exorbitant prices.

High prices for farm commodities are a boon to Canadian farmers, and not much of a problem for consumers with money to spare. They could be a benefit to farmers in poor countries who have a bit of surplus to sell. But for countries that have lost food self-sufficiency, price increases and especially price instability only benefit the wealthy few, particularly the grain traders, while bringing disaster for the many. The UN estimates these factors have recently added 100 million to the ranks of the hungry. Much of the instability has been caused by speculators playing commodity markets. Speculative money in commodities futures has ballooned from US$5 billion in 2000 to US$175 billion to 2007.

Some countries are rethinking agriculture policy in light of the problems caused by recent price instability. Though we think about exports a lot in Canada, the fact is most food consumed in the world is still produced by small farmers. Policies that reduce the number of small farmers reduce food security. This is coming home with a vengeance in many African, Asian and Central American countries.

The issue is not really the high cost of basic foodstuffs. Small farmers tend to produce for their families and their villages first, with surpluses for sale to the larger community after this. Large farmers focus on the best-priced market. If that is for carnations for export, local food production suffers. As farmers leave and are driven from the land in the millions all over the world, they are added to the ranks for the food-insecure.

The cost of imported food will only continue to increase as transportation costs rise with oil price increases. Poor countries that have lost self-sufficiency and rely on imports will see increasing costs for food. Poland's agriculture policies might lead to greater exports, but what will the ultimate cost be?

 Paul Beingessner beingessner@sasktel.net

Wind Turbines Come Under Fire

Column # 683 25/08/08

The debate over alternative liquid fuels like ethanol is fairly easy to understand. After all, it takes large amounts of fossil fuels to produce the corn or other crop needed to produce the ethanol. Is their really any net benefit from the process, or are biofuels just a sneaky way to get taxpayers to subsidize farmers?

The debate over wind turbines is a little tougher to comprehend. You can't challenge the energy balance of the electricity-producing towers, which have become popular with governments around the globe. You would think environmentalists would be similarly enthralled with the idea of replacing coal or nuclear powered electrical plants with emission-free wind power. Some European countries have done so wholeheartedly, with Germany leading the way. Germany plans to phase out its nuclear power and replace it with renewables. Wind is a major factor in this decision. Germans are not only generating lots of electricity with wind power. They are generating significant numbers of jobs by being one of the largest producers and exporters of turbines.

Some environmentalists, however, are not so happy about wind turbines. A recent editorial on wind power called them an assault on human well being, a threatening monster jammed down the throats of neighbors and localities. The idea seems to be that wind turbines offend the senses by their presence on the skyline, and thereby degrade the human spirit.

The idea is also expressed frequently in environmental circles that the use of renewable energy sources has failed to curb growth in oil and gas consumption. Rather, it has simply been part of a large overall increase in energy consumption globally – an increase that is having serious environmental impacts.

The environmental movement is split on the approach to wind power and other renewables. Some groups endorse these strongly, while a few smaller ones are vocal in their opposition for the reasons given above.

The simple fact is that we are a society hooked on high energy consumption, and our consumption is rising yearly, both for personal and industrial use. The latter is huge in Canada, as vast amounts of energy are consumed in the production of tar sands oil.

Farmers generally view the advent of a wind turbine not as some looming monster, but as a welcome addition to the income their land might generate and for the jobs created, albeit few, in the maintenance of the turbines. On a personal level, I polled my rather environmentally conscious family about their feelings toward wind towers. It was quite positive. We tend to see them not as a blight on the horizon, but as an elegant and graceful way to generate electricity.

I am not really clear on the link anti-turbine groups make between the over consumption of energy by our society and the production of energy. It seems to be the belief that the more we produce the more we will consume. Since few of us have any awareness of the amount produced, that seems unlikely. Consumption of power, like consumption of alcohol and tobacco, is directly linked to our ability to pay. Those with more money have bigger houses, drive bigger cars, have more energy consuming toys, take more airplane flights, buy more consumables and so on.

Wind power is expensive – at least in Saskatchewan it is more expensive than throwing another shovel of coal in the power plant. In this regard, using wind power should actually reduce energy consumption since it will make the price of electricity higher.

