U.S. grain and seed ports will kill a few more Canadian jobs – with a little help from Stephen Harper

Bunge’s $200-million US grain port at Longview, Wash. Below, U.S. police and strikers scuffle at the port.

Back in 2009, when the destruction of the Canadian Wheat Board was still just a twinkle in Prime Minister Stephen Harper’s eye, work started on a $200-million US grain-handling terminal in the port of Longview, Wash., just south of the Canadian border.

The companies behind the project – which, significantly, will be capable of loading about 200 grain ships a year – are Bunge Ltd. (the giant “Bermudian” agricultural and food products corporation with its real headquarters in White Plains, N.Y.), Japan’s Itochu Corp. and South Korea’s STX Pan Ocean Co.

Fast-forward to the present and the giant Longview grain shipping facility is open for business, Mr. Harper’s dismantling of the Canadian Wheat Board as an effective marketing agency for Western Canadian grain farmers is all but complete, and the West Coast Port of Vancouver is happily burbling along on the assumption it will continue to handle about 250 shiploads of CWB grain a year as it does now.

Vancouver’s not alone in this, by the way. About 350,000 grain cars controlled by the Canadian Wheat Board shipped grain not just to Vancouver, but Prince Rupert, B.C., Churchill, Man., and Montreal, Quebec City and Trois-Rivières via the Lakehead.

But will nothing change? As is so often the case with Mr. Harper’s economic export schemes, it’s our economy that ends up getting exported. In this case, what’s good for the U.S.A., Japan and South Korea (and China and Bermuda too, presumably) doesn’t necessarily offer very much to British Columbia or the Prairies.

If we think about it at all, city folks in Vancouver and elsewhere tend to see the fight over the Canadian Wheat Board as an internecine battle among Canadian grain farmers – with those in geographical locations that forced them to rely on the Wheat Board to fetch a good price for their product abroad opposing the Tories’ program, and those adjacent to the U.S. border who saw an advantage in not being restricted by the Wheat Board’s rules supporting it.

The latter group allied themselves with the Harper Government, which mouths market fundamentalist platitudes at every opportunity. Arguably, however, if the government of Canada adopts policies like this one, what it’s really doing is putting economic power into the hands of major corporations and delivering Canadian farmers into the hands of these often-foreign corporate entities.

Most Western grain farmers are not likely to benefit much as the centre of gravity in grain marketing shifts from the Wheat Board to corporations like Bunge and Cargill, but most urban Canadians are not likely to get exercised about it if Canada’s rural population keeps voting Conservative regardless and city folks don’t see any obvious impact on their lives.

Even some of the farmers who now support their “liberation” from the “tyranny” of the Wheat Board will come to regret their enthusiasm, it is said here.

But face it, we’re not likely to know very quickly if the declining quality of our bread, pasta and beer is tied to the import of low-quality grain from elsewhere, another likely impact of the demise of the Wheat Board. After all, it’s been plausibly argued that the end of the Board means it’s much less likely there will be high-quality Canadian grain in Canadian-made products like these as corporate food processors go for the cheapest source – even if it happens to be grain from Ukraine that glows in the dark.

And most of us will likely never make the connection when we’re required to shell out more taxes to support beleaguered farmers through other means, at least enough to keep them voting Tory – plus, of course, to offer big tax breaks to multinational “agri-food” corporations.

But maybe British Columbians at least will figure out the connection between lost jobs on the West Coast and the end of the Wheat Board’s single desk. This will happen because the Board will no longer be able to direct Canadian wheat along Canadian rail lines to Canadian ports, as it has done for years.

In addition to the grain terminal at Longview, Legumex Walker Inc. is also building a $110-million US canola exporting operation in Warden, Wash., which will likely also eliminate a few more Canadian jobs.

There’s nothing the Wheat Board could have done about that, of course, since it never handled oilseeds. Still, this development does suggest the claim that, if only the single-desk were shut down, Canadian companies would start adding value to Canadian produce at plants right here in Canada, is baloney.

Back in Longview, meanwhile, which will certainly contribute to a loss of good unionized jobs in Vancouver, Bunge has engaged in a protracted fight with union workers in the port – almost entirely ignored by the mainstream media.

According to the market fundamentalist philosophy that prevails among the Harper Conservatives, however, this is all as it should be – indeed, we’re being “greedy” and anti-free trade if we suggest Canadian work should stay in Canada.

Corporate donations roll in to pay for the slick ads needed to attack parties and politicians that might go to bat for Canadian farmers, working people and economic development.

As for those British Columbians who notice this, if they want economic benefits, they’ll just have to learn to live with a bitumen pipeline or two.

This post also appears on Rabble.ca.

