"Re-organizing" a Canadian institution.

October 17, 2011 9:03 AM

The government of Canada has decided to end the Canadian Wheat Board's single desk system for the sale and export of wheat and barley. This has been on the Conservative agenda for some time now, despite some claims that farmers support the Wheat Board. Many are suggesting that the repercussions could stretch beyond wheat farmers; including concern for the town of Churchill, known mostly for the local bear population, which does 95% of their port business through the Wheat Board.
A history and primer of the Wheat Board.

Previously

It's co-op week on metafiler?
posted by Stagger Lee (96 comments total)

Woops, typo. Sorry folks, I'll fire my editor. :)
posted by Stagger Lee at 9:04 AM on October 17, 2011

So if you ever watch freight trains go by in the US, you'll notice that practically every one has at least 10 or 15 grain cars that say "Government of Canada" on the side and have a logo of a stalk of wheat. I guess we won't see those anymore.
posted by miyabo at 9:11 AM on October 17, 2011

This is to allow agribusiness to absorb independent wheat farmers. It's a terrible idea.
posted by Pseudoephedrine at 9:13 AM on October 17, 2011 [27 favorites]

Let see, so far in the last few months Harper has basically cancelled the Postal Workers right to strike, Air Canada staffs right to strike, abolished the Wheat Board that is by and large wanted by the actual wheat farmers, and extended the Afghan mission.

What I'm trying to say here, is, well... FUCK YOU HARPER!
posted by WinnipegDragon at 9:15 AM on October 17, 2011 [19 favorites]

Don't forget the ridiculous "commemoration" of the War of 1812. It's comforting (and irritating at the same time) to remember less than 35% of votes went the Conservative party in the last election.
posted by KokuRyu at 9:22 AM on October 17, 2011 [2 favorites]

I'm looking to return around 2014, please tell me this bozo will be gone by then?
posted by Meatbomb at 9:29 AM on October 17, 2011

Stephen Harper: Making Obama look good since 2009.
posted by Brandon Blatcher at 9:33 AM on October 17, 2011 [3 favorites]

Oh fuck.
posted by mobunited at 9:36 AM on October 17, 2011

known mostly for the local bear population, which does 95% of their port business through the Wheat Board

We have very smart bears in Canada. Smarter than Yogi, even.
posted by orange swan at 9:37 AM on October 17, 2011 [25 favorites]

It's co-op week month
posted by ioesf at 9:37 AM on October 17, 2011

Sounds like this is a system for implicit farm subsidies? I'm American (and no fan of Harper) but political consensus is growing in the US for scaling back our (explicit) subsidies, and I don't see much of a downside.

Can someone explain to a Yank why this is a bad thing?
posted by downing street memo at 10:00 AM on October 17, 2011 [1 favorite]

Because we currently have independent farmers that can market worldwide using the Wheat Boards single desk. With this change, farmers have to market and sell their product by themselves, or contract out to an agribusiness. Guess which option most farmers will be forced to choose?
posted by WinnipegDragon at 10:05 AM on October 17, 2011 [9 favorites]

No fan of Harper, but I support the decision to get rid of the Wheat Board (and other similar entities that regulate the dairy industries in Ontario and Quebec).

All such boards do are provide subsidies to a small group of individuals at the expense of the average consumer who must pay effectively a 30 or 40% premium on the price of bread, milk, cheese, etc, as compared to those in the US. This is not an inconsiderable amount, and remains only because a small group of farmers has outsize voting power due to the organization of ridings.

If you can't farm a product a competitive price, then that farm must eventually cease operation. It's no different than any other industry.
posted by modernnomad at 10:07 AM on October 17, 2011 [5 favorites]

Sounds like this is a system for implicit farm subsidies? I'm American (and no fan of Harper) but political consensus is growing in the US for scaling back our (explicit) subsidies, and I don't see much of a downside.

The wiki take:

American complaints

Although the Board was reformed to meet free market conditions under the North American Free Trade Agreement and the World Trade Organization Treaty, American producers continually complain. Despite numerous challenges and much posturing by the United States, the World Trade Organization ruled in 2003 that the Wheat Board was a producer marketing body and not a system for government subsidy although the decision has since been overturned. In fact, Canadian producers have almost no government subsidy while their American and European Union counterparts are heavily subsidized. The attacks on the Wheat Board are one of the major irritants in bilateral relations between Canada and the United States.
posted by Durn Bronzefist at 10:09 AM on October 17, 2011 [8 favorites]

Because we currently have independent farmers that can market worldwide using the Wheat Boards single desk. With this change, farmers have to market and sell their product by themselves, or contract out to an agribusiness. Guess which option most farmers will be forced to choose?

Fair, but which option actually leads to lower food prices? Shouldn't that be the government's main interest? And is the presence of the subsidy making it inefficient for farmers to diversify and grow other crops? (these are questions we are grappling with here too)
posted by downing street memo at 10:09 AM on October 17, 2011

According to CBC reports back in 2004,

"...farmers in Europe received subsidies of about $6 a bushel, U.S. farmers got $2.50 a bushel, Canadian farmers received subsidies of only 40 cents a bushel."
posted by Durn Bronzefist at 10:11 AM on October 17, 2011 [5 favorites]

My limited understanding of the CWB is that it gives the growers/suppliers a lot more clout when it comes to prices because they control the Canadian supply. The growers sacrifice higher potential profits for better (on average) stable returns. In theory, someone could go and make more money by hustling on their own, but in that environment the pooled returns turn into a pyramid. The lucky ones make more, most everyone makes less.

