Column # 711 16/03/09
When farmers worry about their industry, pretty much a full time job
in the last decade, they tend to look for solutions in the areas of
production and marketing. In production, they look at using the latest
technologies and maximizing the value they get from the inputs they
use. They do the latter by trying to use inputs efficiently and by
trying to purchase them at as cheaply as possible. In marketing, they
obviously try to achieve the best price they can with the options
available.
They have a couple problems in both areas. In production, most new
technologies come at a cost. That cost sometimes erases the value of
the gain in production. An example would be the cost of growing
genetically modified crops. In this case, there often is no cost
reduction and no yield gain over conventional varieties. The ability
to use cheaper herbicides, for example, is offset by the cost of
having to buy new seed each year. But at some point, all new varieties
contain the GM traits, so if you want the advantages that might come
from new varieties - increased yield or better agronomic properties -
you have to accept the inability to use your own seed.
When buying inputs, farmers again face the fact that while there might
still be a fair number of retailers, they all sell products from the
same few manufacturers. This is true for machinery and parts,
fertilizers, fuels and chemicals.
Marketing runs into problems as well. On the prairies, we have a grain
industry that has consolidated into just a few firms. Delivery points
have been sharply reduced. Farmers' choices are sometimes limited by
proximity to handling facilities. Livestock producers are even worse
off. All auction barns in Saskatchewan, for example, are controlled by
a single firm, which has raised fees and added new charges since
consolidating its grip on the auction market. The number of feedlots
for cattle is declining. The packing industry in all of Canada is
overwhelmingly dominated by two firms. Cattle prices reflect the lack
of competition.
When farm organizations look at the problems with agriculture, they
tend to have two solutions. The first is the notion that we will be
better off if we can just expand market access. We try to convince
countries to take our GM crops. We look for trade agreements that will
give us market access in other countries. We fight to gain an
advantage in global trade agreements like the WTO. Sometimes these
efforts are successful for a while. After the NAFTA was signed, cattle
numbers soared in Canada because of better access to U.S. markets.
When market access doesn't happen, or doesn't solve the problem, farm
groups have one last solution. They turn to government to fill the
gap. Governments in Canada have done precious little in this area for
some time.
Governments themselves, when faced with the agriculture crisis, seem
to pin all their hopes on the market access side of things. Financial
aid to farmers is always given late and begrudgingly.
But there's something I don't get. We live in a capitalist economy.
Capitalism says the marketplace works when it consists of a reasonable
number of buyers and sellers. A reasonable number of buyers insures
sellers will get a fair price. A reasonable number of sellers means
buyers are not held hostage. In this ideal situation, the system works
pretty good.
The trouble is we don't have that in agriculture. Oh, we have lots of
sellers - eighty or ninety thousand farmers on the prairies. But we
have an ever-decreasing number of buyers. While bad in many
industries, it is likely worst in the cattle industry. When it comes
to inputs, we have lots of buyers, those same farmers, and only a few
sellers. Farmers are on the wrong end of the stick in both cases.
So, here's the part I can't figure out. Why do so many farm
organizations, steeped as they are in the free market, worry so little
about this lack of competition? Without competition, all other
solutions simply don't work. You can expand market access, but if
there are only three companies buying from the farmer and selling to
those markets, they will simply absorb the increased revenues.
The Canadian Cattlemen's Association is an example of this problem. As
I said before, there is no industry as consolidated as meat packing.
Yet, the CCA never seems to worry about this. It had nary a concern
about the recent reduction in meat packers from three to two in
Canada. Nope. If you can believe the Competition Bureau, farm groups
were only concerned about market access. And when confronted with the
anti-competitive aspect of captive supply, the CCA defended the
packers! It said they needed this to ensure they could operate
efficiently. Yet if you search the literature, you can find lots of
studies by economists who document the decrease in cattle prices as a
result of captive supply. Why doesn't the CCA get this?
I don't know an easy way to increase competition in these areas. But I
do know we should at least fight further consolidation. And unless we
recognize the value of competition, make it a top priority, and
pressure governments to recognize this as well, any other gains will
simply be taken from us.
© Paul Beingessner beingessner@sasktel.net
Monday, March 16, 2009
Tuesday, March 10, 2009
Grain Commission Changes Motivated by Misinformation
Column # 710 09/03/09
Writing a newspaper column is all about words, obviously. If you write regularly, you learn something about the power words can have to influence people. Politicians know this very well, as does anyone who uses the media to get out a message. When politicians communicate with the public, it is often disrespectfully called "spin". This means taking a situation or event and twisting the message so it communicates what you want it to communicate. We used to call it propaganda, but we only seem to use that word now to refer to things done in other countries. Tin-pot dictators use propaganda. Leaders of upstanding democratic countries use spin.
Some politicians are better at this than others. Some are smooth, some are clumsy. Some mix their spin with half-truths and outright fabrications. Gerry Ritz would fall into this category. He doesn't seem to let the facts get in the way of the issues.
His attempts to defend the changes he is proposing to the Canada Grain Act and hence the Canadian Grain Commission show once again that Gerry went to the Goebbels School of Communication.
Changes to the Canadian Grain Commission have been on the agenda of the Harper government for some time. Bill C-39 was introduced in December, 2007, but died on the order paper when Parliament ended with the election call. Bill C-13, introduced in late February, appears identical to C-39. It calls for an end to mandatory inward weighing and inspection at port, changes the CGC mandate away from its focus on protecting producers and eliminates the need for grain companies to post security with the CGC to cover potential defaults on payments.
These proposals have come under scrutiny from many quarters. Removing the bonding requirement for grain companies has raised red flags with producers, especially in the current unstable economic environment. In defending his legislation, Ritz has played fast and easy with the truth. In an interview with a reporter from Golden West Radio in Altona, Manitoba, Ritz declared that the best that has ever been paid out through the Payment Security Program was 30 cents on the dollar. Because of this, he can easily declare the program is not working.
The only trouble is, he's wrong. The Payment Security Program has actually been quite successful. Over the last ten years, the CGC has issued payments to producers in nine cases of default by grain companies. In six of these, the payment was 100 % of claims. In one, it was 99.8 %. In one, the bankruptcy of Naber Seeds in 2002, payout reached 51.4 % of claims and in the case of Venture Seeds Ltd in 2004, payment was just 28 % of claims. Total payments from the bonding required by the CGC were $4,503,000 to 343 producers, for an average of $13,127 per claimant. The total payouts were actually 77.15 % of claims, not 30 % as Ritz claimed.
In the interview with the Golden West reporter, Ritz also claimed that this protection would only be removed when something better was in place. Again, this is not true. Bill C-13 removes the bonding requirement. Full stop. It does not propose any alternatives and no viable alternatives are on the table.
Ritz went on to claim that the CGC has been under a moratorium for more than a decade (he was likely referring to a moratorium on fee increases) and as a result it is not offering the services it could be. When I consulted an official at the CGC he told me he was not aware of any new services that would be facilitated by C-13. In fact, the recent decision by the CGC to end optional inspection at inland terminals for grain bound for the U.S. came about because the Minister has ordered the CGC to focus on its mandate, and not to perform optional services. The mandate is found in the act and C-13 diminishes, not expands the mandate. The services the Minister is referring to appear to exist only in the Minister's head.
I want to be charitable to Minister of Agriculture Gerry Ritz. He has a reputation for saying things to reporters that, to put it kindly, are creative. I don't think he lies intentionally, as in his claim that payouts through the CGC Payment Security Program have never reached 30 %. But if the Minister doesn't know the facts of the situation, if he hasn't figured out that passing C-13 ends payment security, that there is no alternative waiting in the wings, where does he get his information? If the aides responsible for briefing him are that ignorant of the facts, he should find some new ones. If the Minister himself follows the industry so little that he doesn't remember any of the bankruptcy cases but one, what is he doing in the position?
So, where does Gerry get his information? The Grain Growers of Canada might be one source. In a February 1, 2008 letter to Ritz, the group claimed that "The termination of bonding system, although controversial, will ultimately be a step in the right direction as the bonds to date have not provided proper coverage anyway." Perhaps Ritz took this vague bit of misinformation and simply applied his creative juices. He should try to hang with a better informed class of people.
© Paul Beingessner beingessner@sasktel.net
Writing a newspaper column is all about words, obviously. If you write regularly, you learn something about the power words can have to influence people. Politicians know this very well, as does anyone who uses the media to get out a message. When politicians communicate with the public, it is often disrespectfully called "spin". This means taking a situation or event and twisting the message so it communicates what you want it to communicate. We used to call it propaganda, but we only seem to use that word now to refer to things done in other countries. Tin-pot dictators use propaganda. Leaders of upstanding democratic countries use spin.
Some politicians are better at this than others. Some are smooth, some are clumsy. Some mix their spin with half-truths and outright fabrications. Gerry Ritz would fall into this category. He doesn't seem to let the facts get in the way of the issues.
His attempts to defend the changes he is proposing to the Canada Grain Act and hence the Canadian Grain Commission show once again that Gerry went to the Goebbels School of Communication.
Changes to the Canadian Grain Commission have been on the agenda of the Harper government for some time. Bill C-39 was introduced in December, 2007, but died on the order paper when Parliament ended with the election call. Bill C-13, introduced in late February, appears identical to C-39. It calls for an end to mandatory inward weighing and inspection at port, changes the CGC mandate away from its focus on protecting producers and eliminates the need for grain companies to post security with the CGC to cover potential defaults on payments.
These proposals have come under scrutiny from many quarters. Removing the bonding requirement for grain companies has raised red flags with producers, especially in the current unstable economic environment. In defending his legislation, Ritz has played fast and easy with the truth. In an interview with a reporter from Golden West Radio in Altona, Manitoba, Ritz declared that the best that has ever been paid out through the Payment Security Program was 30 cents on the dollar. Because of this, he can easily declare the program is not working.
The only trouble is, he's wrong. The Payment Security Program has actually been quite successful. Over the last ten years, the CGC has issued payments to producers in nine cases of default by grain companies. In six of these, the payment was 100 % of claims. In one, it was 99.8 %. In one, the bankruptcy of Naber Seeds in 2002, payout reached 51.4 % of claims and in the case of Venture Seeds Ltd in 2004, payment was just 28 % of claims. Total payments from the bonding required by the CGC were $4,503,000 to 343 producers, for an average of $13,127 per claimant. The total payouts were actually 77.15 % of claims, not 30 % as Ritz claimed.
In the interview with the Golden West reporter, Ritz also claimed that this protection would only be removed when something better was in place. Again, this is not true. Bill C-13 removes the bonding requirement. Full stop. It does not propose any alternatives and no viable alternatives are on the table.
Ritz went on to claim that the CGC has been under a moratorium for more than a decade (he was likely referring to a moratorium on fee increases) and as a result it is not offering the services it could be. When I consulted an official at the CGC he told me he was not aware of any new services that would be facilitated by C-13. In fact, the recent decision by the CGC to end optional inspection at inland terminals for grain bound for the U.S. came about because the Minister has ordered the CGC to focus on its mandate, and not to perform optional services. The mandate is found in the act and C-13 diminishes, not expands the mandate. The services the Minister is referring to appear to exist only in the Minister's head.
I want to be charitable to Minister of Agriculture Gerry Ritz. He has a reputation for saying things to reporters that, to put it kindly, are creative. I don't think he lies intentionally, as in his claim that payouts through the CGC Payment Security Program have never reached 30 %. But if the Minister doesn't know the facts of the situation, if he hasn't figured out that passing C-13 ends payment security, that there is no alternative waiting in the wings, where does he get his information? If the aides responsible for briefing him are that ignorant of the facts, he should find some new ones. If the Minister himself follows the industry so little that he doesn't remember any of the bankruptcy cases but one, what is he doing in the position?
So, where does Gerry get his information? The Grain Growers of Canada might be one source. In a February 1, 2008 letter to Ritz, the group claimed that "The termination of bonding system, although controversial, will ultimately be a step in the right direction as the bonds to date have not provided proper coverage anyway." Perhaps Ritz took this vague bit of misinformation and simply applied his creative juices. He should try to hang with a better informed class of people.
© Paul Beingessner beingessner@sasktel.net
Monday, March 09, 2009
Waiting for a Miracle
Column # 709 02/03/09
"All things come to those who wait." I think that saying was meant to
produce patience. Wait long enough, and you'll get what you want. But
it doesn't actually say that. It says all things come, so it could as
easily mean the bad as the good.
Farmers, though, generally take the usual meaning of that expression
to heart. That's why they never tire of referring to their place,
wherever it may be, as "next year country". It implies an eternal
waiting for the bumper crop that evaded them yet another year.
But lest you think that next year country refers to an environmental
or economic condition, I will let you in on a little secret: the
eternal waiting that farmers are fixated on actually arises from their
dealings with government. Farmers are waiting, patiently, for
governments to hear them.
And farmers' patience is admirable. Take cattle farmers for instance.
They've been waiting for the government, any government, to notice
their plight and take action. Some, in fact, have waited themselves to
death, finally leaving an industry they embraced their entire lives
when it became apparent that government also was waiting.