27 Comments on "U.S. grain and seed ports will kill a few more Canadian jobs – with a little help from Stephen Harper"

  1. Filostrato says:

    For the record, I signed the petition protesting the illegal closure of the Canadian Wheat Board, for all the good it did.

    Growing up in Montreal and seeing the “Farine Five Roses Flour” sign as part of the skyline (the “Flour” part has since disappeared), my mind followed the grain ships from the lakehead through the Great Lakes and down the St. Lawrence River to mill to be turned into flour. (I was a map nerd.) It was a strong tie that joined the west to the east.

    Speaking as a home-made bread fan (and other good stuff made with flour), I know that Canadian wheat makes fantastic bread. I’ve tried making bread with British soft wheat flour and the result resembles a damp, chewy sponge. (Not sure about Ukrainian wheat grown in the dark.)

    So, the quality of our lives continues to deteriorate, jobs disappear or become less attractive, communities disintegrate and market fundamentalists and the corporations they adore get fatter and richer. No wonder the Cons dropped the “Progressive” from their names. It was an hypocrisy even they couldn’t stomach.

    That “Sermon in the Field” speech a week or so ago – you know, Harper at the pulpit with seas of waving grain around him and adoring followers spread in a semicircle around him – had me looking around for the extra-strength Gravol again. “Pardon the poor farmers”, intones Pastor Harper, “except the ones that don’t agree with me.” And then he separates the wheat from the chaff and throws the wheat into the fire.

  2. Caryl Tyson says:

    This article is full of lies. I am a grain farmer and the end of the cwb’s monopoly is great. Farmers can still sell through the cwb and if it’s so great I’m sure everyone will. Hahaha

  3. Kevin says:

    The CWB has no ability to stop companies from importing wheat before the CWB monopsony was ended. What makes you think cheap wheat will start being imported now? Unless our wheat price rises relative to what it was before under the monopsony, in which case, why are the lower CWB prices a benefit to us?
    We shouldn’t be forced to take less for our grain just to protect union jobs. Thank you Conservative government for ending this abysmal one-buyer system we’ve been subject to all these years,.

    • K Larsen says:

      Why would foreign wheat come into Canada now? Part of the answer lies in your misunderstanding of what the CWB was. It was the single desk SELLER (think exclusive dealership) for Cdn Wheat and barley, not a buyer. Since the Con Wheat Board can no longer hold the line on prices and must compete to sell, processors now have an incentive to either use cheaper off-shore wheat that can come in via ocean rather than overland by rail or demand lower prices by playing off the various sellers of Cdn wheat and barley.

      Under these new conditions, wheat will behave like that other commodity: oil. Ocean freight is cheaper than overland rail or pipeline. Transportation costs are why western oil is not burned in Ontario and Quebec. Now that the CWB is no longer the only seller, the same thing applies to western wheat.

      • Kevin says:

        The CWB was the single seller of Western Canadian wheat, but only by virtue of the fact that the legislation made it illegal for us to sell our wheat to anyone else. Buyers of wheat had to buy from the CWB middleman if they wanted local wheat, but there was nothing except freight costs that ever stopped them from importing all the wheat that they wanted.
        The “single seller” moniker the CWB gave themselves was effective at bending the truth by implying that buyers couldn’t get wheat if they didn’t buy from the CWB, but this was never true, buyers were only prevented from buying our local western Canadian wheat. They were always able to import wheat. The CWB ability to extract a premium in western Canada was limited to the amount of the costs to import wheat.
        This has effectively managed to drive new investment in wheat and durum processing south of the border, along with the jobs that would come along with that investment. So instead of getting premiums, because exclusive rights to our property were given to the state trading agency, more of the users of our wheat have been driven farther away, and subsequently farmers get to pay the higher freight costs.

      • John De Pape says:

        Ken – you’ve got it wrong again.
        In the domestic market the CWB always did compete. The CNMA demanded a North American competitive price from the CWB which resulted in the Domestic Human Consumption (DHC) price for Canadian millers. This was a formula price based on US market prices. For this, the CWB earned the CNMA “support” for the single desk, which amounted to neutrality.

        For your argument about importing wheat to hold water, we would have already seen it happen. And we haven’t. THE CWB NEVER CONTROLLED IMPORTS AND DOMESTIC SOURCES HAVE ALWAYS BEEN THE CHEAPEST.

        By the way, the pricing of oil into eastern Canada is a little more complicated than you make it to be – there’s more to it than just ocean freight. When oil is processed into various products (cracking) there is a split between the amount of diesel and the amount of gasoline that is produced. Since Europe has a hire appetite for diesel than gasoline, when they process for diesel, the end up with excess gasoline for their market, so they ship it to the east coast of Canada and the US.