It is unfortunate that we apparently can't see the real looming monster on the horizon. This is the vast increase in the cost of petroleum products that will take place over the next several decades as demand increases in heavily populated countries like India and China, and as conventional (cheap) supplies of oil decline. As this happens, economics will force some hard choices on us. Energy use will consume a much greater percentage of our personal incomes, leaving lower income people with some hard choices. Even the wealthy will have less money to throw around.

Higher energy costs will hit rural people harder than urbanites. With no access to public transit, and having to travel further for all services, rural folk will spend a greater proportion of their income on energy. At some point, we will have to get really serious about reducing energy use. This will not be as hard as people seem to think. We used far less energy forty years ago, yet our lifestyles were quite similar. We were also healthier and some might even say happier.

But we will still need energy. Those looming monsters on the horizon, the wind turbines, will be part of that mix - a relatively clean, safe part. Get used to it. We should use the interval to make them as safe and efficient as possible.

 Paul Beingessner beingessner@sasktel.net

Transportation Review Will Be Light on Farmer Input

Column # 682 18/08/08

Farmers on the prairies are beginning a harvest that looks to be above average in many districts. Busy as this season is, they likely have little time to think ahead to the fall, winter and spring when they will attempt to ship that crop to buyers domestically and around the world. But maybe they should, because an above-average crop could bring back the transportation woes that plagued grain shippers and hence farmers in years past.

To anyone who has farmed more than a few years, the story will be familiar. Grain movement starts slowly in Sept and October and gets worse in December and January. Shippers point fingers at the railways, the railways point at the weatherman and farmers point their middle fingers skyward in frustration. Demurrage bills pile up; sales are lost. Seeing a chance for political gain, the Wheat Growers swear it is the CWB's fault.

Around April, farmers start thinking about seeding, and transportation problems fade into the background. A year goes by, and the transportation monitor issues a report saying that the system really hasn't gotten any better than it was when we had umpteen branch lines and small grain elevators. Governments cluck sympathetically and the railways release profit figures that show yet another record has been broken. Their CEOs get hefty pay increases.

As I said in an earlier column, it would be hard to find any grain shippers today who would tell you they are happy with the service the railways provide. Shippers of lots of other products would sing a similar song. That's the reason shippers across Canada have been asking the government for major changes to the transportation act for nearly a decade. What they've received from past and current governments has been tinkering that has done little to improve the situation. When the last transportation act amendments became law, shippers got one small bone from the Conservative government. It promised to conduct a review of railway service.

That review is about to begin – the details have been released. Shippers who hoped it would be a chance to thoroughly air their grievances should take a hard look at them. This review looks nothing like the several that have preceded it.

The structure of the review will go something like this: consultants will be hired to gather statistical data on railway performance, to look at the logistics system overall and to examine railway best practices. This phase is expected to take about six months. Following this, the government will appoint a panel of three "eminent" persons to examine the collected data and draw some conclusions and recommendations. Then, and only then will "interested parties" be invited to comment on these recommendations and give their own input.

It seems a cock-eyed way to conduct a review, unless your goal is to manage the outcome. The data-gathering phase will largely be carried out under the radar with little chance to scrutinize the process or the input. Logically, you'd expect that you would collect public input before writing recommendations. If these are written before small shippers and farmers get to tell their stories, they will frame the discussion that comes after. The recommendations will decide which issues are important and which solutions are possible.

The second problem I have with the structure is the idea of appointing a three-party panel to write recommendations. The government announcement says that "ideally" it would have someone with a railway background, someone with a shipper background and a "neutral" third party. Tri-partite panels, especially where worldviews might conflict substantially, tend to produce timid and tepid solutions. Better to have a single independent person writing a report. Solutions will be more imaginative and less subject to pallid compromise.

We have already tried enough half-measures to correct the power imbalance between the two large railways and Canadian shippers. They haven't worked. They weren't really designed to work because Transport Canada's bureaucracy has had a decades-long love affair with the railways. The government's design of this inquiry holds only faint promise for real reform.

 Paul Beingessner beingessner@sasktel.net

Apology for interupted posting

My apologies for the delay in posting Paul Beingesner's column. Due to a computer glitch.