Unfortunately, humanity is plagued by a surfeit of individuals who think they're the lucky one.
posted by Decimask at 10:12 AM on October 17, 2011 [4 favorites]

This backgrounder, while obviously not neutral, is quite comprehensive, linking to past NAFTA and WTO decisions.
posted by Durn Bronzefist at 10:19 AM on October 17, 2011

I don't think the American's were complaining about the Wheat Board directly subsidizing Canadian farmers, I think they were more pissed off about Canadian farmers having a relatively nice government desk to go to instead of the cold, greedy, money-grubbing agribusiness desk to kneel before.

Looks kind of like the same old "Why them?" instead of "Why not me too?"

Also, goddamn it Harper, we're not even a year in. Be lazy you rotten bastard, you've got about four more years to make everyone's lives shit.
posted by Slackermagee at 10:20 AM on October 17, 2011 [6 favorites]

If you can't farm a product a competitive price, then that farm must eventually cease operation. It's no different than any other industry.

In my opinion, there is a societal benefit to having a system that allowed independent farms to stay in business and not get bought up by megacorporations. I liked having a government that understood that.

Fair, but which option actually leads to lower food prices? Shouldn't that be the government's main interest?

No.
posted by auto-correct at 10:20 AM on October 17, 2011 [8 favorites]

If you can't farm a product a competitive price, then that farm must eventually cease operation. It's no different than any other industry.

My brother in law and sister run a farm. If they didn't have schemes like quota to protect them, they'd go under quite quickly from fluctuations in the market, or just outright being competed out of existence by huge factory farms. Farmers have a lot of money tied up in farm equipment, machinery, buildings and animals. Very little of it is liquid, and all of it is necessary to the enterprise. There is very little wiggle room for weathering a drastic change in costs or in revenues. Being "lean and mean" in this kind of operation means switching to growing something else, in my experience.

This plan will put a lot of farmers out of business, and force many more to grow something other than wheat to survive.
posted by LN at 10:23 AM on October 17, 2011 [9 favorites]

My limited understanding of the CWB is that it gives the growers/suppliers a lot more clout when it comes to prices because they control the Canadian supply.

Isn't the word for this "cartel"?

"...farmers in Europe received subsidies of about $6 a bushel, U.S. farmers got $2.50 a bushel, Canadian farmers received subsidies of only 40 cents a bushel."

From the looks of that article, looks like that's a measurement of direct subsidies. What's the value of the implicit subsidy? How much is it worth, in other words, to have a monopsony buyer and a price floor?

Fair, but which option actually leads to lower food prices? Shouldn't that be the government's main interest?

No.

We can agree to disagree, then. I'll just note that there are a lot more eaters than farmers, even in Canada.
posted by downing street memo at 10:24 AM on October 17, 2011 [1 favorite]

Well, I don't think anyone thinks that "lowest possible price" should be the overriding priority for the government, right? Otherwise there would be no environmental protections, worker safety rules, minimum wages, etc. There are social responsibilities beyond giving consumers the lowest possible price at the grocery store.
posted by auto-correct at 10:30 AM on October 17, 2011 [16 favorites]

I should add as well, big agri-food companies coming in and sweeping the field of all competitors may not necessarily lead to cheaper prices at the grocery store for consumers. It will lead to greater profits for the agri-food companies.
posted by LN at 10:32 AM on October 17, 2011 [5 favorites]

"If you can't farm a product a competitive price, then that farm must eventually cease operation. It's no different than any other industry."

Assuming the comment was meant to distinguish US wheat agribusiness from Canadian (if not, my apologies), I could say something about how many fingers on a pointing hand are pointed back at the person pointing, but let's leave it at Pot. Kettle. Black.
posted by Mike D at 10:34 AM on October 17, 2011

The wheatboard dissoultion will be catastrophic for family farms and for the economy of the west--as catastrophic in its own way as Trudea's oil plan, but the advantage of the oil plan was that it re-federated the country and made some sense--this one, like the WTO and NAFTA takes candian products outside of Canadian pervue and sells it for super cheap world wide.

The thing is, Saskatchewan will be pissed, but Alberta has been fucking over its farmers for so long, they won't notice how Harper et. al has moved away from its contexts.
posted by PinkMoose at 10:34 AM on October 17, 2011

From the looks of that article, looks like that's a measurement of direct subsidies. What's the value of the implicit subsidy? How much is it worth, in other words, to have a monopsony buyer and a price floor?

This is how these farmers compete with more-heavily-subsidized crops abroad, through organization. How are they to survive in that climate otherwise? Of course the answer is that they aren't supposed to -- they're to be divided and conquered.
posted by Durn Bronzefist at 10:35 AM on October 17, 2011 [3 favorites]

Don't forget the ridiculous "commemoration" of the War of 1812.

To derail for a minute, I would like to say that I admire our northern neighbors for reminding us that they once invaded the US and burned our capitol. While we have a fine and loving friendship at the moment, I think it is necessary for Americans to not lose sight of "The Snowy Menace." The price of maple syrup is eternal vigilance! Or something....
posted by GenjiandProust at 10:36 AM on October 17, 2011 [10 favorites]

If you can't farm a product a competitive price, then that farm must eventually cease operation. It's no different than any other industry.