Now, what government is waiting for is anyone's guess. Here's mine:
the province of Saskatchewan was waiting for the problem to go away on
its own, or for the federal government to take the lead. The feds were
waiting for the clock to miraculously wind back to the time before
COOL and Mad Cow, or perhaps for the cattle organizations to come, cap
in hand, begging for help. Both appeared to be waiting for enough
farmers to fall off the bandwagon, that governments built in the first
place, to reduce the number of cattlefolk to a quantity that could no
longer be heard.
Well, the waiting is over. Sort of, anyway. This past weekend, farmers
received two things they were waiting for. One was the Saskatchewan
government's response to the livestock crisis, which came in the form
of a payment of $40 per head for breeding cows and heifers and $20
apiece for market hogs. The second was a ruling from the federal
government's competition watchdog concerning the proposed takeover of
Lakeside Packers by XL Foods.
While the provincial contribution was a feeble imitation of Alberta's
assistance to cattle farmers, it was welcome. Forty bucks doesn't go
very far toward covering the losses cattle farmers are enduring, but
it has to be better than a kick in the head from a cranky cow that you
can't afford to feed. The Competition Bureau ruling, on the other
hand, was a kick in the head from a cow we really can't afford to feed
any longer, since it hasn't produced a calf in years.
The Bureau, you see, decided to allow XL Foods to purchase Tyson-owned
Lakeside Packers. The Bureau's press release provided little detail,
but then, what can you say when you allow a consolidation that sees
two companies controlling virtually the entire beef packing industry
in Canada? As when it allowed Cargill to buy Better Beef in Ontario in
2005, the Bureau seems to believe that access to packers in the U.S.
means competition in Canada is not an issue. The Bureau appeared not
to notice that Cargill is the second largest packer in the U.S. and
unlikely to compete vigorously with itself.
Contrast the ruling by the Competition Bureau with a story from the
U.S. that appeared almost the same day. The Antitrust Division of the
Department of Justice was opposing a merger between two of the four
largest beef packers in the U.S. because it felt that allowing only
three companies to control more than 80% of cattle slaughter would
reduce competition in the industry to unacceptable levels. The
Antitrust division had a lawsuit in progress to stop the merger. The
merger was called off by the companies involved, in the face of
opposition from the Department of Justice and the Attorneys General of
sixteen cattle-producing states.
So how does the competition watchdog in Canada not feel concern about
two packers controlling 95% of beef slaughter here while its American
counterpart has a cow over the notion that three companies would
control 80%?
While you are pondering that, you might ask yourself why both state
and federal governments in the U.S. fought the idea, when provincial
governments in Canada have been absolutely silent. Or why did
organizations like the Canadian Cattlemen's Association and the
Saskatchewan Stock Growers and Alberta Beef Producers appear
unconcerned (silence means acquiescence) when American farm groups
were up in arms?
While you grow old waiting for answers to these questions, consider
one more thing. In a free market economy, you rely on one of two
things to make the economy work. You either must have competition,
real competition, or, where this isn't possible (think railways or
utility companies, for example) you must have regulation to control
anti-competitive behavior. The federal government, and its provincial
counterparts, appears to have abandoned both notions. In the packing
industry, like so many others, we will have neither competition nor
regulation. What we have instead is promises. The Competition Bureau
promises to watch the marketplace and if there is a "substantial
lessening of competition" it says it will take remedial action. It
will, presumably, try at some point in the future to put Humpty-Dumpty
back together again.
Meanwhile, farmers can go back to waiting. It's what they do best.
© Paul Beingessner beingessner@sasktel.net
"All things come to those who wait." I think that saying was meant to
produce patience. Wait long enough, and you'll get what you want. But
it doesn't actually say that. It says all things come, so it could as
easily mean the bad as the good.
Farmers, though, generally take the usual meaning of that expression
to heart. That's why they never tire of referring to their place,
wherever it may be, as "next year country". It implies an eternal
waiting for the bumper crop that evaded them yet another year.
But lest you think that next year country refers to an environmental
or economic condition, I will let you in on a little secret: the
eternal waiting that farmers are fixated on actually arises from their
dealings with government. Farmers are waiting, patiently, for
governments to hear them.
And farmers' patience is admirable. Take cattle farmers for instance.
They've been waiting for the government, any government, to notice
their plight and take action. Some, in fact, have waited themselves to
death, finally leaving an industry they embraced their entire lives
when it became apparent that government also was waiting.
Now, what government is waiting for is anyone's guess. Here's mine:
the province of Saskatchewan was waiting for the problem to go away on
its own, or for the federal government to take the lead. The feds were
waiting for the clock to miraculously wind back to the time before
COOL and Mad Cow, or perhaps for the cattle organizations to come, cap
in hand, begging for help. Both appeared to be waiting for enough
farmers to fall off the bandwagon, that governments built in the first
place, to reduce the number of cattlefolk to a quantity that could no
longer be heard.
Well, the waiting is over. Sort of, anyway. This past weekend, farmers
received two things they were waiting for. One was the Saskatchewan
government's response to the livestock crisis, which came in the form
of a payment of $40 per head for breeding cows and heifers and $20
apiece for market hogs. The second was a ruling from the federal
government's competition watchdog concerning the proposed takeover of
Lakeside Packers by XL Foods.
While the provincial contribution was a feeble imitation of Alberta's
assistance to cattle farmers, it was welcome. Forty bucks doesn't go
very far toward covering the losses cattle farmers are enduring, but
it has to be better than a kick in the head from a cranky cow that you
can't afford to feed. The Competition Bureau ruling, on the other
hand, was a kick in the head from a cow we really can't afford to feed
any longer, since it hasn't produced a calf in years.
The Bureau, you see, decided to allow XL Foods to purchase Tyson-owned
Lakeside Packers. The Bureau's press release provided little detail,
but then, what can you say when you allow a consolidation that sees
two companies controlling virtually the entire beef packing industry
in Canada? As when it allowed Cargill to buy Better Beef in Ontario in
2005, the Bureau seems to believe that access to packers in the U.S.
means competition in Canada is not an issue. The Bureau appeared not
to notice that Cargill is the second largest packer in the U.S. and
unlikely to compete vigorously with itself.
Contrast the ruling by the Competition Bureau with a story from the
U.S. that appeared almost the same day. The Antitrust Division of the
Department of Justice was opposing a merger between two of the four
largest beef packers in the U.S. because it felt that allowing only
three companies to control more than 80% of cattle slaughter would
reduce competition in the industry to unacceptable levels. The
Antitrust division had a lawsuit in progress to stop the merger. The
merger was called off by the companies involved, in the face of
opposition from the Department of Justice and the Attorneys General of
sixteen cattle-producing states.
So how does the competition watchdog in Canada not feel concern about
two packers controlling 95% of beef slaughter here while its American
counterpart has a cow over the notion that three companies would
control 80%?
While you are pondering that, you might ask yourself why both state
and federal governments in the U.S. fought the idea, when provincial
governments in Canada have been absolutely silent. Or why did
organizations like the Canadian Cattlemen's Association and the
Saskatchewan Stock Growers and Alberta Beef Producers appear
unconcerned (silence means acquiescence) when American farm groups
were up in arms?
While you grow old waiting for answers to these questions, consider
one more thing. In a free market economy, you rely on one of two
things to make the economy work. You either must have competition,
real competition, or, where this isn't possible (think railways or
utility companies, for example) you must have regulation to control
anti-competitive behavior. The federal government, and its provincial
counterparts, appears to have abandoned both notions. In the packing
industry, like so many others, we will have neither competition nor
regulation. What we have instead is promises. The Competition Bureau
promises to watch the marketplace and if there is a "substantial
lessening of competition" it says it will take remedial action. It
will, presumably, try at some point in the future to put Humpty-Dumpty
back together again.
Meanwhile, farmers can go back to waiting. It's what they do best.
© Paul Beingessner beingessner@sasktel.net
Thursday, February 26, 2009
I'd Laugh If I Could Stop Crying
Column # 708 23/02/09
It is widely known that the Canadian public has a low opinion of
politicians. The best evidence of this comes not from surveys or
coffee shops but from the low turnout in Canadian elections. Of
course, politicians always try to spin this to suit their purposes.
The winning party claims it is because people are satisfied with them
and see no need to change. The losing party sees it as proof that
people are so fed up with the government they won't stoop to
participating in the process that elects it.
Rhetoric aside, people don't vote because they increasingly don't
think what governments do is relevant to their lives. They are wrong,
but it may be that what governments do today is not as important as
what they don't do. In the last couple decades, governments have
steadily and continuously eroded their own ability to intervene in the
economic and social fabric.
Let me give you a couple of examples. In the United States, a drug
manufacturer is asking to be allowed to use the drug cefquinome
against respiratory infections in beef cattle. Cefquinome is from the
family of cephalosporins, a relatively new family of antibiotics that
is used in humans as a last line of defense against certain
infections. Many medical groups in the U.S., including the American
Medical Association, have urged the U.S. Department of Agriculture not
to license the drug for animal use. The fear is that resistance to
this class of antibiotics could be hastened by using them in
livestock. The response of the USDA has been that the rules do not
allow it to turn down the drug company's request, no matter how
well-founded these fears might be.
The second example is also American. Last year, the Peanut Corporation
of America continued to sell peanuts after salmonella contamination
was found in its processing plant. It did not report this
contamination to health authorities. It seems the Food and Drug
Administration in the U.S. does not have the authority to compel such
plants to turn over their inspection data. One bureaucrat though it
would not be wise to enact such a law because then companies might
simply stop testing!
In Canada, governments have also been quick to limit their own powers.
The issue of competition is a glaring example. Competition is
essential to the working of a capitalist economy. Competition ensures
that no one is gouged and that companies continue to seek out ways to
be more efficient. You would thing that competition would be
absolutely sacred to a free enterprise government. Yet governments
claiming to be devoted to that ideology seem to care little if
effective competition in the marketplace exists.
For example, what farmer would deny that competition in the beef
packing industry is insufficient? With the consolidation of the
packing industry into only three hands in Canada, the farmers' share
of the beef dollar has shrunken dramatically. The National Farmers
Union pointed out the degree of this in a carefully researched study.
Presently, the Competition Bureau is examining a proposed sale that
would reduce the number of major beef processors in Canada to two. The
proposal would allow the sale of Tyson's beef slaughter plant in
Brooks, Alberta to XL Foods. XL already has a significant presence in
Canada in cattle feeding and slaughter, and owns all the major
livestock auction facilities in Saskatchewan. If the sale proceeds,
Cargill and XL would control the slaughter of 95 % of the fed cattle
in Canada. Few reputable economists believe you can have vigorous
competition when there are only two competing firms in the market.
It is likely, however, that the Competition Bureau will allow the sale
to go ahead, if its past track record is any indication of future
actions. It had no qualms about allowing Cargill to buy Better Beef in
Ontario. As a result, Ontario is now the lowest priced market for
cattle in Canada.
The National Farmers Union has insisted that the Bureau make public
its full analysis of the situation so that Canadians can see if the
Bureau's analysis stands up to scrutiny. This too is unlikely if past
behavior at the Bureau is any indication.
Lest you think the Competition Bureau is useless, however, rest easy.
If you are hiring a school bus in Newfoundland, the Bureau is right
there at your side. In a recent ruling, the Bureau found evidence of
price fixing among school bus drivers and companies in Newfoundland.
Other than that, since 2005 the Bureau has never failed to give its
blessing to all and any mergers and acquisitions that came before it.
It allowed appliance manufacturers, drug companies, steel makers,
newspapers, cell phone companies, all and sundry who came before it,
to buy out their competitors. In all cases, the Bureau's response was
the same: "Based on the information available, the Bureau determined
that the proposed transaction would not likely result in a substantial
lessening or prevention of competition in any of the relevant
markets."
There was one exception. In 2005, the Competition Bureau decided that
Johnson and Johnson could not buy out the consumer healthcare business
of Pfizer Inc. without some remedial measures. The reason? Diaper rash
ointment. Johnson and Johnson would have had too big a share of the
diaper rash ointment market. So, farmers need not despair. They will
never be subject to market dominance should there be an outbreak of
diaper rash among their cattle.
© Paul Beingessner beingessner@sasktel.net
It is widely known that the Canadian public has a low opinion of
politicians. The best evidence of this comes not from surveys or
coffee shops but from the low turnout in Canadian elections. Of
course, politicians always try to spin this to suit their purposes.
The winning party claims it is because people are satisfied with them
and see no need to change. The losing party sees it as proof that
people are so fed up with the government they won't stoop to
participating in the process that elects it.
Rhetoric aside, people don't vote because they increasingly don't
think what governments do is relevant to their lives. They are wrong,
but it may be that what governments do today is not as important as
what they don't do. In the last couple decades, governments have
steadily and continuously eroded their own ability to intervene in the
economic and social fabric.