Little Muddy

Harper Wants Third Parties to Influence CWB Election

Column # 681 11/08/08

No matter where you stand on the Canadian Wheat Board, you have to
admit that what happens to it is farmers' business. Not the business
of the butcher in Burnaby or the real estate salesperson in Regina.
Not the business of the dog groomer in Davis Inlet, the welder in
Wetaskawin or the taxi driver in Toronto. And, though there is
something of a closer connection here, not the business of the grain
company in greater Winnipeg. While the grain company might be affected
by the way farmers choose to market their grain, it is still their
choice, and if they choose the single desk of the CWB, that is no more
the grain companies' business than it is that of the far northern dog
groomer.

I think most Canadians would see this as logical. Unless of course
they happen to be members of Stephen Harper's Conservative government,
or that tiny number of farmers who show up in every survey as stoutly
believing that the federal government should be the one to decide the
future of the Canadian Wheat Board.

While those farmers could be written off as self-doubters, since they
don't even trust themselves to the task of governing the CWB, Harper's
gang lacks any such logical explanation. His party, it seems, believes
that everyone but farmers should decide the fate of the CWB. How else
to interpret the latest in a long series of attempts to thwart the
will of the majority of farmers?

Harper recently declared that anyone wanting to exert their influence
over the future of the CWB should be able to. Anyone, that is, except
farmers. To that end, the Conservatives have issued a Cabinet order
allowing outside parties the opportunity to spend unlimited amounts of
money to influence CWB director elections. Farmers who are CWB
candidates, on the other hand, will be restricted to raising just
$15,000 to put their own views forward. In doing so, he has declared
that this would "promote eligible voters to become fully informed
about the future direction of the CWB during the election of its
directors". It is a move that would be akin to allowing corporations
in other countries to spend money to influence Canadian elections.

Stephen Harper's record on campaign spending by third parties would
indicate he thinks democracy is for those with money. In 2000, Harper
vigorously opposed Jean Chretien's bill, which limited third-party
spending in federal elections. He launched a constitutional challenge
to the bill while head of the National Citizens' Coalition. Oddly
enough, when the Supreme Court of Canada threw out Harper's challenge
to federal election spending limits it used language similar to
Harper's on the CWB, but reached the opposite conclusion. It declared
that spending restrictions on third parties would provide "a level
playing field for those who wish to engage in the electoral discourse,
enabling voters to be better informed".

Let's face it. Most folks who run for the CWB spend a pittance on
their efforts. Publicly available information shows that many
candidates fund their campaigns largely from their own pockets. In
federal elections, candidates are often relatively wealthy, witness
the number of lawyers who regularly try to get elected. Candidates for
election to the CWB board of directors are less likely to be
well-heeled. They are farmers, after all.

But there are parties other than farmers who stand to gain mightily
from the end of the CWB. Viterra, for example, the grain company
formed from the amalgamation of Agricore United and Saskatchewan Wheat
Pool, has publicly declared it would stand to make millions if it were
able to market farmers' grain in an unrestricted manner. Surely this
would be incentive enough for Viterra to pour money into supporting
candidates that would support its view.

Harper's government has initiated a number of illegal moves against
the CWB, including an attempt to take barley from the single desk and
another to gag the CWB. The courts threw out both of these. Harper's
proposal on third-party spending violates the principle of the federal
election law. Since he is changing regulations this time, not the bill
itself, his actions do not have to go through Parliament, so
technically they may be legal. However, as editorial commentators
across Canada have indicated, they make a mockery of democracy.

Interested parties have till the end of August to tell the government
what they think of this.

(c) Paul Beingessner

Deny, Deny, Deny

Hi folks,
I won't be sending out a column next week as we are going on a short
vacation. Hope summer is treating all of you well. Regards, Paul

Column # 680 Deny, Deny, Deny 28/07/08

In Freudian psychology, denial is an ego defense mechanism. Defense
mechanisms are used by our subconscious minds to help us deal with
realities we find too difficult to face. They aren't a sign of mental
illness; rather, everyone uses them to some extent. They only become a
problem when their use leads a person to do things that are harmful in
the end. Freud had a whole list of defense mechanisms, ranging from
repression to projection to denial. The key thing to remember about
defense mechanisms is that they operate in the subconscious. We don't
realize we are indulging in them. So, denial is not really a form of
lying to ourselves. We actually believe what we are saying.