You know what that is? That's ideological bullshit.
posted by klanawa at 10:36 AM on October 17, 2011 [13 favorites]

Well, I don't think anyone thinks that "lowest possible price" should be the overriding priority for the government, right? Otherwise there would be no environmental protections, worker safety rules, minimum wages, etc. There are social responsibilities beyond giving consumers the lowest possible price at the grocery store.

As a general principle, I think you're right, but I think the social responsibility of feeding more people outweighs the social responsibility of maintaining the traditional family farm structure. But, again, I'm American, Canada probably has a different relationship to farms and farming than we do, and I wouldn't presume to know what's best for another country. I couldn't care less about our own farmers' rent-seeking complaints about the CWB and I hope Harper isn't doing this in response to American pressure.

I should add as well, big agri-food companies coming in and sweeping the field of all competitors may not necessarily lead to cheaper prices at the grocery store for consumers. It will lead to greater profits for the agri-food companies.

Does it have to be either-or? I mean, with Harper and the conservatives running stuff, you're probably right. But you guys do have the benefit of a functioning government, unlike us, and at some point you'll get liberals back who can regulate the market. The problem is that now, there is no market at all.
posted by downing street memo at 10:38 AM on October 17, 2011

Fair, but which option actually leads to lower food prices? Shouldn't that be the government's main interest?

Well, that needs to be balanced against the interest in maintaining and developing a system of domestic production to benefit the citizens who actually grow the wheat...
posted by mikelieman at 10:39 AM on October 17, 2011 [2 favorites]

If you can't farm a product a competitive price, then that farm must eventually cease operation. It's no different than any other industry.

If you look at the history of the CWB that, certainly hasn't been the attitude of previous governments. The board was created following the Depression to STOP farmers from going broke. In that context it seems like absurd folly to kill it now, during another recession and much crying of austerity measures.
posted by Stagger Lee at 10:40 AM on October 17, 2011 [1 favorite]

I'm curious to know how the farming scene in Ontario differs from the praries given that their CWB equivalent, the OWPMB, does not have monopoly power. Do they make more/less money? Are wheat and other staple crops slowly disappearing in favour of more profitable crops? Did small farms disappear in favour of mega-farms?

Can anyone provide any insight on this?
posted by Frank Exchange Of Views at 10:45 AM on October 17, 2011

Sure, we can just eat food from China or something.
posted by KokuRyu at 10:46 AM on October 17, 2011 [1 favorite]

If you can't farm a product a competitive price, then that farm must eventually cease operation. It's no different than any other industry.

Except there is a long history (like thousands of years long) of small farms being consumed by larger, "more efficient" enterprises. Pretty much without exception, this process has been disastrous for the government and the culture in the long run (Rome and China being the two empires that come immediately to mind). So preventing aggregation of agriculture is not an unreasonable goal for a government.
posted by GenjiandProust at 10:47 AM on October 17, 2011 [6 favorites]

Fair, but which option actually leads to lower food prices? Shouldn't that be the government's main interest?

A stable price is better than a fluctuating price even if the average is somewhat lower. $10 wheat next year is of minimial utility if the price is $60 today. Or vice versa if farmers stop growing at $10 reducing the total available food.

Getting rid of the CWB is plainly idiotic that will benefit a few at the expense of many, including consumers and Canadian GDP, but it is par for the union busting course of Harper and his buddies.
posted by Mitheral at 10:49 AM on October 17, 2011 [3 favorites]

The Wheat board is not a subsidy. It is a mandated common buyer. It's a non-profit transporter and marketer of Canadian wheat.

Canadian farmers have a couple of problems.

They're one of the furthest from market in the world, on average about 1300km from a port. Austrailian farmers, by contrast, are a few hundred on average. About a third of the price of Canadian wheat has to go to transportation costs.

They're also hostage to dry-farming in the middle of a highly-variable mid-continental climate: some years are very good, bad years are very bad. They need a way of buffering costs, year to year. As LN says, farmers have a lot of assessts, but very little is liquid.

What the wheat board does is: manage a large, diverse (train, truck, ship) transportation network that spread over an area larger than most countries, provide stable sale prices to farmers so market fluctuations aren't so horrible and bad years aren't so bad. Note that that is just averaging, not a subsidy. It's colectivised transport and marketing, but completely finded by the farmers. No tax dollars go into the CWB. There is no subsidy.

The historical problem is that farmers, particularly those near the US border, see spot prices for wheat fluctuate in the US markets. Those prices, sometimes, are better than what the CWB offers. As one of the biggest big sellers of grain in the world, the CWB tends to do well in contract negotiations, but isn't always the best price on the market. There's a minority of wheat farmers who think that they can do better than the CWB prices. What they would really prefer is to be able to sell themselves when prices are good, but take advantage of the time-averaged base price of the CWB when years are bad.

Of course, this is unsustainable. Seeing big dollars, the Conservatives have long bought into the rhetoric of abolishing the Wheat Board. It was one of the major policy innovations of the CCF, and therefore socalist.

IMO, the end result of this is going to be more farm concentration, and less stability in the Canadian praries.
posted by bonehead at 10:52 AM on October 17, 2011 [35 favorites]

I'm curious about the food security element of the discussion; I thought one of the reasons we subsidized the wheat board was so that we could reliably provide food for ourselves and not be beholden to other countries or single providers for staple foods.
posted by dobie at 10:57 AM on October 17, 2011 [3 favorites]

The board was created following the Depression to STOP farmers from going broke.