Let me give you a couple of examples. In the United States, a drug
manufacturer is asking to be allowed to use the drug cefquinome
against respiratory infections in beef cattle. Cefquinome is from the
family of cephalosporins, a relatively new family of antibiotics that
is used in humans as a last line of defense against certain
infections. Many medical groups in the U.S., including the American
Medical Association, have urged the U.S. Department of Agriculture not
to license the drug for animal use. The fear is that resistance to
this class of antibiotics could be hastened by using them in
livestock. The response of the USDA has been that the rules do not
allow it to turn down the drug company's request, no matter how
well-founded these fears might be.
The second example is also American. Last year, the Peanut Corporation
of America continued to sell peanuts after salmonella contamination
was found in its processing plant. It did not report this
contamination to health authorities. It seems the Food and Drug
Administration in the U.S. does not have the authority to compel such
plants to turn over their inspection data. One bureaucrat though it
would not be wise to enact such a law because then companies might
simply stop testing!
In Canada, governments have also been quick to limit their own powers.
The issue of competition is a glaring example. Competition is
essential to the working of a capitalist economy. Competition ensures
that no one is gouged and that companies continue to seek out ways to
be more efficient. You would thing that competition would be
absolutely sacred to a free enterprise government. Yet governments
claiming to be devoted to that ideology seem to care little if
effective competition in the marketplace exists.
For example, what farmer would deny that competition in the beef
packing industry is insufficient? With the consolidation of the
packing industry into only three hands in Canada, the farmers' share
of the beef dollar has shrunken dramatically. The National Farmers
Union pointed out the degree of this in a carefully researched study.
Presently, the Competition Bureau is examining a proposed sale that
would reduce the number of major beef processors in Canada to two. The
proposal would allow the sale of Tyson's beef slaughter plant in
Brooks, Alberta to XL Foods. XL already has a significant presence in
Canada in cattle feeding and slaughter, and owns all the major
livestock auction facilities in Saskatchewan. If the sale proceeds,
Cargill and XL would control the slaughter of 95 % of the fed cattle
in Canada. Few reputable economists believe you can have vigorous
competition when there are only two competing firms in the market.
It is likely, however, that the Competition Bureau will allow the sale
to go ahead, if its past track record is any indication of future
actions. It had no qualms about allowing Cargill to buy Better Beef in
Ontario. As a result, Ontario is now the lowest priced market for
cattle in Canada.
The National Farmers Union has insisted that the Bureau make public
its full analysis of the situation so that Canadians can see if the
Bureau's analysis stands up to scrutiny. This too is unlikely if past
behavior at the Bureau is any indication.
Lest you think the Competition Bureau is useless, however, rest easy.
If you are hiring a school bus in Newfoundland, the Bureau is right
there at your side. In a recent ruling, the Bureau found evidence of
price fixing among school bus drivers and companies in Newfoundland.
Other than that, since 2005 the Bureau has never failed to give its
blessing to all and any mergers and acquisitions that came before it.
It allowed appliance manufacturers, drug companies, steel makers,
newspapers, cell phone companies, all and sundry who came before it,
to buy out their competitors. In all cases, the Bureau's response was
the same: "Based on the information available, the Bureau determined
that the proposed transaction would not likely result in a substantial
lessening or prevention of competition in any of the relevant
markets."
There was one exception. In 2005, the Competition Bureau decided that
Johnson and Johnson could not buy out the consumer healthcare business
of Pfizer Inc. without some remedial measures. The reason? Diaper rash
ointment. Johnson and Johnson would have had too big a share of the
diaper rash ointment market. So, farmers need not despair. They will
never be subject to market dominance should there be an outbreak of
diaper rash among their cattle.
© Paul Beingessner beingessner@sasktel.net
Tuesday, February 17, 2009
Government's Role in Fixing the Mess
Column # 707 16/02/09
You don't need to be really sophisticated to see that we've messed up
bad as a species. 2008 provided the ultimate proof, if it was needed.
The financial crisis engulfing the world didn't happen by accident. It
was caused by human stupidity, primarily the stupidity of elected
officials who fell for the line that the financial industry was quite
capable of regulating itself into good behavior. Self-regulation. Now
there's an oxymoron if ever there was one. It wasn't so much a case of
the fox guarding the henhouse, as one of expecting the fox to slap his
own paw when he came near the henhouse.
Of course, the financial sector isn't the only one that is
inadequately policed by the people who are supposed to be guarding the
public interest. Consider the case of food safety regulators. Corrupt
and stupid bankers can leave you penniless if left to their own
devices, but corrupt and stupid food processors can leave you dead.
And so it was for the folks who imbibed peanuts in the United States
last fall. Eight of them died, and 19,000 across 43 states became ill
after eating peanut butter and processed foods containing peanuts
contaminated with salmonella. Just as the financial collapse stemmed
from a variety of causes, the peanut debacle points to a host of
structural problems within the industrial food sector.
The most obvious is the lack of adequate regulations. In a twist that
could only have been conceived by a peanut-brained politician, food
safety rules in the U.S. require plants to test for contaminants like
salmonella, but do not require them to inform the Food and Drug
Administration (FDA) or the public if they find them.
In 2004, for example, food processing giant ConAgra found salmonella
in peanut butter from a plant in Georgia. ConAgra was exposed by a
whistleblower from within the plant, but when the FDA asked for the
inspection records, ConAgra refused. The FDA did nothing more, until
three years later when hundreds of people became sick from tainted
peanut butter made at the facility. It then demanded the records,
which ConAgra insisted not be made public.
The peanut scandal in late 2008 came from a plant in Blakely, Georgia
owned by the Peanut Corporation of America. Its abysmal safety record
and failure to disclose again highlights the lack of proper regulation
in the food industry, and the lack of resources to enforce the rules
that do exist.
But it isn't just health regulations that we've messed up royally. The
Peanut Corporation of America only processes one percent of the
peanuts used in the U.S., yet its criminal carelessness affected
people across the continent and around the world. The highly
integrated industrial system that supplies us with food is in itself
part of the problem. Many American companies obtained peanut paste
from Peanut Corp for use in foods of all sorts. The scale of such
plants means that food borne contaminants from a single facility can
reach thousands of miles and affect millions of people. It is the same
with meat processing plants, as people across the world have
discovered. When contaminated hamburger was found to originate from a
ConAgra slaughter facility in Greeley, Colorado in 2002, hundreds were
sickened and 19 million pounds of ground beef were recalled from
across the continent.
At least in the era when packing plants were local, a problem would be
confined to a limited area. Today's massive food processing facilities
can spread a problem around the world in a few weeks.
The financial mess and ongoing food safety issues are two areas that
indicate a sophisticated, highly technological society cannot afford
to push government to a peripheral role. Even the Grain Growers of
Canada finally appear to understand that. In a recent press release,
they called for the federal government to increase its investment in
plant research.
The GGC has never been one to promote government involvement in
anything. Its members are the first to complain about government
"interference" in the marketplace. To its credit in this case, the GGC
recognizes that private companies do varietal and crop research for
their own benefit, not specifically for the benefit of farmers. Thus,
private research is not much interested in diseases or insect pests
that are restricted to certain areas. Not do agronomic questions like
how to reduce input costs concern the agribusiness giants.
Now, if the GGC could see that we've also messed up the system that
transfers publicly generated knowledge into the public sphere. When
crop varieties are developed with public money, we then license them
to companies that restrict their use by prohibiting seed saving and
restrict farmers' marketing options by tying the variety to exclusive
contracts. Fixing this mess-up would ensure that public money really
does benefit farmers.
Fixing the mess we are in means we need to elect politicians who
understand the role governments have to play. We haven't done such a
good job on that either.
© Paul Beingessner beingessner@sasktel.net
You don't need to be really sophisticated to see that we've messed up
bad as a species. 2008 provided the ultimate proof, if it was needed.
The financial crisis engulfing the world didn't happen by accident. It
was caused by human stupidity, primarily the stupidity of elected
officials who fell for the line that the financial industry was quite
capable of regulating itself into good behavior. Self-regulation. Now
there's an oxymoron if ever there was one. It wasn't so much a case of
the fox guarding the henhouse, as one of expecting the fox to slap his
own paw when he came near the henhouse.
Of course, the financial sector isn't the only one that is
inadequately policed by the people who are supposed to be guarding the
public interest. Consider the case of food safety regulators. Corrupt
and stupid bankers can leave you penniless if left to their own
devices, but corrupt and stupid food processors can leave you dead.
And so it was for the folks who imbibed peanuts in the United States
last fall. Eight of them died, and 19,000 across 43 states became ill
after eating peanut butter and processed foods containing peanuts
contaminated with salmonella. Just as the financial collapse stemmed
from a variety of causes, the peanut debacle points to a host of
structural problems within the industrial food sector.
The most obvious is the lack of adequate regulations. In a twist that
could only have been conceived by a peanut-brained politician, food
safety rules in the U.S. require plants to test for contaminants like
salmonella, but do not require them to inform the Food and Drug
Administration (FDA) or the public if they find them.
In 2004, for example, food processing giant ConAgra found salmonella
in peanut butter from a plant in Georgia. ConAgra was exposed by a
whistleblower from within the plant, but when the FDA asked for the
inspection records, ConAgra refused. The FDA did nothing more, until
three years later when hundreds of people became sick from tainted
peanut butter made at the facility. It then demanded the records,
which ConAgra insisted not be made public.
The peanut scandal in late 2008 came from a plant in Blakely, Georgia
owned by the Peanut Corporation of America. Its abysmal safety record
and failure to disclose again highlights the lack of proper regulation
in the food industry, and the lack of resources to enforce the rules
that do exist.
But it isn't just health regulations that we've messed up royally. The
Peanut Corporation of America only processes one percent of the
peanuts used in the U.S., yet its criminal carelessness affected
people across the continent and around the world. The highly
integrated industrial system that supplies us with food is in itself
part of the problem. Many American companies obtained peanut paste
from Peanut Corp for use in foods of all sorts. The scale of such
plants means that food borne contaminants from a single facility can
reach thousands of miles and affect millions of people. It is the same
with meat processing plants, as people across the world have
discovered. When contaminated hamburger was found to originate from a
ConAgra slaughter facility in Greeley, Colorado in 2002, hundreds were
sickened and 19 million pounds of ground beef were recalled from
across the continent.
At least in the era when packing plants were local, a problem would be
confined to a limited area. Today's massive food processing facilities
can spread a problem around the world in a few weeks.
The financial mess and ongoing food safety issues are two areas that
indicate a sophisticated, highly technological society cannot afford
to push government to a peripheral role. Even the Grain Growers of
Canada finally appear to understand that. In a recent press release,
they called for the federal government to increase its investment in
plant research.
The GGC has never been one to promote government involvement in
anything. Its members are the first to complain about government
"interference" in the marketplace. To its credit in this case, the GGC
recognizes that private companies do varietal and crop research for
their own benefit, not specifically for the benefit of farmers. Thus,
private research is not much interested in diseases or insect pests
that are restricted to certain areas. Not do agronomic questions like
how to reduce input costs concern the agribusiness giants.
Now, if the GGC could see that we've also messed up the system that
transfers publicly generated knowledge into the public sphere. When
crop varieties are developed with public money, we then license them
to companies that restrict their use by prohibiting seed saving and
restrict farmers' marketing options by tying the variety to exclusive
contracts. Fixing this mess-up would ensure that public money really
does benefit farmers.
Fixing the mess we are in means we need to elect politicians who
understand the role governments have to play. We haven't done such a
good job on that either.
© Paul Beingessner beingessner@sasktel.net
Monday, February 09, 2009
Obama Promises Farm Subsidy Caps
Column # 706 09/02/09
American President Barrack Obama is creating a bit of a stir in
agriculture circles. For one thing, he has indicated he'll bring in a
ban on meat packers owning cattle. This has been a long time on the
wish list of American ranchers, who believe that when packers own
cattle, they are able to manipulate livestock prices to their
advantage. The mechanism is rather simple: when prices are high on the
open market, the packer will dip into his own supply of cattle for
slaughter. The lack of demand in the open market pushes prices down,
at which point the packer returns to the auction house. This
mechanism, along with secret contracts with some feedlots, leaves a
lot of uncertainty as to the true market price for livestock.
But Obama has other ideas to reform agriculture as well. He has stated
that he will impose a $250,000 payment cap on farm support payments to
any individual farm. His policy document puts it like this: "Implement
a $250,000 payment limitation so we help family farmers -- not large
corporate agribusiness. Close the loopholes that allow mega farms to
get around payment limits."
If you want to improve the survival of family farms, a payment cap
makes sense. Handing government money to large farms often simply
finances their next round of acquisitions. Large farms get larger by
buying out smaller ones. Furthermore, it is unlikely that the average
taxpayer wants his tax dollars to carry out the concentration of
agriculture in fewer and fewer hands.