Now Freud is kind of old hat these days. Many psychologists today
figure he was too influenced by the repressed upper-middle class women
he saw in his therapy sessions, so they dismiss most of his theories
as unscientific. In the case of denial, however, current human
behaviour is making a pretty good case for Freud's idea.

Now, how does all this psychological mumbo-jumbo relate to
agriculture? Agriculture in developed countries, and increasingly in
all countries, is rooted in the consumption of fossil fuels. Fossil
fuels are the basis of planting, weeding and harvesting operations.
They produce our fertilizers and pesticides and transport our crops to
processors and markets. And they are running out.

Yes, you can trot out all the figures you want about oil sands, shale
oil, coalbed methane and the like. But a friend recently put it all in
perspective for me when he gave me the following figures: Currently
the world uses 87 million barrels of oil per day. This is increasing
rapidly and will reach 116 million barrels by 2030. At that time, we
will be using a trillion barrels every 23 years. In all of history up
until now, we've used a trillion barrels. By 2030, we'll be using this
much every 23 years. It doesn't take a rocket scientist to figure out
that our bingeing on fossil fuels will come to an end a lot sooner
than we think.

Whenever this argument is made, the usual response by those in the
throes of Freudian denial is to point to the reserves of oil sands in
Alberta and parts of Saskatchewan. Total reserves in the Athabasca
formation are estimated at around two trillion barrels, but only about
170 billion are recoverable with current techology. Even if the total
amount were recoverable, which it won't be, and notwithstanding the
massive amount of natural gas or some other form of energy required to
extract the oil from the oil sands, it is plain that we will indeed
run out of oil.

Of course, before that happens, the price will skyrocket and $1.40 a
litre diesel fuel will be a distant cherished memory.

The figures I gave you came from the International Energy Agency. The
IEA grew out of the Organization for Economic Co-operation and
Development (OECD) and is controlled by 27 developed countries
including Canada, the U.S., Japan and the U.K. The IEA's figures are
accepted by and available to these countries. So why do most of them
still act as if the petroleum age will go on forever?

The end of low cost oil will mean changes to our world as dramatic as
those brought on by the advent of low cost oil. We will continue to
need large amounts of energy, but we will have to get them somewhere
else. Some folks point to nuclear power as a solution to some of our
impending shortages. But, guess what! There are only 60 years of known
uranium reserves for the reactors currently operating in the world.

The simple fact, almost completely neglected by politicians and the
public in general, is that we need to cut energy consumption,
dramatically and rapidly. Doing so will stretch out existing petroleum
reserves and allow us more time to change the way we do just about
everything., including producing food.

And here is where denial really comes into its own. Reducing energy
consumption will mean fewer and smaller vehicles, less miles driven,
fewer airplane trips, fewer exotic vacations, fewer leaf blowers, less
food imported by air from Taiwan and Chile, smaller houses, and no
more electric toothbrushes. It will mean a whole lot more than that as
well. But these are precisely the things we don't seem prepared to
give up. In fact, we, 1.3 billion Chinese, and 1.1 billion Indians
seem to think these things are measures of the good life. Believing
this, we find all kinds of ways to tell ourselves that the impending
end of oil won't happen, or that there will be a technological
solution that will allow the orgy of energy use to continue.

I said earlier that the failure to acknowledge and act on these
realities is a form of denial by our politicians and ourselves. In
fact, that statement is denial in itself. The truth is that
politicians, at least those in real positions of power, know all this.
What they are about is protecting the interests of those reaping
massive profits from energy production in the current system.

Our denial, as citizens, is real though. In Freud's world, denial was
only pathological if it caused you to act in self-destructive ways.
Seems to me we passed that point some time ago.

(c) Paul Beingessner

Bureaucrats and Politicians Watch Rail Lines Vanish

Column # 679
21/0708

The spring of 2008 brought good news to farmers in northeast
Saskatchewan in the form of a new short line railway, Torch River Rail.
While farmers in that part of the prairies were rejoicing at the
victory, following a long struggle, farmers in southern Manitoba were
gnashing their teeth as a last ditch effort to set up a short line on
portions of CP's La Riviere and Napinka subdivisions failed.