Personally, I think this long-term view is missing from proponents of dissolution. The Board was created for a reason, and those reasons haven't gone away. The price of having the protection of the Board is that your highs may not be as high, but your lows are not as low, either.

From my limited understanding of the Board and its operations, there are genuine marketing and governance issues among farmers which need to be addressed. Reform of the Board structure, or simply just new management, may be a better solution than outright dissolution.

However, that would require moderation on the part of the Conservative government, and an acknowledgment that their long-established belief may not be 100% correct. I won't hold my breath waiting for them to make an accommodation on this or, well, anything, really.
posted by Capt. Renault at 10:58 AM on October 17, 2011 [2 favorites]

Personally, I think this long-term view is missing from proponents of dissolution. The Board was created for a reason, and those reasons haven't gone away. The price of having the protection of the Board is that your highs may not be as high, but your lows are not as low, either.

The desire to increase revenue by implicitly engaging in higher levels of risk is a common element throughout modern business. The Canadian government has not been shy about bragging about how Canada escaped the global banking meltdown by regulating banks to require higher levels of capital which implicitly is a way of lowering risk.

That they're basically deregulating the wheat & barley sector is the polar opposite that and shows that either they're ignorant to underlying economics or that they're slaves to ideology. Or, being the Reform party, both.
posted by GuyZero at 11:03 AM on October 17, 2011 [5 favorites]

Those who forget history are doomed to repeat it.
posted by Talez at 11:32 AM on October 17, 2011 [1 favorite]

If you can't farm a product a competitive price, then that farm must eventually cease operation. It's no different than any other industry.
posted by modernnomad at 12:07 PM on October 17

Yes, it is different. We have a national security interest in not being dependent on other countries for our food, and wheat is a staple.
posted by joannemerriam at 11:32 AM on October 17, 2011 [3 favorites]

While it seems illogical to abolish the Wheat Board, it's important to remember the Harper government likes to be in control.
posted by KokuRyu at 11:34 AM on October 17, 2011

Also, I've been to Churchill and seen the bears near it, and that was pretty amazing. This is the right time of year to go. If you have enough money to get to Churchill (I went on VIA Rail and at the time it was three or four hundred dollars), the "tundra buggy" tours aren't very expensive for what they provide. You can do it as a day trip. And I will say the burger I had at the local diner was pretty amazing, too.
posted by joannemerriam at 11:36 AM on October 17, 2011 [1 favorite]

Yes, it is different. We have a national security interest in not being dependent on other countries for our food, and wheat is a staple.

I agree. I would have no problem with deregulating the telecommunications industry along modernnomad's school of thought, but food security is too important an issue to be left to trade pacts and corporate personages.
posted by dobie at 11:36 AM on October 17, 2011

Also, deregulating telecom was to prevent a monopoly (a "natural" monopoly). It reduces concentration in the sector.

Deregulating what is going to do the opposite and will increase concentration.
posted by GuyZero at 11:39 AM on October 17, 2011 [1 favorite]

I am not sure whether Wheat Board is subsidy system or just a trading mechanism/ co-op. If just the ladder, then farmers should hire their own trading desk.

However food subsidies by Western countries are evil and unfair way of ensuring that developing countries (especially in Africa) will not be able to compete in agriculture. Agriculture being one of the very industries, where they otherwise might have small change of competing globally. Of course lot other problems need to be solved in Africa as well, such as right to property, contract law, access to capital, know how, rule of law, etc.

This is whining farmers is similar to creatives classes complaining about loosing design jobs to <$10/ hour bidders from India. American and European farmers right to subsidized living and western hipsters' right to profits are more important than 3rd world families to provide for themselves.
posted by zeikka at 11:44 AM on October 17, 2011

I am not sure whether Wheat Board is subsidy system or just a trading mechanism/ co-op. If just the ladder, then farmers should hire their own trading desk.


You could, you know, read one or two of the links before commenting then.
posted by Stagger Lee at 11:45 AM on October 17, 2011 [1 favorite]

We have a national security interest in not being dependent on other countries for our food, and wheat is a staple.

I think this is a simplistic view of what counts as a national security interest. In an interdependent world, Canada is always going to rely on international trade for any number of things its population direly needs. Likewise, I would not be in favour of subsidizing the tar sands because cheap petroleum is a vital national interest, and I suspect most people here would feel the same way.

(And yes, while the Wheat Board does not provide direct subsidies, the end result has that effect and drives up the end price of wheat -- of course farmers are in favour of it; they benefit tremendously from the system.)

It'll be a cold day in hell before I vote for the conservatives, but they are on the right side of the issue IMO.
posted by modernnomad at 11:52 AM on October 17, 2011 [3 favorites]

Well it is an implicit subsidy right? If it smoothes out profitability and guarantees equal prices for all producers it is a subsidy, it just isn't a direct transfer, but rather the subsidy comes in the form of slightly higher prices over time for the end consumer. Reasonable people could argue that the benefits of the wheat board in terms of food supply safety and quality of life for farmers outweighs the costs of higher prices, but it is a subsidy.

If a board-free canadian wheat industry would grow less wheat than they currently do, then it also represents a transfer for other better wheat growing areas of the world to Canadians.