Canadian governments have taken a different view on this. There were
once limits on government payments to individual farms. Back in the
days of NISA and CFIP, the limit was $425,000. I can guarantee that
none of the farmers around here saw that amount of money. Yet, the
provincial and federal minister of agriculture saw fit to raise this
to $975,000 and later to $3 million. I assume that government actions
represent an attempt to achieve some policy goals, but I am somewhat
puzzled as to what rational goal a $3 million cap on payments is
supposed to achieve.
Clearly, payments like this do not go to family farms. Nevertheless,
some farmers have achieved mighty benefits from government largesse. A
look into the Public Accounts of Canada for 2004-2005 reveals that
Pallister Farms of Portage la Prairie, Manitoba raked in $532,728 from
Agriculture Canada's Business Risk Management Programs. Pallister
Farms is owned by well-known free-market advocate and anti-CWB
activist Jim Pallister. Pallister's brother Brian is a three term
Conservative MP from Manitoba.
If Statistics Canada is to be believed, large farms in Canada generate
greater net incomes than small ones. Recent analyses have even pointed
out that there is little sign of a farm crisis on the largest Canadian
farms. In light of this, it seems irresponsible of governments to
spend taxpayers' monies on farms that should not need this.
While we are not exactly in an era of fiscal restraint right now, what
with government throwing money around like beads at Mardi Gras, we
will be at some point when governments recognize that the kitty isn't
limitless. Like all government spending, agriculture will eventually
come under scrutiny, to see if spending is achieving policy goals.
Farmers and taxpayers need to clearly understand what those goals are.
If the government simply wants to heave more money at those who have,
subsidy caps are hardly necessary. If it wants to maintain family
farms of a reasonable size, and ensure a future for family-based
agriculture, subsidy caps make a lot of sense.
In addition to being fiscally responsible, limits on subsidies will
ensure that taxpayers' monies don't simply add to the wealth of
already wealthy companies and individuals.
© Paul Beingessner beingessner@sasktel.net
American President Barrack Obama is creating a bit of a stir in
agriculture circles. For one thing, he has indicated he'll bring in a
ban on meat packers owning cattle. This has been a long time on the
wish list of American ranchers, who believe that when packers own
cattle, they are able to manipulate livestock prices to their
advantage. The mechanism is rather simple: when prices are high on the
open market, the packer will dip into his own supply of cattle for
slaughter. The lack of demand in the open market pushes prices down,
at which point the packer returns to the auction house. This
mechanism, along with secret contracts with some feedlots, leaves a
lot of uncertainty as to the true market price for livestock.
But Obama has other ideas to reform agriculture as well. He has stated
that he will impose a $250,000 payment cap on farm support payments to
any individual farm. His policy document puts it like this: "Implement
a $250,000 payment limitation so we help family farmers -- not large
corporate agribusiness. Close the loopholes that allow mega farms to
get around payment limits."
If you want to improve the survival of family farms, a payment cap
makes sense. Handing government money to large farms often simply
finances their next round of acquisitions. Large farms get larger by
buying out smaller ones. Furthermore, it is unlikely that the average
taxpayer wants his tax dollars to carry out the concentration of
agriculture in fewer and fewer hands.
Canadian governments have taken a different view on this. There were
once limits on government payments to individual farms. Back in the
days of NISA and CFIP, the limit was $425,000. I can guarantee that
none of the farmers around here saw that amount of money. Yet, the
provincial and federal minister of agriculture saw fit to raise this
to $975,000 and later to $3 million. I assume that government actions
represent an attempt to achieve some policy goals, but I am somewhat
puzzled as to what rational goal a $3 million cap on payments is
supposed to achieve.
Clearly, payments like this do not go to family farms. Nevertheless,
some farmers have achieved mighty benefits from government largesse. A
look into the Public Accounts of Canada for 2004-2005 reveals that
Pallister Farms of Portage la Prairie, Manitoba raked in $532,728 from
Agriculture Canada's Business Risk Management Programs. Pallister
Farms is owned by well-known free-market advocate and anti-CWB
activist Jim Pallister. Pallister's brother Brian is a three term
Conservative MP from Manitoba.
If Statistics Canada is to be believed, large farms in Canada generate
greater net incomes than small ones. Recent analyses have even pointed
out that there is little sign of a farm crisis on the largest Canadian
farms. In light of this, it seems irresponsible of governments to
spend taxpayers' monies on farms that should not need this.
While we are not exactly in an era of fiscal restraint right now, what
with government throwing money around like beads at Mardi Gras, we
will be at some point when governments recognize that the kitty isn't
limitless. Like all government spending, agriculture will eventually
come under scrutiny, to see if spending is achieving policy goals.
Farmers and taxpayers need to clearly understand what those goals are.
If the government simply wants to heave more money at those who have,
subsidy caps are hardly necessary. If it wants to maintain family
farms of a reasonable size, and ensure a future for family-based
agriculture, subsidy caps make a lot of sense.
In addition to being fiscally responsible, limits on subsidies will
ensure that taxpayers' monies don't simply add to the wealth of
already wealthy companies and individuals.
© Paul Beingessner beingessner@sasktel.net
Monday, February 02, 2009
Cattle Farmers Victims of Joke
Column # 705 02/02/09
Around the end of December, Saskatchewan Finance Minister Rod
Gantefoer told cattle producers they could expect a belated Christmas
present in the federal budget due in late January. Unfortunately, he
didn't tell them it would be a lump of coal. It was a cruel joke.
The budget has come and gone, its passage assured by the Liberals, but
farmers are still scratching their heads, trying to figure out what
exactly they got from it. Those farmers who raise cattle don't need to
scratch though. They know only too well what nothing looks like. It
looks like what they've been getting when they sell their calves. Now
it also looks like the value of Rod Gantefoer's imagination.
Along with a lot of other Saskatchewan farmers, I haven't been able to
figure out why the federal and provincial governments have been so
unwilling to deal with the crisis down on the ranch. I've written
several columns in the last couple months attempting to point out what
is obvious to everyone, except apparently the politicians, that cattle
folk are gasping their last.
Last week, I had a phone call from a farmer in central Saskatchewan
who took his concerns about his livestock operation to the office of
his MP. After he pled his case on behalf of cattle farmers, she told
him that if there was a real problem, there would be a lot more
farmers at her door. She also told him that the problem was he was not
big enough. He needed to get big or get out.
That farmer's call went some distance toward answering my question. No
doubt this MP was just repeating what she heard around the caucus
table. It explains graphically why the Conservative government in
Ottawa is ignoring the plight of cattle producers: it doesn't believe
there is a structural problem in the industry. The problem is simply
that some cattle producers are too small to be viable.
And if the Conservatives believe this federally, is it fair to assume
the Saskatchewan Party also believes it? Undeniably, they travel in
the same circles. It would explain the province's reluctance to help
its cattle producers and its inability to persuade the federal
government to do so. After all, according to Saskatchewan's
Agriculture Minister Bob Bjornerud, his government has immense clout
in Ottawa due to Saskatchewan's economic status. Bjornerud told a
cattle producer's group in Lloydminster that "I know there's a lot of
turmoil in . the livestock industry but if you could only realize how
much more power we have now when we go to the federal meetings."
The farmer who called me last week was angry. He was angry not only at
the governments he felt were allowing cattle farmers to bleed to
death. He was also angry at the associations that claim to represent
those same farmers, feeling they have done too little and been too
conciliatory to governments that simply ignore them.
He may be right on both counts. It is now too late for many cattle
people. There have been too many years of misery, and too few reasons
for optimism. Many have gotten out, and more are planning on reducing
herds to their minimum. The ones who are left don't need vague
promises from Gerry Ritz or his provincial counterparts. They need
money - money to buy feed, money to replace the losses from calves
they feel were stolen from them by the packers. In the longer term,
they need a competitive feedlot industry and a competitive packing
industry. Giving $50 million dollars to the existing packers, as the
federal budget promised, will not provide this.
The only optimistic news on the cattle front at this point comes from
an unlikely source. Newly-elected U.S. President Barrack Obama said
recently that his government was committed to eliminating packer
ownership of cattle. These so-called captive supplies have allowed
packing houses to manipulate cattle markets for decades. They have
been criticized ferociously by American ranchers, who have long
demanded what Obama is now promising.
If the Democrats take this step, and given the lobbying strength of
Cargill and Tyson that is a big if, it may open the door for the
Canadian government to at least contemplate such a move. Mind you, it
would be a big help if Canadian livestock organizations would follow
the lead of the National Farmers Union and actively call for the same
measures here. It might even restore the faith of my caller from
central Saskatchewan.
© Paul Beingessner beingessner@sasktel.net
Around the end of December, Saskatchewan Finance Minister Rod
Gantefoer told cattle producers they could expect a belated Christmas
present in the federal budget due in late January. Unfortunately, he
didn't tell them it would be a lump of coal. It was a cruel joke.
The budget has come and gone, its passage assured by the Liberals, but
farmers are still scratching their heads, trying to figure out what
exactly they got from it. Those farmers who raise cattle don't need to
scratch though. They know only too well what nothing looks like. It
looks like what they've been getting when they sell their calves. Now
it also looks like the value of Rod Gantefoer's imagination.
Along with a lot of other Saskatchewan farmers, I haven't been able to
figure out why the federal and provincial governments have been so
unwilling to deal with the crisis down on the ranch. I've written
several columns in the last couple months attempting to point out what
is obvious to everyone, except apparently the politicians, that cattle
folk are gasping their last.
Last week, I had a phone call from a farmer in central Saskatchewan
who took his concerns about his livestock operation to the office of
his MP. After he pled his case on behalf of cattle farmers, she told
him that if there was a real problem, there would be a lot more
farmers at her door. She also told him that the problem was he was not
big enough. He needed to get big or get out.
That farmer's call went some distance toward answering my question. No
doubt this MP was just repeating what she heard around the caucus
table. It explains graphically why the Conservative government in
Ottawa is ignoring the plight of cattle producers: it doesn't believe
there is a structural problem in the industry. The problem is simply
that some cattle producers are too small to be viable.
And if the Conservatives believe this federally, is it fair to assume
the Saskatchewan Party also believes it? Undeniably, they travel in
the same circles. It would explain the province's reluctance to help
its cattle producers and its inability to persuade the federal
government to do so. After all, according to Saskatchewan's
Agriculture Minister Bob Bjornerud, his government has immense clout
in Ottawa due to Saskatchewan's economic status. Bjornerud told a
cattle producer's group in Lloydminster that "I know there's a lot of
turmoil in . the livestock industry but if you could only realize how
much more power we have now when we go to the federal meetings."
The farmer who called me last week was angry. He was angry not only at
the governments he felt were allowing cattle farmers to bleed to
death. He was also angry at the associations that claim to represent
those same farmers, feeling they have done too little and been too
conciliatory to governments that simply ignore them.
He may be right on both counts. It is now too late for many cattle
people. There have been too many years of misery, and too few reasons
for optimism. Many have gotten out, and more are planning on reducing
herds to their minimum. The ones who are left don't need vague
promises from Gerry Ritz or his provincial counterparts. They need
money - money to buy feed, money to replace the losses from calves
they feel were stolen from them by the packers. In the longer term,
they need a competitive feedlot industry and a competitive packing
industry. Giving $50 million dollars to the existing packers, as the
federal budget promised, will not provide this.
The only optimistic news on the cattle front at this point comes from
an unlikely source. Newly-elected U.S. President Barrack Obama said
recently that his government was committed to eliminating packer
ownership of cattle. These so-called captive supplies have allowed
packing houses to manipulate cattle markets for decades. They have
been criticized ferociously by American ranchers, who have long
demanded what Obama is now promising.
If the Democrats take this step, and given the lobbying strength of
Cargill and Tyson that is a big if, it may open the door for the
Canadian government to at least contemplate such a move. Mind you, it
would be a big help if Canadian livestock organizations would follow
the lead of the National Farmers Union and actively call for the same
measures here. It might even restore the faith of my caller from
central Saskatchewan.
© Paul Beingessner beingessner@sasktel.net
Tuesday, January 27, 2009
What To Do With Sixty-Nine Million
Column # 704 26/01/09
When the railways collected sixty million dollars more than the
revenue cap allowed in 2007/08, they were gambling on their ability to
have their way with the Canadian Transportation Agency. The Agency had
been charged with determining how much money the railways were
spending on maintaining the fleet of government-owned hopper cars.
There was good reason to believe the amount was far less than the
railways had collected for this through their freight rates. If so,
the extra would be taken off the total of the revenue cap.
The dilemma for the railways was this: if they reduced freight rates
to stay under the revenue cap, and the Agency ruled against them,
there was no problem. But if they reduced rates and the Agency ruled
in their favor, they would be out the money they could have charged.
The railways must have known, despite their confidence in their
lawyers' abilities, that they would lose at the CTA. After all, they
really hadn't spent the money on the rail cars, and everyone knew it.
It would be no big deal to have to pay back the money they over
charged. After all, they would have the use of it for many months. But
the penalty, which at 15 percent came to $9 million, would be another
story. No railway wants to give up millions.