Saskatchewan's Torch River Rail, a farmer-owned short line, became the
seventh such railway in the province, which also is home to OmniTrax's
Carlton Trail Railway. Saskatchewan is unique among the prairie
provinces in that the seven locally owned short lines are found on grain
dependent branch lines which move little traffic other than grain and
are home mostly to producer car loading facilities and small elevators.
Nor is the province maxed out in this type of railway. To my knowledge,
there are at least four more farmer-based groups that are negotiating
with either CN or CP to set up new short lines.

In contrast, Manitoba and Alberta have no short lines owned by farmers
or community-based groups. Both have seen huge amounts of branch line
abandonment. In Alberta, few groups have even attempted to set up short
lines, though Alberta was home to the original short line, Central
Western Railway. The exception to this is a group of farmers on the
Alliance subdivision in Alberta, who have been jousting with CN, which
announced its intention to abandon the line several years ago.

The failure of the Boundary Trail Railway Company in southern Manitoba
illustrates why Manitoba and Alberta have been so unable to save branch
lines while Saskatchewan has a track record that is nothing short of
remarkable. Most of the blame for Manitoba and Alberta's failures can be
laid at the feet of their provincial governments. Most of Saskatchewan's
success stems from the same source.

The government of Saskatchewan was intimately involved in the quest to
save branch lines long before the first short line in the province began
operation in late 1989. Southern Rails Co-operative was the culmination
of a vision long held among civil servants in the Department of
Highways. While Southern Rails was the first farmer-owned short line, it
would be a decade before resistance from the major railways broke down
enough to see a second. During that time, however, Saskatchewan saw
limited branch line abandonment as the fight was on over each and every
line. The province had an active unit within the Department of Highways
and Transportation that worked pro-actively with farm groups around the
province each time the railways threatened abandonment. Besides offering
valuable technical support and advice, the province but up some cash,
offering interest-free loans to would-be shortlines to purchase track
and giving grants for feasibility studies.

The situation could not have been more different for farmers in Manitoba
and Alberta. The transportation departments there offered only
indifference or active hostility to the idea of short lines on grain
dependent branch lines. I remember a call I received about 15 years ago
from the major of High River, Alberta when the branch line through that
town was slated for abandonment. After explaining his options under the
law, I suggested he contact his provincial transportation department and
demand some support and assistance in exploring those options. His
gloomy response was that he had done that. Bureaucrats in that
department told him that, rather than supporting his efforts, they were
in agreement with the railways that branch lines should be abandoned.

Ironically, the trouble in Alberta and Manitoba can be laid partly at
the feet of the entrepreneurial spirit. Tom Payne, Alberta's iconic
railroader, was the impetus behind Central Western Railway. He firmly
believed that short lines should be profitable entities that survived by
acting as service providers to the big railways. In Manitoba, Brandon's
Cando Contracting built a small railway empire by becoming dominant in
the railway salvage business. Only later did Cando get into short lines.
The Peters' family enterprise was careful not to get involved in grain
dependent branch lines, preferring instead lines with a diversity of
traffic.

The government of Manitoba seemed more than happy to have Cando
scrutinizing its branch lines for viability. If Cando wasn't interested,
the government wasn't either. Manitoba's other abortive short line
venture came in the form of the Southern Manitoba Railway. These CN
branch lines were sold to an American company with a dubious reputation
as a railroad salvager. That short line lasted about eight years before
ceasing operation altogether.

Saskatchewan's farmer-owned short lines have developed with a different
mentality. The goal has seldom been to create highly profitable
railways. Rather, the short lines have been seen as a means to an end,
that end being the retention of viable rail service to maintain grain
delivery and community development options. Southern Rails Co-op has
logged eighteen years with this approach.

Such an attitude might have served Alberta and Manitoba well. Instead,
indifferent bureaucrats and myopic politicians have thinned their rail
networks to the point of no return. While it is largely too late now,
farmers in these provinces should have been kicking some government
derriere years ago.

And Saskatchewan? Recently the government came up with a half-million
dollars in grant money for short line rehab projects.