Not saying its clear one way or the other what should be done, but you can't make the statement its absolutely a good thing, or it is absolutely a bad thing.

The one thing I can tell you is that a solution that allows the Wheat Board to exist, but allows people to sell outside of it will end up being unstable and untenable.
posted by JPD at 11:57 AM on October 17, 2011 [1 favorite]

but it is a subsidy

Ensuring farmers get a sustainable long-term price for their wheat isn't a subsidy so much as good planning.

The alternative is to pay a little less when there's a surplus and a lot more when there's a shortage. Fluctuating prices don't necessarily benefit consumers in the long run.
posted by GuyZero at 12:09 PM on October 17, 2011 [2 favorites]

you can call it what ever you want. Convention would tell you Subsidy is right term for it. I'm not using "subsidy" like its a some loaded negative word. The word is what the word is.

And the subsidy isn't just that prices fluctuate less over time, its also that all farmers receive the same price for their grain. As a result over time the aggregate revenue received by the farmers is greater than the aggregate revenue they would receive w/o the monopsyny. That difference is the subsidy.

I mean good lord I wasn't even putting forth an argument against the Wheat Board.
posted by JPD at 12:16 PM on October 17, 2011

I think this is a simplistic view of what counts as a national security interest. In an interdependent world, Canada is always going to rely on international trade for any number of things its population direly needs. Likewise, I would not be in favour of subsidizing the tar sands because cheap petroleum is a vital national interest, and I suspect most people here would feel the same way.
posted by modernnomad at 1:52 PM on October 17

I don't think subsidizing the tar sands is a bad idea because petroleum isn't a national security interest (which it clearly is) but because the tar sands are an environmental mess (which I think outweighs their national security importance). There's no comparable harm for the Wheat Board.
posted by joannemerriam at 12:19 PM on October 17, 2011

The word is what the word is.

The text of the NAFTA doesn't define it. NAFTA Secreteriat says:

What is subsidy?

Generally, subsidy occurs when imported goods benefit from foreign government financial assistance.

Examples of subsidies include: loans at preferential rates, grants, tax incentives, or a provision of goods or services by a government at prices below market levels.
posted by Durn Bronzefist at 12:22 PM on October 17, 2011 [1 favorite]

Deregulating what is going to do the opposite and will increase concentration.


It doesn't really matter how concentrated the farms get, because its a commodity - they really won't ever have market power - especially with another large wheat growing nation so close at hand. What will probably happen is that Bunge/ADMs of the world who own the grain infrastructure will end up making a lot more money off of their Canadian operations than they do today. The Wheat Board neutralizes the market power the infrastructure owners are more able to exert in the US. Canadian consumers would probably recapture only a small portion of the implicit subsidy the farmers receive today, but it wouldn't be because the farms would consolidate and have market power.
posted by JPD at 12:26 PM on October 17, 2011

Reasonable people could argue that the benefits of the wheat board in terms of food supply safety and quality of life for farmers outweighs the costs of higher prices, but it is a subsidy.

I'm not an expert on this issue, I don't know any farmers, but I am concerned with the effect that this will have on many families who make their living from farming wheat.

There is a great Wendell Berry essay on the danger of elevating competition as our highest value, and about how the privilege of being human is not to have to let competition trump our other values. I'm having a hard time finding it- can anyone help?

We could also create another profitable industry if we privatized health insurance, but it's not worth it, according to our value and the priorities we've chosen as Canadians.

These aren't just businesses "ceasing to exist", they family farms, communities etc...The Wheat board seems like one socialist idea/subsidy-like thing that is worth keeping.

And like some above, I also wonder if, once the small players are competed out of business, there won't be any noticeable lowering of the price of wheat.
posted by beau jackson at 12:27 PM on October 17, 2011 [2 favorites]

Durn Bronzefist - commodity boards are considered a textbook example of indirect subsidies. I don't know why you all seem to have an issue with the term "subsidy" if its being used in good faith and not meant as some sort of signalling word about the evils of socialism or some crap like that.
posted by JPD at 12:32 PM on October 17, 2011 [1 favorite]

There is a great Wendell Berry essay on the danger of elevating competition as our highest value, and about how the privilege of being human is not to have to let competition trump our other values.

You know, someone is almost always paying for that privilege, and in this case, it's not the ones who are so privileged.
posted by downing street memo at 12:45 PM on October 17, 2011

For some reason, my Google-fu is failing me and I can't find any academic takes on American vs. Canadian food prices, but this blog post seems to indicate that, at least between BC and Washington State, the difference is pretty big.
posted by downing street memo at 12:47 PM on October 17, 2011

I attended a conference on the Wheat Board a couple of years ago. A speaker from a Quebec marketing board made a presentation in favour of marketing boards. No surprise there. He had one slide that stuck with me, showing the price paid in the store for milk, how much went to the farmer and how much went to other people (retailers, bottlers, etc). It was in a jurisdiction where they had a marketing board that was disbanded/abolished (perhaps England) and so it showed the prices before and after. Once the marketing board was stopped the amount the farmers got decreased. No surprise there. However, the price to the consumer increased because retailers and bottlers ended up taking the cost savings for themselves, and then some.