In the end, they appear to have rejected the prudent course and chose
instead to gamble on their own persuasiveness. They lost, and farmers
ended up the winners. Sort of, anyway. Of course, of the $69 million
the railways have to pay back, $60 million should never have been
charged. The $9 million penalty is the good news.
True to form, farmers have taken to arguing about what should be done
with the money. Federal legislation says it is to be paid to the
Western Grains Research Foundation, to be used for research. The WGRF
puts such monies into a trust fund and takes the earnings to fund crop
research.
The legislation hardly contemplated such a huge claw back from the
railways. In fact, those government bureaucrats who crafted the
revenue cap maintained the cap would scarcely be a factor since
intense competition between the railways would occur when the
individual regulated freight rates were converted to an overall cap.
Instead of this intense competition, the railways have maintained
freight rates as close to the maximum allowed as they possibly could.
Admittedly, this year's large overage was a result of a one-time
factor, and won't likely be repeated.
The large amount has made farmers and farm groups take notice. While
some are happy to see the boost given to crop research, others, like
the Western Canadian Wheat Growers, want the money returned to
farmers. There is some merit to the argument that farmers should never
have paid it, and should get it back. But the devil is in the details.
How do you determine how much each should get? Should a farmer in
Lethbridge, whose freight rate is half that of a farmer in Nipawin,
receive as much on a per tonne basis? How exactly do you determine
what freight was paid on open market crops, when the farmer doesn't
know the destination or final use?
One positive aspect of the debate is that it has reminded farmers how
necessary crop research is. Even the Grain Growers of Canada, a group
that usually trumpets the advantages of private enterprise controlling
all aspects of agriculture, has said we need more money poured into
Universities and government research stations. It also admitted that
seed companies don't do much of the agronomic research that farmers
need as badly as they need new varieties.
Maybe it's not such a bad thing if the money stays with the Western
Grains Research Foundation. But developing new crop varieties is only
part of the equation. Making those affordable for farmers is another.
And when seed canola hits over $300 a bushel, you have to think
something is wrong. That something is the way public money is used to
develop crop varieties that are then locked up with Plant Breeders
Rights and turned over to the private sector seed companies. These
companies in turn force producers into contracts that restrict seed
saving and impose conditions on marketing the crop. Many of the
advantages brought by a new variety are lost to farmers because of
this.
I would cast my vote in favor of money going to the WGRF on one
condition: that it take a few hundred thousand and invest in a study
that would determine the benefits to farmers if the WGRF adopted the
model employed by the Saskatchewan Pulse Growers. The SPG does not
allow Plant Breeders Rights to be taken on varieties developed with
farmers' money. It has worked well for them for decades.
© Paul Beingessner beingessner@sasktel.net
When the railways collected sixty million dollars more than the
revenue cap allowed in 2007/08, they were gambling on their ability to
have their way with the Canadian Transportation Agency. The Agency had
been charged with determining how much money the railways were
spending on maintaining the fleet of government-owned hopper cars.
There was good reason to believe the amount was far less than the
railways had collected for this through their freight rates. If so,
the extra would be taken off the total of the revenue cap.
The dilemma for the railways was this: if they reduced freight rates
to stay under the revenue cap, and the Agency ruled against them,
there was no problem. But if they reduced rates and the Agency ruled
in their favor, they would be out the money they could have charged.
The railways must have known, despite their confidence in their
lawyers' abilities, that they would lose at the CTA. After all, they
really hadn't spent the money on the rail cars, and everyone knew it.
It would be no big deal to have to pay back the money they over
charged. After all, they would have the use of it for many months. But
the penalty, which at 15 percent came to $9 million, would be another
story. No railway wants to give up millions.
In the end, they appear to have rejected the prudent course and chose
instead to gamble on their own persuasiveness. They lost, and farmers
ended up the winners. Sort of, anyway. Of course, of the $69 million
the railways have to pay back, $60 million should never have been
charged. The $9 million penalty is the good news.
True to form, farmers have taken to arguing about what should be done
with the money. Federal legislation says it is to be paid to the
Western Grains Research Foundation, to be used for research. The WGRF
puts such monies into a trust fund and takes the earnings to fund crop
research.
The legislation hardly contemplated such a huge claw back from the
railways. In fact, those government bureaucrats who crafted the
revenue cap maintained the cap would scarcely be a factor since
intense competition between the railways would occur when the
individual regulated freight rates were converted to an overall cap.
Instead of this intense competition, the railways have maintained
freight rates as close to the maximum allowed as they possibly could.
Admittedly, this year's large overage was a result of a one-time
factor, and won't likely be repeated.
The large amount has made farmers and farm groups take notice. While
some are happy to see the boost given to crop research, others, like
the Western Canadian Wheat Growers, want the money returned to
farmers. There is some merit to the argument that farmers should never
have paid it, and should get it back. But the devil is in the details.
How do you determine how much each should get? Should a farmer in
Lethbridge, whose freight rate is half that of a farmer in Nipawin,
receive as much on a per tonne basis? How exactly do you determine
what freight was paid on open market crops, when the farmer doesn't
know the destination or final use?
One positive aspect of the debate is that it has reminded farmers how
necessary crop research is. Even the Grain Growers of Canada, a group
that usually trumpets the advantages of private enterprise controlling
all aspects of agriculture, has said we need more money poured into
Universities and government research stations. It also admitted that
seed companies don't do much of the agronomic research that farmers
need as badly as they need new varieties.
Maybe it's not such a bad thing if the money stays with the Western
Grains Research Foundation. But developing new crop varieties is only
part of the equation. Making those affordable for farmers is another.
And when seed canola hits over $300 a bushel, you have to think
something is wrong. That something is the way public money is used to
develop crop varieties that are then locked up with Plant Breeders
Rights and turned over to the private sector seed companies. These
companies in turn force producers into contracts that restrict seed
saving and impose conditions on marketing the crop. Many of the
advantages brought by a new variety are lost to farmers because of
this.
I would cast my vote in favor of money going to the WGRF on one
condition: that it take a few hundred thousand and invest in a study
that would determine the benefits to farmers if the WGRF adopted the
model employed by the Saskatchewan Pulse Growers. The SPG does not
allow Plant Breeders Rights to be taken on varieties developed with
farmers' money. It has worked well for them for decades.
© Paul Beingessner beingessner@sasktel.net
Sunday, January 25, 2009
Banish the Idea of Unfettered Capitalism
Column # 703 18/01/09
A recent editorial in the Western Producer, western Canada's largest
weekly farm paper, encouraged readers to "banish romantic ideas of the
small farm". While it seems to be a critique of very small farms in
poor countries, it implies that North American romantic notions about
small farms also constitute some kind of danger. It then tries to link
that romanticism with the situation in Africa and the Ukraine, where,
according to the editorialist, small farm size is preventing
agriculture from progressing.
Perhaps the problem I had with the editorial came from its lack of of
clear definitions. What exactly constitutes a small farm? What type of
progress does it forestall?
In North America, one of the most romanticized types of farming is not
the small farm, but rather the cattle ranch. Witness the periodic cult
popularity of "cowboy" costumes on the streets of major North American
cities, and the continuing fascination with "western" movies and TV
shows such as Heartland and Wild Roses. But cattle ranching is surely
on the ropes, as any cattleperson can tell you. Should we stop
believing in the romantic notion of the Marlborough Man - minus the
cigarette?
The history of western Canadian agriculture, brief as it is, tells us
that today's large farm is tomorrow's small one. When my grandfather
came here in 1905, a half section was a good sized farm. In my
father's time, two sections made you exceptionally large. When I began
farming it was three. Now? A large farm in our area could be anywhere
from eight to sixteen sections. Do we celebrate the fact that national
and global economics has forced us to the point where we need to farm
half the country to be viable? If you don't want to romanticize small
farms, but you want to romanticize something (where would we be
without some myths?) you will need to be able to hit a moving target.
Or should we try instead to romanticize the notion of serfdom, since
that is increasingly where agriculture is headed. If you doubt that,
ask the contract growers of turkeys, chickens and hogs in the U.S.
I could agree with the thesis of the editorial, that there should be
no romance in a small farm, if I thought a romantic notion was somehow
guiding government policy. That would be a mistake. But we are far
from that. What has guided government policy for at least three
decades has been the hallucination of Sammy Watson and his successor
clones - that there are too many farmers, always too many farmers.
This is indeed a policy, but it is hardly a vision. We haven't had a
vision for agriculture at the national or provincial level for at
least three decades.
Of course, the editorial was really a lead into a story about the
state of agriculture in the Ukraine. Here, farms too small to be
viable in an industrialized economy are the legacy of the end of the
Soviet Union.
But in much of the third world, small farms are not only appropriate,
but far better than the alternative - which is to become the poorest
of the poor in the cities, and to go from some measure of food
security to food insecurity. Nor are small farms intrinsically
unprofitable. In the early 1990's small cotton farmers in some of
Africa's most impoverished countries earned a substantial living. A
farmer in Mali, one of the ten poorest countries on earth, earned
about $1000 a year growing cotton. This was three times the national
average income. The foreign currency earned from cotton exports
provided Mali with money for health care, education and development.
When the U.S. government ramped up cotton subsidies to American
farmers in the years that followed, and to companies processing and
exporting cotton, the result was overproduction in the U.S. and a
crash in cotton prices. Small farmers in Mali did indeed end up in
poverty - not because their farms were too small but because ours were
too big and too powerful- at least where it came to obtaining
government handouts.
I wouldn't worry about the romanticizing of small farms. If you want a
romantic idea to banish, how about the romantic idea that companies
can self-regulate. Or the belief that the unrestricted, unencumbered
marketplace will bring prosperity to all. Or the idea that people who
run big companies (into the ground) are such geniuses they deserve to
become billionaires. What those romantic notions and the policies they
drove brought us was Enron, WorldCom, AIG, the Ponzi schemes of Bernie
Madoff and ultimately near economic collapse.
Worry too about the romantic notion that we will cure this recession
with more of the same - the "hair of the dog that bit you" school of
economic theory.
But leave the small farm alone. Is it so bad to be romantic for a time
when the country was full of people, when small towns were the
cultural, social and business hubs of the prairies? The present state
of rural Canada is surely not one to celebrate unreservedly. At least
not for this romantic.
© Paul Beingessner beingessner@sasktel.net
A recent editorial in the Western Producer, western Canada's largest
weekly farm paper, encouraged readers to "banish romantic ideas of the
small farm". While it seems to be a critique of very small farms in
poor countries, it implies that North American romantic notions about
small farms also constitute some kind of danger. It then tries to link
that romanticism with the situation in Africa and the Ukraine, where,
according to the editorialist, small farm size is preventing
agriculture from progressing.
Perhaps the problem I had with the editorial came from its lack of of
clear definitions. What exactly constitutes a small farm? What type of
progress does it forestall?
In North America, one of the most romanticized types of farming is not
the small farm, but rather the cattle ranch. Witness the periodic cult
popularity of "cowboy" costumes on the streets of major North American
cities, and the continuing fascination with "western" movies and TV
shows such as Heartland and Wild Roses. But cattle ranching is surely
on the ropes, as any cattleperson can tell you. Should we stop
believing in the romantic notion of the Marlborough Man - minus the
cigarette?
The history of western Canadian agriculture, brief as it is, tells us
that today's large farm is tomorrow's small one. When my grandfather
came here in 1905, a half section was a good sized farm. In my
father's time, two sections made you exceptionally large. When I began
farming it was three. Now? A large farm in our area could be anywhere
from eight to sixteen sections. Do we celebrate the fact that national
and global economics has forced us to the point where we need to farm
half the country to be viable? If you don't want to romanticize small
farms, but you want to romanticize something (where would we be
without some myths?) you will need to be able to hit a moving target.
Or should we try instead to romanticize the notion of serfdom, since
that is increasingly where agriculture is headed. If you doubt that,
ask the contract growers of turkeys, chickens and hogs in the U.S.
I could agree with the thesis of the editorial, that there should be
no romance in a small farm, if I thought a romantic notion was somehow
guiding government policy. That would be a mistake. But we are far
from that. What has guided government policy for at least three
decades has been the hallucination of Sammy Watson and his successor
clones - that there are too many farmers, always too many farmers.
This is indeed a policy, but it is hardly a vision. We haven't had a
vision for agriculture at the national or provincial level for at
least three decades.
Of course, the editorial was really a lead into a story about the
state of agriculture in the Ukraine. Here, farms too small to be
viable in an industrialized economy are the legacy of the end of the
Soviet Union.
But in much of the third world, small farms are not only appropriate,
but far better than the alternative - which is to become the poorest
of the poor in the cities, and to go from some measure of food
security to food insecurity. Nor are small farms intrinsically
unprofitable. In the early 1990's small cotton farmers in some of
Africa's most impoverished countries earned a substantial living. A
farmer in Mali, one of the ten poorest countries on earth, earned
about $1000 a year growing cotton. This was three times the national
average income. The foreign currency earned from cotton exports
provided Mali with money for health care, education and development.