(c) Paul Beingessner
beingessner@sasktel.net

High Food Prices Not the Problem

Column # 678 14/07/08

A recent Reuters news story on the high cost of food was itself food for
thought. The story concerned the U.S. Commodity Futures Trading
Commission (CFTC), an "independent" government agency with a mandate to
regulate commodity futures and option markets in the United States. The
CFTC announced it had formed a taskforce with other government agencies
to study recent activities in commodity markets. The concern that
prompted this was the meteoric rise in commodity prices over the last
year or so. Some suggest this has been fuelled by speculators looking
for a quick buck, rather than by any fundamentals of supply and demand.

The CFTC didn't single out food prices as the major area of concern,
citing instead rising oil prices and "other commodities". The Reuters
story, however, complained that high prices for farm commodities, along
with oil, have "roiled U.S. and world markets in recent months". It went
on to quote the U.S. Department of Agriculture, which it said is
"forecasting sharp increases this year in U.S. food prices, expected to
rise by five per cent in the largest increase since 1990".

The Reuters reporter, it seems, saw the focus of this story as the high
price of food. Indeed, this has become a major pre-occupation for
reporters and for lobby groups of all types. Food prices are too high if
you judge by the cacophony of voices shouting this mantra. Yet the
number Reuters used is startling for how low it is. Given the beating
farmers have taken since 1990, a five percent increase in their incomes
would be paltry. Yet a five percent increase in food prices can be
trumpeted as a major crisis. Note that Reuters did not mention the
percent increase in the price of gasoline or heating fuels or (here in
western Canada) house prices.

A story in a similar vein surfaced a couple weeks ago. It came from the
United Nations Food and Agriculture Organization. It seems the FAO had
commissioned but not released a study on the increase in grain prices
caused by the demand for grain for ethanol and bio-fuels. Contrary to
numbers put forth by the American government, which claims grain for
bio-fuels only contributed to three percent of the price increase, the
FAO study said it was actually 75 percent. This is an important issue,
but again, the focus of reporting on it often revolves around concern
about food prices.

Stories like this are commonplace today. The Canadian Chamber of
Commerce recently wrote a letter to the Prime Minister asking that
Canada give up its support for supply management in the interest of
getting a new trade deal at the WTO. The Chamber justified its stance by
claiming supply management cost the average Canadian family of four $300
more per year than it otherwise would have had to spend on dairy and
poultry products.

The common theme in these various stories is that food price increases
are universally a bad thing. This simply isn't so. Yes, they are bad for
those folks in poor countries existing on one or two dollars a day.
Since most of this meager amount is spent on food, any increase is
disastrous. For a relatively wealthy European, Asian or North American,
a few percentage points increase in the cost of food is a minor
inconvenience at most. Since a third to a half of all North American
meals are now eaten in restaurants, one less trip per week to the golden
arches would save enough to offset the "sharp" five percent increase the
USDA is fretting about.

The increasing cost of food is a good thing if the extra money accrues
to the world's farmers. That is a controversial item in itself, and not
really the subject for this column, but farmers are indeed achieving
somewhat better returns due to higher grain prices. This will spur extra
production, which is needed, since world grain stocks have fallen
precipitously in recent years. So that is a good thing on many fronts.

It doesn't change, however, the negative consequences for the world's
poor. But, and this is the crux of this long diatribe, we are defining
the problem incorrectly. The problem is not the high cost of food for
the poor, since many of the poor are small farmers, and might in fact
benefit when they go to sell any surplus crops. The problem is the low
levels of income and wrong-headed government policies that fail to
protect the vulnerable from food price increases. Much of this bad
government policy is entrenched in trade deals that attempt to force
open the markets of developing countries, under the guise of allowing
their farmers to compete on world markets. What they do is destroy the
ability of a country to enact policies to achieve food sovereignty.

All this underscores the fact that food policies have failed the two
classes that are most affected by the cost of food - farmers and the
poor. In a rational world, we would separate food out from other trade
and government policies, and examine it with a different lens. The CFTC
might be right to suspect that speculators are inappropriately affecting
the price of food, but it will come to the wrong conclusions in seeking
a solution if it thinks the problem is the high cost of food. The
problem is our failure to see the right to adequate food as the most
basic of human rights.

(c) Paul Beingessner
beingessner@sasktel.net