We keep hearing the same lines that once whatever impediment to the market is removed (unions, marketing boards, unnecessary regulations, expensive local labour, etc) then consumers will reap the benefits in reduced prices but what usually ends up happening is that the people making the actual good and their communities get shafted, consumers pay about the same and all the people in between take a bigger cut.
posted by any portmanteau in a storm at 12:53 PM on October 17, 2011 [8 favorites]

Durn Bronzefist - commodity boards are considered a textbook example of indirect subsidies. I don't know why you all seem to have an issue with the term "subsidy" if its being used in good faith and not meant as some sort of signalling word about the evils of socialism or some crap like that.

Well I've been linking to NAFTA and WTO decisions. If you're going to talk about issues discussed in these decisions, it's a good idea to use terms as intended. As a lawyer, I first look to the governing legislation or agreement, then to authorized dispute res panels and finally travaux (if I have to). I get that we're just having a conversation. I don't get why "the word is what the word is" is an answer to anything when we can actually see what meaning is given the word in context.

And it's a little naive to think subsidy isn't a politicized word -- it's the reason it was in issue in that CBC article I linked and why it initially came up in this thread.
posted by Durn Bronzefist at 12:59 PM on October 17, 2011 [2 favorites]

For me the issue is that there's political hay to be made by cutting subsidies where the government pays someone to do something, i.e. ones that cost tax dollars.

The indirect subsidy created by the Wheat Board could be defined as a subsidy, sure, but I think it's confusing to conflate money the government spends or chooses not to collect (e.g. tax deductions) versus a mandated marketing collective that ends up creating higher prices through a monopsony position for farmers.

This is my only concern with the term 'subsidy', that it gets mis-interpreted, even if used correctly.
posted by GuyZero at 1:04 PM on October 17, 2011

you can call it what ever you want.

commodity boards are considered a textbook example of indirect subsidies

I'm really not feeling your nonchalantness about this.
posted by Durn Bronzefist at 1:04 PM on October 17, 2011

Well have a little faith that I'm not using it in a politicized way - something that would make sense to you if actually read my original comment where I went out of my way not to make a judgement about the existance of a wheat board.

Subsidy is not just a legal term. How NAFTA and the WTO define "subsidies" is immaterial. Not to mention if you are pro unfettered free-trade one of your major arguments with those agreements is their tight legalistic defintion of subsidy which has allowed other non-tariff barriers to proliferate.

I'm really not feeling your nonchalantness about this

well I don't know what to tell you. You can continue to choose to use a legalistic definition of "subsidy" I'll continue to use the definition as taught in econ textbooks.

This is my only concern with the term 'subsidy', that it gets mis-interpreted, even if used correctly.

a very reasonable view point, and one that I agree with.
posted by JPD at 1:11 PM on October 17, 2011

And the subsidy isn't just that prices fluctuate less over time, its also that all farmers receive the same price for their grain. As a result over time the aggregate revenue received by the farmers is greater than the aggregate revenue they would receive w/o the monopsyny. That difference is the subsidy.

The only income the board gets is through the sale of grain. There is no subsidy, no external price support mechanism. It sells grain on the international market. It's a big seller, but Canada is not the dominant source of wheat in the world, not even close. The CWB does not get tax dollars to support operations. It's just the mandated buyer. It's no more a subsidy than a private marketing board is. The only difference, and the thing that pisses-off its opponents, is that participation is manditory. Famers cannot opt out.

If you're going to argue that the CWB returns higher incomes to the farmers (which its supporters do), that's more because it's a more efficient competitor on the world market. Canada exports more than 80% of its production. Further, domestic Canadian consumers generally don't pay more for croisants and spaghetti because of the CWB. US (and other) producers are free to sell their products to Canadians too. CWB faces stgrong competition for its products both externally and within the country. I can't see where your subsidy is coming from.

Farmers do occasionally get income support, sometimes directly, but mostly in the form of extra insurance payouts. This usually happens because of bad weather. Sometimes there are stimulus programs for new farmers and such. In general, however, Canadian farmers do not routinely get money from the government. They're on their own.
posted by bonehead at 1:15 PM on October 17, 2011 [5 favorites]

You can continue to choose to use a legalistic the NAFTA definition of "subsidy" I'll continue to use the definition as taught in econ textbooks academic definition.

Go right ahead. But if you think discussions about the Wheat Board are not going to revolve around government support (ie: financial support) of farmers, you need to spend more time outside of the classroom.

on preview: look, there's one now.
posted by Durn Bronzefist at 1:20 PM on October 17, 2011

The only income the board gets is through the sale of grain. There is no subsidy, no external price support mechanism. It sells grain on the international market.

I'm not sure how this was ever unclear.

This explains how the Wheat Board works, and everybody arguing should at least skim it. Nobody looks particularly clever when they're misrepresenting something, with the documents sitting right in their lap.

Here's the wikipedia description of how it works:

"The farmers deliver their wheat and barley to grain elevators throughout the crop year. The Board acts as a single desk marketer of wheat and barley on behalf of prairie farmers. Upon delivery to an elevator, farmers receive an initial payment for their grain from the CWB that represents a percentage of the expected return for that grade from the pool account. After the end of the crop year, July 31, an interim payment and a final payment are paid to farmers, in addition to their initial payment so they will have received 100 percent of the return from the pool for the grain they delivered. The initial payments are guaranteed by the Government of Canada so that farmers will receive payment even if there is a deficit in the pool account. Initial payments are set with a risk factor built in to guard against the event that price expectations are not met."
posted by Stagger Lee at 1:28 PM on October 17, 2011

The Government of Canada guarantees all CWB debt. Maybe that's what is considered a subsidy under NAFTA?
posted by Kabanos at 1:33 PM on October 17, 2011

On the plus side: no more gun registry! Yaaaay, farmers!