When the U.S. government ramped up cotton subsidies to American
farmers in the years that followed, and to companies processing and
exporting cotton, the result was overproduction in the U.S. and a
crash in cotton prices. Small farmers in Mali did indeed end up in
poverty - not because their farms were too small but because ours were
too big and too powerful- at least where it came to obtaining
government handouts.
I wouldn't worry about the romanticizing of small farms. If you want a
romantic idea to banish, how about the romantic idea that companies
can self-regulate. Or the belief that the unrestricted, unencumbered
marketplace will bring prosperity to all. Or the idea that people who
run big companies (into the ground) are such geniuses they deserve to
become billionaires. What those romantic notions and the policies they
drove brought us was Enron, WorldCom, AIG, the Ponzi schemes of Bernie
Madoff and ultimately near economic collapse.
Worry too about the romantic notion that we will cure this recession
with more of the same - the "hair of the dog that bit you" school of
economic theory.
But leave the small farm alone. Is it so bad to be romantic for a time
when the country was full of people, when small towns were the
cultural, social and business hubs of the prairies? The present state
of rural Canada is surely not one to celebrate unreservedly. At least
not for this romantic.
© Paul Beingessner beingessner@sasktel.net
Wednesday, January 14, 2009
Seed Industry Wants Taxpayers to Fund Certified Seed
Column # 702 12/01/09
In December, 2008 the Canadian Seed Trade Association made a proposal
to federal Finance Minister Jim Flaherty that would give farmers a
greater incentive to use certified seed. Currently, the use of
certified seed in Canada varies widely from one crop to another.
For those not familiar with the CSTA, it is composed largely of
companies that sell certified seed, as well as some that do plant
breeding, like Monsanto and Pioneer Hi-Bred. It also includes seed
grower organizations like Secan and a small number of farmer groups
like the Saskatchewan Pulse Growers. Associate members to CSTA are
diverse. Among others, they include Manyan, a producer of jute bags,
and Agro Protection International Inc., which is described on the CSTA
website as "high-level investigative and evidence-gathering services".
Agro Protection International Inc. does not have a website but I
suspect that those farmers who've run afoul of Monsanto's seed patents
will be acquainted with the work of this company.
The CSTA proposal asked that farmers who use certified seed be given a
special deduction from income tax. Specifically, purchases of
certified seed would qualify the farmer for an expense item equal to
1.55 times the actual cost of the seed. According to the CSTA, that
would make the cost of using purchased certified seed about equal to
the cost of using one's own saved seed. The CSTA estimates that
increasing certified seed use from the current 30 percent to 50
percent would cause the government to forego about $90 million in tax
revenue.
In describing the benefits it believes would flow from such a move,
the CSTA says that increasing the use of certified seed would, among
other things, increase the amount of private research into plant
breeding. It claims that private sector research is highest in crops
where the most certified seed is used. It notes that canola, where 92
percent of seed is certified, receives 74 percent of private sector
investment. The CSTA also quantified the amount of money invested in
private sector research by its members at $56 million in 2007. It says
the private sector plans to "almost double" this amount over the next
five years.
There is no doubt the CSTA quest to increase the amount of certified
seed farmers use is self-serving. Members of CSTA, mostly companies
that sell seed, stand to benefit greatly if farmers can be cajoled,
compelled or incented to buy more seed and use less of their own crops
for seed. The CSTA has had several proposals in the past aimed at
achieving the same end. These have included the suggestion that
farmers who use certified seed should qualify for reductions in crop
insurance premiums and the idea that the need for Kernel Visual
Distinguishability (KVD) could be eliminated if farmers used certified
seed exclusively.
The CSTA maintains that there would be great benefits to the Canadian
economy if their tax incentive scheme were implemented. It says
farmers would benefit because new varieties would give higher yields,
greater disease and insect resistance and better response to inputs.
Processors would benefit from having better quality crops to process.
Consumers could have a healthier diet, and society as a whole would
benefit from a reduction of tillage and reduced use of pesticides and
fertilizers.
Some of these claims are difficult to quantify, and CSTA offers scant
evidence for the notion that new plant varieties are giving us
healthier consumers. (While you can't necessarily blame it on plant
varieties, today's consumers are obese, and largely less healthy than
a generation ago.) Also, claims that new varieties reduce overall
pesticide and fertilizer use have yet to be proven.
The CSTA proposal is part of an overall strategy to reduce farmers'
ability to save their own seed. CSTA has developed this strategy,
quite simply, because farmer use of certified seed only occurs where
choices are limited and where farmers perceive real benefits. For
example, farmers use mainly certified seed of canola because they
believe there are benefits to using herbicide tolerant varieties. If
they could get these without a contract binding them to buy certified
seed, they would save their own. With some crops, corn for example,
certified seed use is high because the varieties are largely hybrids
that do not breed true from seed.
With most cereal crops, like wheat, oats and barley, farmers save
their own seed because they don't believe the use of certified seed
provides enough benefits to offset the costs. If this is wrong, the
CSTA might be better off to show farmers the data that prove the
benefits. It is noteworthy that a tax incentive only helps farmers if
they are profitable. In a year where they lose money, the added cost
of certified seed would be just that - an added cost. The seed
industry might counter that there is a production benefit to using
certified seed. If so, show us the research and convince farmers. Then
they will buy your seed.
The CSTA is correct in saying we need more money going to plant
breeding. But its proposal would take $90 million a year from tax
revenues and return it to seed growers and seed sellers. This is twice
the entire amount spent by CSTA members for plant breeding. If the
government is going to "spend" that money, wouldn't farmers be better
off if the government invested $90 million directly in public plant
research, rather than see some small portion of it trickle through the
pockets of seed companies to their research sides? This would be a far
more efficient use of taxpayers' money.
© Paul Beingessner beingessner@sasktel.net
In December, 2008 the Canadian Seed Trade Association made a proposal
to federal Finance Minister Jim Flaherty that would give farmers a
greater incentive to use certified seed. Currently, the use of
certified seed in Canada varies widely from one crop to another.
For those not familiar with the CSTA, it is composed largely of
companies that sell certified seed, as well as some that do plant
breeding, like Monsanto and Pioneer Hi-Bred. It also includes seed
grower organizations like Secan and a small number of farmer groups
like the Saskatchewan Pulse Growers. Associate members to CSTA are
diverse. Among others, they include Manyan, a producer of jute bags,
and Agro Protection International Inc., which is described on the CSTA
website as "high-level investigative and evidence-gathering services".
Agro Protection International Inc. does not have a website but I
suspect that those farmers who've run afoul of Monsanto's seed patents
will be acquainted with the work of this company.
The CSTA proposal asked that farmers who use certified seed be given a
special deduction from income tax. Specifically, purchases of
certified seed would qualify the farmer for an expense item equal to
1.55 times the actual cost of the seed. According to the CSTA, that
would make the cost of using purchased certified seed about equal to
the cost of using one's own saved seed. The CSTA estimates that
increasing certified seed use from the current 30 percent to 50
percent would cause the government to forego about $90 million in tax
revenue.
In describing the benefits it believes would flow from such a move,
the CSTA says that increasing the use of certified seed would, among
other things, increase the amount of private research into plant
breeding. It claims that private sector research is highest in crops
where the most certified seed is used. It notes that canola, where 92
percent of seed is certified, receives 74 percent of private sector
investment. The CSTA also quantified the amount of money invested in
private sector research by its members at $56 million in 2007. It says
the private sector plans to "almost double" this amount over the next
five years.
There is no doubt the CSTA quest to increase the amount of certified
seed farmers use is self-serving. Members of CSTA, mostly companies
that sell seed, stand to benefit greatly if farmers can be cajoled,
compelled or incented to buy more seed and use less of their own crops
for seed. The CSTA has had several proposals in the past aimed at
achieving the same end. These have included the suggestion that
farmers who use certified seed should qualify for reductions in crop
insurance premiums and the idea that the need for Kernel Visual
Distinguishability (KVD) could be eliminated if farmers used certified
seed exclusively.
The CSTA maintains that there would be great benefits to the Canadian
economy if their tax incentive scheme were implemented. It says
farmers would benefit because new varieties would give higher yields,
greater disease and insect resistance and better response to inputs.
Processors would benefit from having better quality crops to process.
Consumers could have a healthier diet, and society as a whole would
benefit from a reduction of tillage and reduced use of pesticides and
fertilizers.
Some of these claims are difficult to quantify, and CSTA offers scant
evidence for the notion that new plant varieties are giving us
healthier consumers. (While you can't necessarily blame it on plant
varieties, today's consumers are obese, and largely less healthy than
a generation ago.) Also, claims that new varieties reduce overall
pesticide and fertilizer use have yet to be proven.
The CSTA proposal is part of an overall strategy to reduce farmers'
ability to save their own seed. CSTA has developed this strategy,
quite simply, because farmer use of certified seed only occurs where
choices are limited and where farmers perceive real benefits. For
example, farmers use mainly certified seed of canola because they
believe there are benefits to using herbicide tolerant varieties. If
they could get these without a contract binding them to buy certified
seed, they would save their own. With some crops, corn for example,
certified seed use is high because the varieties are largely hybrids
that do not breed true from seed.
With most cereal crops, like wheat, oats and barley, farmers save
their own seed because they don't believe the use of certified seed
provides enough benefits to offset the costs. If this is wrong, the
CSTA might be better off to show farmers the data that prove the
benefits. It is noteworthy that a tax incentive only helps farmers if
they are profitable. In a year where they lose money, the added cost
of certified seed would be just that - an added cost. The seed
industry might counter that there is a production benefit to using
certified seed. If so, show us the research and convince farmers. Then
they will buy your seed.
The CSTA is correct in saying we need more money going to plant
breeding. But its proposal would take $90 million a year from tax
revenues and return it to seed growers and seed sellers. This is twice
the entire amount spent by CSTA members for plant breeding. If the
government is going to "spend" that money, wouldn't farmers be better
off if the government invested $90 million directly in public plant
research, rather than see some small portion of it trickle through the
pockets of seed companies to their research sides? This would be a far
more efficient use of taxpayers' money.
© Paul Beingessner beingessner@sasktel.net
Tuesday, January 06, 2009
Governments Need to Decide on Livestock Support
Column # 701 05/01/09
God help the beleaguered cattle producers of Canada! As prices
plummeted like the proverbial stone in 2007 we were told it was
because of the high cost of feed grains and the soaring Canadian
dollar that briefly took on the American greenback and pummeled it.
Now the situation is nearly the opposite. Feed grains have tumbled and
the Loonie has resumed it humbled position beneath the feet of the
American eagle. But bad as cattle prices were then, they are worse
now. So, what's up with that?
One major difference is the American's implementation of Country of
Origin Labeling. COOL has scared most American packers off processing
Canadian beef, and this is now considered an important driver in the
downhill slide. It should also be noted, though, that cattle prices
have been more or less continuously falling since 1989, as an
excellent report by the National Farmers Union recently pointed out.
The inevitable outcome is a drop in Canadian cattle numbers as farmers
cull older cows and reduce replacement heifer numbers. Last July,
Statistics Canada released data that demonstrated this. Where the
losses are taking place is interesting. Overall, Canada's beef cow
herd shrank 4.7 percent from July 2007 to July 2008, but the pain was
unequally spread. Manitoba lost 1.8 percent, Saskatchewan dropped 4
percent, Alberta tumbled 5.8 percent and B.C's relatively small herd
fell by nearly 12 percent. Eastern Canada did not fare quite so badly.
Ontario's beef cow numbers declined 3.3 percent and Quebec lost less
than 1 percent.
The smaller declines in Ontario and Quebec may be a result of the much
larger domestic market in those provinces. Western Canada needs to
export much more of its beef production due to larger numbers of
cattle and a smaller population.
While the cattle industry wallows in misery, the federal government
has offered it a teaser. Finance Minister Jim Flaherty made a cryptic
reference to the problems in the livestock industry during a meeting
with provincial finance ministers. It was enough to inspire
Saskatchewan's finance minister Rod Gantefoer to offer his own teaser
- farmers should look to the upcoming January 27 federal budget for a
late Christmas present. Alberta's government didn't wait for the feds
to move. Alberta brought out a substantial assistance package for
livestock producers months ago.
Governments should indeed act. Livestock producers are losing equity
daily while they maintain their herds. Governments, both federal and
provincial need to decide what they want for a livestock industry. If
cattle producers are left to their own devices, the industry will
indeed shrink far more yet. If this is the decision of governments,
that the industry must shrink to meet the new reality, they should
immediately make that clear to producers so they can exit before they
consume their equity in a futile waiting game. Let them get on with
it, break up their pastures and hayfields and produce the annual crops
that are more profitable (I'm trying to keep a straight face as I
write that last sentence, given recent grain prices). Better yet,
provide a program to let producers exit the industry with dignity and
the cash to transition to something else.
But if governments support the industry, what is the endgame? Would it
be done with the belief that markets will one day turn around and the
industry will be there to take advantage of them? This is a pathetic
strategy at best.
