Mr Dion’s Wheat Board Woes

Less than three weeks after winning the Liberal Party leadership Stéphane Dion hopped a plane to Winnipeg to pledge his support for the Canadian Wheat Board. It was the prime ministerial pretender’s first bid to cut a swath between himself and Stephen Harper, whose government has pledged to dismantle the state-sponsored grain marketer, on things non-environmental.

Unfortunately, Dion’s debut in the less familiar terrain of economic policy also marked his first big mistake.

To be sure, it was a politically savvy move for the native Quebecker whose support for the Kyoto Protocol and turgid English will make winning the West an uphill battle. Already, the Harper government is softening its Wheat Board stance in the wake of a wave of indignation rolling across the country like a prairie squall through a wheat field. But while Mr Dion commiserated with the beleaguered Board’s ex-president, given the proverbial boot by Agriculture Minister Chuck Strahl just the day before, I wonder whether he had time to take in the sites of one of Canada’s more easily forgettable provincial backwaters.

Visiting Winnipeg these days, it’s hard to imagine its turn of the 20th century moniker as the "Chicago of the North." The modest Prairie town is more distinguished by what it’s lacking than any claim to fame. For one thing, despite the endless farmers’ fields that seem to sprout from the city ’s periphery, Winnipeg has not spawned a single multinational grain-handling company or internationally relevant grain trader along the lines of Europe’s Louis Dreyfus or South America’s Bunge. There are no world-class Canadian grain processors and despite a reputation for high quality cereal, no homegrown pasta companies or malting operations of global girth.

Surprisingly, Winnipeg still has a commodity exchange. Though, reduced as it is, to a humble fourth floor enclosure in one of the city’s handful of squat mid-rises, Mr Dion probably missed it. I don’t blame him - the exchange can barely muster interest from the city’s few scattered grain traders and stockbrokers. In 2001 it gave up selling its once coveted bourse seats, which in the 1930s, before the creation of the Wheat Board, sold for $30,000 a pop. By contrast, a seat on the Chicago Board Options Exchange, the only commodity market larger than Winnipeg’s a century ago, auctioned for a record $US1.5-million last year.

So what does Winnipeg have, exactly? Well, while Minneapolis, Minnesota has Cargill, the global grain marketer and processor, which boasts 149,000 employees in 63 countries and St. Louis, Missouri is home to seed giant, Monsanto, Winnipeg’s got the Wheat Board and its 460 civil servants. The agency is also the world’s largest wheat seller thanks to its legislated power forcing farmers to hand over their crops whether they want to or not.

I just wonder whether Mr Dion, while walking the city’s wide avenues, made to feel all the more empty by the lack of discernible development, questioned how the Board contributes to a dynamic Canadian grain, and by extension, agri-food industry.

The Board’s big selling point is that it garners a higher price for farmers ’ wheat and barley then they would otherwise earn peddling their commodity crops individually (a point anti-Board farmers strenuously deny). Of course, it’s constantly ensnared in trade disputes over its marketing monopoly with the United States, resulting in the periodic blocked sale of Canadian grain south of the border. But it’s worth it - Canada may not have much in the way of a value-added, globally competitive domestic grain industry, but farmers earn $20 more per tonne of durum wheat.

In its defence, the state agency argues that if it weren’t for its collective muscle, poor Canadian farmers would be at the mercy of cutthroat American conglomerates like Archer Daniels Midland and Cargill and the Canadian Prairies would be more overrun with foreign multinationals than it already is. Unless farmers band together, it claims, the country’s very sovereignty is at stake. By hitching its wagon to the national cause and fear mongering, it has earned the steadfast support of many farmers - as witnessed by a plebiscite in January 2007 in which a majority of Manitoba farmers defended the grain marketer. The sad irony, of course, is that if anyone has jeopardized Canadian sovereignty and handcuffed farmers, it is the Canadian Wheat Board.

A case in point: the Prairie Pasta Producers, a group of 200 farmers from the three Prairie provinces has battled the Board for nearly a decade for the right to establish a pasta-milling company using their own wheat. They were hoping to follow in the footsteps of their brethren across the border in North Dakota, who back in the 1990s established a farmers’ cooperative that is today the third largest pasta producer in the US. The Board blocked the venture so they proposed selling their wheat to the North Dakotans in return for becoming partners in the multi-million dollar business. By the time the Board sold them back their own wheat at the higher collective price, however, it was too expensive to resell to the Americans and the venture died on the vine.

In its zeal to squeeze a few extra pennies from each bushel of wheat, the Board has ensured that Canadian aspirations begin – and end – with the production of a commodity, while leaving the field of value-added possibilities open for others to exploit. Even worse, farmers buy into the bluster and, suspended in an almost childlike state, are now convinced they don’t have the wherewithal or smarts to market and sell their own crops.

"They underestimate us," says one farmer of the Board. "And in turn, we underestimate ourselves." Here’s to hoping that Mr Dion isn’t willing to trade in farmers’ futures for the sake of making a little political hay.