My dad voted against busting up the Wheat Board. I did not mention the plus side to him. He owns guns.
posted by Alvy Ampersand at 1:46 PM on October 17, 2011

Modernnomad, In my simplistic view I believe that Canada should always and unequivocally be able to produce enough food for all Canadians. I guess I just don't trust the rosy view of a perfectly integrated global economy on this, like I would for telecommunications or oil. The line is drawn when a basic requirement for human survival is entrusted into corporate interests.

I recognize that oil is crucial for Canada, but the reality is that the market supports innovation for alternate solutions because as the cost goes up, we come up with alternatives that may cost less to do the same things.

On the flip side, we will never be able to not eat.
posted by dobie at 1:51 PM on October 17, 2011

The whole point of farm subsidies is to prevent the business cycle from causing us all to starve to death. If what happened to housing happens to farming once ever, we're all dead.
posted by mek at 1:55 PM on October 17, 2011 [3 favorites]

The whole point of farm subsidies is to prevent the business cycle from causing us all to starve to death. If what happened to housing happens to farming once ever, we're all dead.

Oy. The housing market bubble had nothing to do with business cycles, and everything to do with our government's inability to regulate the financial sector.

Agriculture bubbles are possible, yes. But the correct answer to those is good policy, not subsidies that benefit a few at the expense of everyone else.
posted by downing street memo at 1:59 PM on October 17, 2011

The Government of Canada guarantees all CWB debt. Maybe that's what is considered a subsidy under NAFTA?
posted by Kabanos at 1:33 PM on October 17 [+] [!]

Before we get too deep into the semantic argument, yes, it's meant to do exactly what the right-wingers are afraid of:

By the early 20th century in Western Canada, grain purchasing, transportation and marketing were dominated by large companies headquartered outside the region, such as the Canadian Pacific Railway and the trading companies which dominated the Winnipeg Grain Exchange. Producers were deeply suspicious of the business practises of these companies and hostile to their positions of power.
posted by Stagger Lee at 2:00 PM on October 17, 2011

And, if anything, monoculture as the result of crop subsidies is arguably a greater threat to food security than business cycles, commodity bubbles, or anything else.
posted by downing street memo at 2:01 PM on October 17, 2011 [1 favorite]

Modernnomad, In my simplistic view I believe that Canada should always and unequivocally be able to produce enough food for all Canadians. I guess I just don't trust the rosy view of a perfectly integrated global economy on this, like I would for telecommunications or oil. The line is drawn when a basic requirement for human survival is entrusted into corporate interests.


But if you truly believed that every nation ought to be entirely self sufficient in terms of food production, you'd absolutely decimate the Canadian wheat industry -- 80% of Canadian wheat is exported.
posted by modernnomad at 2:02 PM on October 17, 2011 [2 favorites]

But the correct answer to those is good policy, not subsidies that benefit a few at the expense of everyone else.

Good policy? From this government? Heh.
posted by mek at 2:18 PM on October 17, 2011 [1 favorite]

WinnipegDragon: ... and extended the Afghan mission.

Wait, what?
posted by twirlip at 2:38 PM on October 17, 2011

Well, according to this pro-Wheat Board report of 2005, the annual support* of the state was about $750 million Canadian dollars. That's staff and marketing and shipping and other things probably detailed in the report.

Or "subsidy" in English. I mean, when subsidies are banned by treaty, I get that you don't want to call it a subsidy. But no-one here is a politician, right? We can call a subsidy a subsidy? Or even a "tiny subsidy by international standards", to be fair?
posted by alasdair at 2:44 PM on October 17, 2011

Likewise, I would not be in favour of subsidizing the tar sands because cheap petroleum is a vital national interest, and I suspect most people here would feel the same way.

I thought the tar sands had been getting subsidies for decades?
posted by Hoopo at 2:53 PM on October 17, 2011

But if you truly believed that every nation ought to be entirely self sufficient in terms of food production, you'd absolutely decimate the Canadian wheat industry -- 80% of Canadian wheat is exported.

They distinctly said they believe Canada should be food self-sufficient. This does not imply every other country should (or even could) be food self-sufficient.
posted by five fresh fish at 3:02 PM on October 17, 2011 [1 favorite]

alasdair, I don't understand how you arrive at that conclusion. The annual reports and balances sheets for the CWB are here. All of their revenues (and the money used to pay farmers) are coming from wheat sales.

I don't see any government inputs on their balance sheet under revenues.
posted by bonehead at 3:08 PM on October 17, 2011

If you're going to argue that the CWB returns higher incomes to the farmers (which its supporters do), that's more because it's a more efficient competitor on the world market.

A non-profit is able to return more money to the producer and yet can also be competitively priced to the consumer's advantage.

"Profit" is just another word for "money leech". You can be sure the CWB folk pay themselves competitively. But without shareholders and grossly overpaid CEOs, there's no need to suck farmers' blood.
posted by five fresh fish at 3:14 PM on October 17, 2011

I don't see any government inputs on their balance sheet under revenues.
posted by bonehead at 3:08 PM on October 17 [+] [!]

