August 1: Freedom for Western Canadian Wheat Farmers
By David Henderson
On August 1 this year, the Canadian government’s monopsony over western Canadian wheat will end. For 68 years, farmers in western Canada have been able to sell their wheat legally only to one entity: the Canadian Wheat Board. But starting August 1, they will be able to sell their wheat to anyone they wish.
One Manitoba farmer, who farms near where I grew up, is Rolf Penner of Morris, Manitoba. Rolf is a particularly articulate spokesman for farmers’ freedom. Here’s an interview he did with host Charles Adler last year. Some highlights:
2:45: “The main thing is I have not been able to sell my wheat and barley to who[m] I want, when I want, for how much I want.”
2:50: “Freedom is so very precious when you don’t have it.”
5:09: His evidence that the monopsony has held the price of wheat to farmers down.
5:20: The first contracts were signed in December 2011 once it became clear that the monopsony would end. “Arbitrage is working.”
Rolf sent me an op/ed he has written for a local publication and gave me permission to quote from it. Here are three key paragraphs:
In an open market, it was claimed, all our cereal grains would head south, flooding the U.S. and thus crash the market. But when we look at the prices offered by our local elevators today and compare them to what’s available in the States, we see that they are just as good here, and in some cases a bit better, than they are down south.
Rather than seeing the grain pulled south, the price has come to us. It’s called arbitrage. We were also told, “Okay, it may work everywhere else in the world and with every other commodity in Canada, but it could never possibly work with wheat and barley.” Well it can and – surprise, surprise – it does.
In the past, under the monopoly system, it was not uncommon to see Prairie producers offered prices heavily discounted from those seen in the northern States (under the former Board’s “Fixed Price Contract,” for example). This column has documented those differences numerous times in the past, as have the Western Canadian Wheat Growers Association, risk-management specialist John De Pape, Informa and various economists such as Al Loyns, just to name a few. Not only is it nice to see those discounts disappear, it’s great to see that they disappeared so quickly.
I’ll be near his place next month and he has offered to take me out on a combine for a couple of hours, something I never did when I was kid in the Carman, Manitoba farm community. One big difference: the combines usually have air conditioning now, something they didn’t typically have in the mid-1960s.