One strategy, advocated by the NFU as one part of its overall plan to
revitalize the livestock sector, is to decrease the cattle herd to one
that matches domestic consumption. To many, that would be a hard pill
to swallow. Charlie Gracey, longtime observer of the cattle industry
in Canada, called this idea unthinkable. It would certainly mean a
reduction in the number of feedlots in Canada, and a shift out of feed
grain production in some areas. For ranchers, the decision to downsize
is often very hard, as the idea of being more profitable with fewer
cows seems counterintuitive.
A smaller industry makes sense though. Since current returns on calves
barely cover variable costs, a positive return on fewer calves would
have to look better. Fewer acres of pasture and hayland would be
needed for a smaller cowherd, but farmers could use these surplus
lands to background their calves, rather than selling them at weaning.
This would bring an even greater return per calf and provide less
disruption to cropping and land use patterns.
Much more would be needed to make this situation feasible, and the NFU
report contains many ideas. One thing is sure. If our governments,
provincial and federal, have a better idea, they should say so soon.
Canada's hard working cattle people deserve to know where they stand.
© Paul Beingessner beingessner@sasktel.net
God help the beleaguered cattle producers of Canada! As prices
plummeted like the proverbial stone in 2007 we were told it was
because of the high cost of feed grains and the soaring Canadian
dollar that briefly took on the American greenback and pummeled it.
Now the situation is nearly the opposite. Feed grains have tumbled and
the Loonie has resumed it humbled position beneath the feet of the
American eagle. But bad as cattle prices were then, they are worse
now. So, what's up with that?
One major difference is the American's implementation of Country of
Origin Labeling. COOL has scared most American packers off processing
Canadian beef, and this is now considered an important driver in the
downhill slide. It should also be noted, though, that cattle prices
have been more or less continuously falling since 1989, as an
excellent report by the National Farmers Union recently pointed out.
The inevitable outcome is a drop in Canadian cattle numbers as farmers
cull older cows and reduce replacement heifer numbers. Last July,
Statistics Canada released data that demonstrated this. Where the
losses are taking place is interesting. Overall, Canada's beef cow
herd shrank 4.7 percent from July 2007 to July 2008, but the pain was
unequally spread. Manitoba lost 1.8 percent, Saskatchewan dropped 4
percent, Alberta tumbled 5.8 percent and B.C's relatively small herd
fell by nearly 12 percent. Eastern Canada did not fare quite so badly.
Ontario's beef cow numbers declined 3.3 percent and Quebec lost less
than 1 percent.
The smaller declines in Ontario and Quebec may be a result of the much
larger domestic market in those provinces. Western Canada needs to
export much more of its beef production due to larger numbers of
cattle and a smaller population.
While the cattle industry wallows in misery, the federal government
has offered it a teaser. Finance Minister Jim Flaherty made a cryptic
reference to the problems in the livestock industry during a meeting
with provincial finance ministers. It was enough to inspire
Saskatchewan's finance minister Rod Gantefoer to offer his own teaser
- farmers should look to the upcoming January 27 federal budget for a
late Christmas present. Alberta's government didn't wait for the feds
to move. Alberta brought out a substantial assistance package for
livestock producers months ago.
Governments should indeed act. Livestock producers are losing equity
daily while they maintain their herds. Governments, both federal and
provincial need to decide what they want for a livestock industry. If
cattle producers are left to their own devices, the industry will
indeed shrink far more yet. If this is the decision of governments,
that the industry must shrink to meet the new reality, they should
immediately make that clear to producers so they can exit before they
consume their equity in a futile waiting game. Let them get on with
it, break up their pastures and hayfields and produce the annual crops
that are more profitable (I'm trying to keep a straight face as I
write that last sentence, given recent grain prices). Better yet,
provide a program to let producers exit the industry with dignity and
the cash to transition to something else.
But if governments support the industry, what is the endgame? Would it
be done with the belief that markets will one day turn around and the
industry will be there to take advantage of them? This is a pathetic
strategy at best.
One strategy, advocated by the NFU as one part of its overall plan to
revitalize the livestock sector, is to decrease the cattle herd to one
that matches domestic consumption. To many, that would be a hard pill
to swallow. Charlie Gracey, longtime observer of the cattle industry
in Canada, called this idea unthinkable. It would certainly mean a
reduction in the number of feedlots in Canada, and a shift out of feed
grain production in some areas. For ranchers, the decision to downsize
is often very hard, as the idea of being more profitable with fewer
cows seems counterintuitive.
A smaller industry makes sense though. Since current returns on calves
barely cover variable costs, a positive return on fewer calves would
have to look better. Fewer acres of pasture and hayland would be
needed for a smaller cowherd, but farmers could use these surplus
lands to background their calves, rather than selling them at weaning.
This would bring an even greater return per calf and provide less
disruption to cropping and land use patterns.
Much more would be needed to make this situation feasible, and the NFU
report contains many ideas. One thing is sure. If our governments,
provincial and federal, have a better idea, they should say so soon.
Canada's hard working cattle people deserve to know where they stand.
© Paul Beingessner beingessner@sasktel.net
Gifts of Another Kind
Column # 700 22/12/08
I don't usually write a Christmas column. Well, I usually write one
around Christmas time but I don't recall ever having written one with
a Christmas theme. It turns out, though, that this week's column is
significant for two reasons. It coincides with Christmas, and it is my
seven hundredth column, so I've decided to break with my tradition and
do a Christmas theme. After seven hundred weekly columns, I figure I
should be able to do whatever I darn well please - at least this once.
I haven't neglected Christmas due to some enmity toward the season.
Quite the contrary. I like Christmas a great deal. In my small farming
community, we still celebrate a very traditional Christmas, with a
community Christmas party, complete with a play presented by the young
folks in the area. We still go to church on Christmas eve or Christmas
day, and we have a whopping huge dinner with turkey, potatoes and
gravy, and not a speck of tofu in sight.
We also do presents, though the season of consumption gets awfully
wearying. The older I get, the less I want to receive more stuff.
Christmas being a time of giving, we try to send off a batch of
cheques to charities that we support. The relative success of the year
on the farm determines the size and number of those cheques.
Presents that involve laying out cash aren't the only type, however.
There are presents I would love to give, but money simply can't buy
them. It doesn't prevent me wishing, though, and if I could, the
following is a list of gifts I would give to some significant folk in
Canada.
To Prime Minister Steven Harper, my gift would give a better
perception of democracy. The PM seems to have inverted the usually
definition. He believes that the only valid government is one that is
elected by a third of the people. Hence a coalition elected by two
thirds of the population is invalid in his mind. This odd view of
democracy explains his position on the Canadian Wheat Board. Since
eight of ten farmer-elected directors support the single desk, Steven
believes it is illegitimate. The other 20 percent of directors
represent, in Steve's mind, the majority of farmers. Remember the song
about cowboy logic? This is Harper logic at its best.
To Michael Ignatieff, the new leader of the Liberal party, I would
give mass amnesia across western Canada. Ignatieff says he wants to
regain the trust of western Canadians. The quickest way to gain the
trust of the agriculture community would be for that community to be
stricken with a massive and overwhelming epidemic of amnesia that
would cause it to forget the Liberal years with Lyle Vanclief as
Agriculture Minister. Since the Liberals forgot about western farmers
during their long reign, it seems only mass amnesia will allow us to
forget their legacy.
To Jack Layton, federal NDP leader, I would give the ghost of Tommy
Douglas to be his speech writer. Maybe then Jack could overcome his
reputation as Canada's most boring political leader.
To Saskatchewan Premier Brad Wall, I would give a cow. Actually, a
whole herd of cows. Brad, you see, has never heard of cows himself. At
least that is the conclusion I've come to, considering that he is
oblivious to the pain in the farm community caused by cattle prices
that seem to have no up-side. Brad can have my cows, provided he puts
that large brain of his to use figuring out a way to make them
profitable.
For CN and CP, Canada's national railway monopolies, I would give a
winter with no snow in the mountains, no cold on the prairies and no
excuses. (Don't hold your breath waiting for any of those.)
And for Western farmers, a return to the good old days of, say, early
2008. Remember? It was that brief period when prices were high and
hopes were higher?
And finally, for the readers who have long endured my columns, I give
my thanks, for all your support, your criticism, your comments and
your friendship. You have given me the encouragement to continue, at
least for another seven hundred. Christmas blessings to you all.
© Paul Beingessner beingessner@sasktel.net
I don't usually write a Christmas column. Well, I usually write one
around Christmas time but I don't recall ever having written one with
a Christmas theme. It turns out, though, that this week's column is
significant for two reasons. It coincides with Christmas, and it is my
seven hundredth column, so I've decided to break with my tradition and
do a Christmas theme. After seven hundred weekly columns, I figure I
should be able to do whatever I darn well please - at least this once.
I haven't neglected Christmas due to some enmity toward the season.
Quite the contrary. I like Christmas a great deal. In my small farming
community, we still celebrate a very traditional Christmas, with a
community Christmas party, complete with a play presented by the young
folks in the area. We still go to church on Christmas eve or Christmas
day, and we have a whopping huge dinner with turkey, potatoes and
gravy, and not a speck of tofu in sight.
We also do presents, though the season of consumption gets awfully
wearying. The older I get, the less I want to receive more stuff.
Christmas being a time of giving, we try to send off a batch of
cheques to charities that we support. The relative success of the year
on the farm determines the size and number of those cheques.
Presents that involve laying out cash aren't the only type, however.
There are presents I would love to give, but money simply can't buy
them. It doesn't prevent me wishing, though, and if I could, the
following is a list of gifts I would give to some significant folk in
Canada.
To Prime Minister Steven Harper, my gift would give a better
perception of democracy. The PM seems to have inverted the usually
definition. He believes that the only valid government is one that is
elected by a third of the people. Hence a coalition elected by two
thirds of the population is invalid in his mind. This odd view of
democracy explains his position on the Canadian Wheat Board. Since
eight of ten farmer-elected directors support the single desk, Steven
believes it is illegitimate. The other 20 percent of directors
represent, in Steve's mind, the majority of farmers. Remember the song
about cowboy logic? This is Harper logic at its best.
To Michael Ignatieff, the new leader of the Liberal party, I would
give mass amnesia across western Canada. Ignatieff says he wants to
regain the trust of western Canadians. The quickest way to gain the
trust of the agriculture community would be for that community to be
stricken with a massive and overwhelming epidemic of amnesia that
would cause it to forget the Liberal years with Lyle Vanclief as
Agriculture Minister. Since the Liberals forgot about western farmers
during their long reign, it seems only mass amnesia will allow us to
forget their legacy.
To Jack Layton, federal NDP leader, I would give the ghost of Tommy
Douglas to be his speech writer. Maybe then Jack could overcome his
reputation as Canada's most boring political leader.
To Saskatchewan Premier Brad Wall, I would give a cow. Actually, a
whole herd of cows. Brad, you see, has never heard of cows himself. At
least that is the conclusion I've come to, considering that he is
oblivious to the pain in the farm community caused by cattle prices
that seem to have no up-side. Brad can have my cows, provided he puts
that large brain of his to use figuring out a way to make them
profitable.
For CN and CP, Canada's national railway monopolies, I would give a
winter with no snow in the mountains, no cold on the prairies and no
excuses. (Don't hold your breath waiting for any of those.)
And for Western farmers, a return to the good old days of, say, early
2008. Remember? It was that brief period when prices were high and
hopes were higher?
And finally, for the readers who have long endured my columns, I give
my thanks, for all your support, your criticism, your comments and
your friendship. You have given me the encouragement to continue, at
least for another seven hundred. Christmas blessings to you all.
© Paul Beingessner beingessner@sasktel.net
Government Bailouts Bypass Livestock Producers
Column # 699 15/12/08
Cattle and hog producers watching the growing list of industries
slated for infusions of cash by the Canadian government must be
wondering what they have to do to convince politicians of the worth of
their industry. In addition to promising aid to the Canadian auto and
aerospace industries, Canada's free enterprise government is now
talking about assistance for the forestry and mining industries.
Livestock industries? Well, no. With the exception of Alberta throwing
a whack of money at its cattle farmers, other provinces and the
federal government appear ready to turn a blind eye to an industry
sinking into the ground.
It's interesting to compare the situation of livestock producers to
that of auto workers. The auto industry in Canada exists largely
because of a trade agreement with the United States, known as the Auto
Pact. It shifted some auto manufacturing from the U.S., where most of
Canada's cars were made, to Canada, mainly Ontario. The Pact required
that for every car sold in Canada, one had to be built here.
The cattle and hog industries in Canada, with their present levels of
production, exist largely because of the North American Free Trade
Agreement. Prior to this, Canada's beef industry was mostly sized to
fit domestic needs and the hog industry was similarly small. When
Canadian livestock were allowed into the U.S. tariff-free, our
production began to grow. That was further accelerated by poor grain
prices in the 1980s and 90s. Marginal lands were converted back to
grass and feed grains were cheap.
Both industries are in huge trouble today, and the government is
bailing one of them out. Guess which one?