As I understand it, that would only be necessary if wheat prices fell so hard mid season that the WCB couldn't cover the difference.
posted by Stagger Lee at 3:15 PM on October 17, 2011

Reading this thread has left me with a bunch of questions, so I posted them to AskMe.
posted by twirlip at 4:52 PM on October 17, 2011

By the early 20th century in Western Canada, grain purchasing, transportation and marketing were dominated by large companies headquartered outside the region, such as the Canadian Pacific Railway and the trading companies which dominated the Winnipeg Grain Exchange. Producers were deeply suspicious of the business practises of these companies and hostile to their positions of power.

There is an old farmer in his field, shaking his fist at the sky, and shouting: "God Damn the CPR!"

This is not a joke.
posted by ovvl at 5:38 PM on October 17, 2011

modernnomad writes "(And yes, while the Wheat Board does not provide direct subsidies, the end result has that effect and drives up the end price of wheat -- of course farmers are in favour of it; they benefit tremendously from the system.) "

Generally only farmers close to the US border or some other port are in favour of disbanding the CWB as their shipping costs are lower allowing them to out compete their more northerly neighbours. And considering that while Canada exports a lot of wheat other producers export significantly more means they aren't really setting the market price.


downing street memo writes "I can't find any academic takes on American vs. Canadian food prices, but this blog post seems to indicate that, at least between BC and Washington State, the difference is pretty big."

Two big problems (and probably a few minor ones): It's comparing prices at a frackin' Super WalMart to a rural grocery store and most of the comparisons are for products which have no shit subsidies on the American side (Milk and Sugar). On the minor side it is unclear whether the author accounted for exchange rates and how were they trending at that time.
posted by Mitheral at 6:51 PM on October 17, 2011

I'm pro Wheat Pool and I still miss the grain elevators, but farmers of everything else (soy, canola, corn, rice, potatoes, etc.) have not had to use the Wheat Board and I'm not aware of any cataclysm there, so I hope it turns out okay even though I don't see any advantage to getting rid of the board.

Oh Cheadle, Alberta, with your 11 Facebook likes.
posted by furtive at 8:15 PM on October 17, 2011

downing street memo writes "I can't find any academic takes on American vs. Canadian food prices, but this blog post seems to indicate that, at least between BC and Washington State, the difference is pretty big."

I live in a city in BC, and I can attest that prices here at regular supermarkets are about 30% than in neighbouring Washington State. There's transport costs to figure in, plus differing economies of scale, and the fact that Canadian companies like to cheerfully gouge regular Canadians.
posted by KokuRyu at 9:30 PM on October 17, 2011

Regardless the semantics of the word subsidy, lets assume for arguments sake, it is some form of financial help from government. Then would a Wheat Board or even a Coop differ from a corporation? Governments give corporations huge subsidies all the time. If any group of individuals want to band together to package , transport and sell their product and feel much safer, less stressed, and have a healthy income, what is wrong with that? What am I missing here? I can only conclude its about ideology.
posted by smudgedlens at 11:21 PM on October 17, 2011

Can someone explain to a Yank why this is a bad thing?

It sounds like Privatization 101, arguing that the free market will implicitly do a better job than the existing government-run system that everyone other than the free-market people seems to like. It reads, basically, like every argument and plan to abolish state-run anything, from electric utilities to hospitals.

If it follows that usual pattern, a couple hundred politicians and their chummy friends will get stinky rich in the short term, while both producers and consumers suffer indefinitely.
posted by rokusan at 2:45 AM on October 18, 2011 [4 favorites]

There are separate regulatory and economic reasons for the higher cost of food in Canada. Eg. stricter controls on meat/milk production, less subsidy for corn everything, less (but by no means zero) cheap immigrant labor, higher gas taxes increasing shipping costs, higher purchasing power in general, etc. The CWB is really not a part of that equation.
posted by mek at 12:56 PM on October 18, 2011

I should add that the USA spent $180 billion on the corn subsidy in 2009 alone, most of that via "tax expenditures" - that's well over a dollar a day for every resident of the country. That has a great deal to do with the low cost of (crappy) food in the USA and the difference between the USA and Canada. Lower gax taxes explains most of the rest. Canadian producers are mostly protected by tariff walls and commodity boards which yes, end up costing the consumer rather than the government.

Now if you want to see a real commodity cartel, take a look at the Liquor Boards up here...
posted by mek at 1:07 PM on October 18, 2011

Can't say as I've noticed radical price savings on liquor post-privatization.

Can say I'm glad to pay a little extra to avoid the risks of US-style meat processing. Let alone cantelopes (with added listeria this week!)
posted by five fresh fish at 2:22 AM on October 19, 2011 [2 favorites]

The directors of the Canadian Wheat Board are suing the federal government over its decision to dismantle the board.

“The Harper government is acting illegally and immorally,” Allen Oberg, chairman of the farmer-controlled board said Wednesday morning in announcing the lawsuit.

He accused the government of acting like a “dictatorship” and he said eliminating the board will harm farmers and turn over control of the wheat and barley trade to U.S. companies.

posted by twirlip at 10:22 AM on October 26, 2011 [1 favorite]

And at the same time, a group of farmers is suing the wheat board, demanding freedom of choice.

I have no idea what to believe.
posted by five fresh fish at 10:26 PM on October 27, 2011

Here we go, a countersuit.
posted by five fresh fish at 10:38 PM on October 27, 2011