So why do provincial and federal governments in Canada see the auto
industry as worth saving and the livestock industry as so much waste
to flush down the toilet? The answer may lie in location and politics.
The auto industry in eastern Canada means seats for any government
that wants to rule or keep ruling. Ontario voters will go Liberal,
Conservative or even NDP at the drop of a hat (or a dollar). Western
voters, particularly rural ones, vote Conservative no matter what. The
federal government seems totally uninterested in agriculture, with the
exception of dumping the Canadian Wheat Board. Equally, in
Saskatchewan, the governing party seems assured of rural votes. In
return, it is ignoring Saskatchewan's large livestock sector.
Here's the awful irony. When the Liberals ruled Canada from an eastern
base, they ignored western agriculture. Commentators would often say
we should not expect good treatment from a party we refuse to vote
for. Now the party we vote for is in power, and we still get nothing
because they expect we will always vote for them.
The same dichotomy seems to be playing out in Saskatchewan. The NDP
was largely estranged from rural Saskatchewan during its long reign.
Now the Saskatchewan Party, solidly entrenched in rural Saskatchewan,
categorically says it has no help for the livestock industry. (And the
Saskatchewan Stock Growers Association president Jack Hextall says,
darn it.oh well.okay.)
The exception to this perverse rule is Alberta. The reigning
Conservatives have doled out big bucks to the livestock sector to keep
it afloat.
To compound the situation, it is unlikely that pouring money into this
industry would do much good in the long run anyway. A recent study by
the National Farmers Union shows that livestock returns, which were
relatively constant for many decades, took a tumble with the advent of
NAFTA and the consolidation of the packing industry. The example of
calf prices illustrates this. Prices for 500 to 600 pound calves today
are just over half their 1942 to 1989 average.
So, following the advice of governments and the economic dictates of
the time, farmers increased livestock production and packers
consolidated. When the system fails, as it has today, governments are
quite prepared to dump the farmer. But then, that has been the way of
thinking in government for a long time. Farmers are the problem, the
solution is to get rid of more of them and leave only the efficient.
It's so much easier than challenging the conventional wisdom about
business and trade.
© Paul Beingessner beingessner@sasktel.net
Cattle and hog producers watching the growing list of industries
slated for infusions of cash by the Canadian government must be
wondering what they have to do to convince politicians of the worth of
their industry. In addition to promising aid to the Canadian auto and
aerospace industries, Canada's free enterprise government is now
talking about assistance for the forestry and mining industries.
Livestock industries? Well, no. With the exception of Alberta throwing
a whack of money at its cattle farmers, other provinces and the
federal government appear ready to turn a blind eye to an industry
sinking into the ground.
It's interesting to compare the situation of livestock producers to
that of auto workers. The auto industry in Canada exists largely
because of a trade agreement with the United States, known as the Auto
Pact. It shifted some auto manufacturing from the U.S., where most of
Canada's cars were made, to Canada, mainly Ontario. The Pact required
that for every car sold in Canada, one had to be built here.
The cattle and hog industries in Canada, with their present levels of
production, exist largely because of the North American Free Trade
Agreement. Prior to this, Canada's beef industry was mostly sized to
fit domestic needs and the hog industry was similarly small. When
Canadian livestock were allowed into the U.S. tariff-free, our
production began to grow. That was further accelerated by poor grain
prices in the 1980s and 90s. Marginal lands were converted back to
grass and feed grains were cheap.
Both industries are in huge trouble today, and the government is
bailing one of them out. Guess which one?
So why do provincial and federal governments in Canada see the auto
industry as worth saving and the livestock industry as so much waste
to flush down the toilet? The answer may lie in location and politics.
The auto industry in eastern Canada means seats for any government
that wants to rule or keep ruling. Ontario voters will go Liberal,
Conservative or even NDP at the drop of a hat (or a dollar). Western
voters, particularly rural ones, vote Conservative no matter what. The
federal government seems totally uninterested in agriculture, with the
exception of dumping the Canadian Wheat Board. Equally, in
Saskatchewan, the governing party seems assured of rural votes. In
return, it is ignoring Saskatchewan's large livestock sector.
Here's the awful irony. When the Liberals ruled Canada from an eastern
base, they ignored western agriculture. Commentators would often say
we should not expect good treatment from a party we refuse to vote
for. Now the party we vote for is in power, and we still get nothing
because they expect we will always vote for them.
The same dichotomy seems to be playing out in Saskatchewan. The NDP
was largely estranged from rural Saskatchewan during its long reign.
Now the Saskatchewan Party, solidly entrenched in rural Saskatchewan,
categorically says it has no help for the livestock industry. (And the
Saskatchewan Stock Growers Association president Jack Hextall says,
darn it.oh well.okay.)
The exception to this perverse rule is Alberta. The reigning
Conservatives have doled out big bucks to the livestock sector to keep
it afloat.
To compound the situation, it is unlikely that pouring money into this
industry would do much good in the long run anyway. A recent study by
the National Farmers Union shows that livestock returns, which were
relatively constant for many decades, took a tumble with the advent of
NAFTA and the consolidation of the packing industry. The example of
calf prices illustrates this. Prices for 500 to 600 pound calves today
are just over half their 1942 to 1989 average.
So, following the advice of governments and the economic dictates of
the time, farmers increased livestock production and packers
consolidated. When the system fails, as it has today, governments are
quite prepared to dump the farmer. But then, that has been the way of
thinking in government for a long time. Farmers are the problem, the
solution is to get rid of more of them and leave only the efficient.
It's so much easier than challenging the conventional wisdom about
business and trade.
© Paul Beingessner beingessner@sasktel.net
Farmers Show Strong CWB Support in Director Elections
Column #698 08/12/08
One of the most contentious CWB director elections to date ended on
Sunday, with a result sure to have the federal government gnashing its
teeth. Supporters of the CWB's single desk won four out of five of the
districts holding elections. The exception was District Two, in
Alberta. Three of the five elected directors are new to the board, as
incumbents in these three districts were not eligible to run again.
In the four districts that elected CWB supporters, the margins of
victory were large, with 60 percent of voters, on average, voting for
single desk supporters. The largest margin fell to Bill Woods, in
District Four. This was formerly held by Ken Ritter, who could not run
again. Significantly, the two Conservative MPs whose ridings cover
most of District Four are Agriculture Minister Gerry Ritz and David
Anderson, the MP with responsibilities for the CWB. Both Anderson and
Ritz have been vocal and aggressive opponents of the CWB, claiming
that their own electoral victories showed that farmers want to see the
single desk eliminated.
Woods took the district on the first ballot, with 63.4 percent of the
vote. Wood's main opponent, Sam Magnus, held several positions with
the federal Reform and Conservative parties, including a stint on the
national council of the Conservative Party. Magnus' status within the
party didn't help him much as he garnered only 28.5 percent of total
votes. If Ritz and Anderson have a vestige of honesty, these MPs will
drop the pretense that their schemes to neuter the board are supported
by a majority of farmers.
Several other points stand out from the election. The Conservative
government continued its overt interference in the election, including
pruning the voters list further and sending letters to a select group
of farmers, telling them how they might obtain ballots.
The culmination of government interference came when five prairie MPs
used their parliamentary expense accounts to send personal letters to
farmers on the voters list, telling them to vote for anti-single desk
candidates. One of these MPs was David Anderson. As Wood's substantial
victory demonstrated, this strategy failed miserably. Hopefully, when
Parliament resumes in January, in whatever form it might take,
Anderson will be required to account for this misuse of Parliamentary
money, and to explain how he acquired the voters list. That list is
supposed to be confidential to the candidates.
Another of the four MPs, Andrew Scheer of Regina-Qu'Appelle, used his
expense account to send a personal attack on re-elected CWB director
Rod Flaman. Flaman was Scheer's Liberal opponent in the federal
election. Scheer claimed that Flaman "shamelessly shirked his
responsibilities to the farmers who elected him and spent the last
year campaigning for federal office while collecting his CWB pay
cheque".
Apparently farmers trusted Flaman more than they trusted Scheer, whose
closest connection to agriculture is being an insurance salesman in
Regina. Flaman won the district with 60.3 percent of the vote on the
third ballot.
Currently, the CWB board consists of fifteen directors, with ten
elected by farmers and five appointed by the federal government. Eight
of the ten farmer-elected directors support the single desk, but the
directors appointed by the Conservative government in Ottawa line up
directly with the government in its opinion of the CWB. The very
strong showing by pro-CWB candidates calls into question the
legitimacy of the directors appointed by the government. Clearly they
do not represent the wishes of farmers who want the CWB to continue
its current mandate. As such, their role at the board table should be
minimized to any specific areas of expertise they might have.
Obstruction is not considered an area of expertise.
On a positive note for those candidates who were defeated, the
Saskatchewan government seems to have a home for anti-single desk
defeated candidates in Enterprise Saskatchewan. The Agriculture Sector
Team has a couple on its board, including the chair, Gerrid Gust.
While the province has aligned itself with the federal government's
anti-board stand, maybe it's time for the Saskatchewan Party to
reconsider its support of a position farmers' clearly do not support.
On a final note, the rate of return of ballots reached 54 percent, a
very good return for a mail-in ballot. The Conservatives have yet to
find a way to manipulate the voters list that will give them the
result they want.
© Paul Beingessner beingessner@sasktel.net
One of the most contentious CWB director elections to date ended on
Sunday, with a result sure to have the federal government gnashing its
teeth. Supporters of the CWB's single desk won four out of five of the
districts holding elections. The exception was District Two, in
Alberta. Three of the five elected directors are new to the board, as
incumbents in these three districts were not eligible to run again.
In the four districts that elected CWB supporters, the margins of
victory were large, with 60 percent of voters, on average, voting for
single desk supporters. The largest margin fell to Bill Woods, in
District Four. This was formerly held by Ken Ritter, who could not run
again. Significantly, the two Conservative MPs whose ridings cover
most of District Four are Agriculture Minister Gerry Ritz and David
Anderson, the MP with responsibilities for the CWB. Both Anderson and
Ritz have been vocal and aggressive opponents of the CWB, claiming
that their own electoral victories showed that farmers want to see the
single desk eliminated.
Woods took the district on the first ballot, with 63.4 percent of the
vote. Wood's main opponent, Sam Magnus, held several positions with
the federal Reform and Conservative parties, including a stint on the
national council of the Conservative Party. Magnus' status within the
party didn't help him much as he garnered only 28.5 percent of total
votes. If Ritz and Anderson have a vestige of honesty, these MPs will
drop the pretense that their schemes to neuter the board are supported
by a majority of farmers.
Several other points stand out from the election. The Conservative
government continued its overt interference in the election, including
pruning the voters list further and sending letters to a select group
of farmers, telling them how they might obtain ballots.
The culmination of government interference came when five prairie MPs
used their parliamentary expense accounts to send personal letters to
farmers on the voters list, telling them to vote for anti-single desk
candidates. One of these MPs was David Anderson. As Wood's substantial
victory demonstrated, this strategy failed miserably. Hopefully, when
Parliament resumes in January, in whatever form it might take,
Anderson will be required to account for this misuse of Parliamentary
money, and to explain how he acquired the voters list. That list is
supposed to be confidential to the candidates.
Another of the four MPs, Andrew Scheer of Regina-Qu'Appelle, used his
expense account to send a personal attack on re-elected CWB director
Rod Flaman. Flaman was Scheer's Liberal opponent in the federal
election. Scheer claimed that Flaman "shamelessly shirked his
responsibilities to the farmers who elected him and spent the last
year campaigning for federal office while collecting his CWB pay
cheque".
Apparently farmers trusted Flaman more than they trusted Scheer, whose
closest connection to agriculture is being an insurance salesman in
Regina. Flaman won the district with 60.3 percent of the vote on the
third ballot.
Currently, the CWB board consists of fifteen directors, with ten
elected by farmers and five appointed by the federal government. Eight
of the ten farmer-elected directors support the single desk, but the
directors appointed by the Conservative government in Ottawa line up
directly with the government in its opinion of the CWB. The very
strong showing by pro-CWB candidates calls into question the
legitimacy of the directors appointed by the government. Clearly they
do not represent the wishes of farmers who want the CWB to continue
its current mandate. As such, their role at the board table should be
minimized to any specific areas of expertise they might have.
Obstruction is not considered an area of expertise.
On a positive note for those candidates who were defeated, the
Saskatchewan government seems to have a home for anti-single desk
defeated candidates in Enterprise Saskatchewan. The Agriculture Sector
Team has a couple on its board, including the chair, Gerrid Gust.
While the province has aligned itself with the federal government's
anti-board stand, maybe it's time for the Saskatchewan Party to
reconsider its support of a position farmers' clearly do not support.
On a final note, the rate of return of ballots reached 54 percent, a
very good return for a mail-in ballot. The Conservatives have yet to
find a way to manipulate the voters list that will give them the
result they want.
© Paul Beingessner beingessner@sasktel.net
Friday, November 28, 2008
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
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
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
Saturday, November 15, 2008
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
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
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
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
Tuesday, November 04, 2008
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
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
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