        • Bandit says:

          John, you are dead wrong on all counts as per usual. The east being net importers of grain did not use much western Canadian grain because it was always more beneficial to import cheaper grain from the south. Oh, you are kind of right, it was already happening. No you said it wasn’t coming in. Okay, my mistake, you are wrong and Ken,s rational holds water. Domestically plants often use foreign grain for their production but that does not take away from the fact that the single desk CWB has had a long standing track record of extracting a premium and more importantly large malt vs feed barley premiums and high protein wheat premiums, especially in rising markets like the markets we see now. This premium was extracted from hundreds of buyers around the globe, delivering the goods on time before people starved to death, with minimal transportation disruption, net positive into the pool, demurage shipping fees. These are facts that stupid people find hard to accept.

          Your spin on the oil in the east is not correct either. Oh, by the way you probably meant higher not hire. Good thing you work on your own, you may not get “highered”. For your rational to hold water, Europe would have converted their ships to bring that fuel to the eastern seaboard of the US and Canada to gasoline, or have they already done that?

  4. rangerkim says:

    ahhh … here come the farmers who know so much about THEIR crops and THEIR farms that they think they can speak with authority about all crops and all farms.
    Adam Smith actually wrote a book about this a few hundred years ago because he saw then, as we do now, that otherwise intelligent and hardworking farmers couldn’t lift their gaze from the plow to the marketplace. Farmers are always price-takers UNLESS they can find a way to circumvent the marketplace. Like the CWB or like a behemoth corporation, both artificial creations supported by the state, one for the benifit of farmers (all farmers that is) and the other to benifit shareholders. This part is not significantly different than any other business.
    The difference arises from the notion of food security. Which is what this article is really about. If a business is not competitive or efficient it can go bankrupt and only the shareholders are affected. If a farmer, or more to the point, a type of farmer; ie Canadian, family or small holding, goes out of business the rest of us are affected in so much as we still have to eat. There is no substitute for food like there is for a shiny widget.
    It is the hieght of stupidity to think that anybody is going to be on the lookout for Canadian food except Canadians. Milk, cheese, bread, meat, fish, fruit and vegatables … we have it all. For the moment. If we allow all the best to be sold off at the highest price that means 2 things, 1. all the best is gone, 2. we are left with the second best or worse.
    Sorry Farmer’s Caryl and Kevin I do not support your percieved right to sell out Canadian health for your personal wealth. I believe Canada should treat their food processors like the valuable resource they are (and we do , we really do) but food should not go to the highest global bidder.

    • Kevin says:

      The CWB was a price taker too, except they didn’t have the incentive that we farmers have to try to get the highest price possible. They simply sold our wheat, deducted their costs(no matter how large, and without financial incentives to reduce inefficiencies), and gave us the remainder.

      Personal health has nothing to do with it – if Chernobyl wheat wasn’t being imported before, there isn’t any reason that it will be now as there was nothing stopping buyers from importing wheat during the single desk monopoly.

    • Bandit says:

      Very wise advise rangerkim. Nothing like human greed to kill off you own off springs bright future.

  5. Khandi says:

    @Filostrato, as a baker and home-made bread fan I agree about flour quality. I found that the US flour quality is even worse than the British flour. It’s very course – dry lumpy rough bread. When my friend who lives in Vermont visits she always buys flour to bring back because she can’t get good flour down there.

    • Filostrato says:

      I like the idea of all those loaves of bread made with Canadian flour rising gently in Vermont to delight the palate of your friend and her family, like a neighbourly handshake across the border.

      I don’t want our good food supply to decline. I like milk without bovine growth hormone and antibiotic residues in it. I like eggs that taste good. Food sustains us. We shouldn’t let its production and supply slip out of our hands. It’s madness.

  6. Dennis says:

    David Climehaga writes the stone-cold truth. The end of the Wheat Board puts the future of the Port of Vancouver into a shadowy place. It’s about the logic of the market. Shall we connect the dots?

    The controlling interest in CP Rail is held by a fellow from New York. He goes by the name of Bill Ackman. His game is to turn around, so called, “under performing” companies. He moved heaven and earth to have a chap named Hunter Harrison assume the position of CP’s, CEO.

    Hunter Harrison’s previous gig was to “turn around,” CN Rail. He built a reputation there for cutting to the bone , with extreme prejudice.

    Now, one of CP’s big expenses is the Crows Nest Pass. The grades are long. Snow falls here in epic amounts. Rain too. It’s the stuff of Canadian mythology.

    Bill Ackman has said he’s interested in money. I’m not aware of his ever having said he holds Canadian mythology in equal esteem.

    There are several export grain terminals on the US west coast. They beckon for many reasons. One of which is, it’s possible to get grain from the Canadian prairies to them without braving the rigours of the Crows Nest Pass.

    Now, back in the day, the Canadian Wheat Board organized trains and shipping. In the here and now, things are less structured.

    Market logic tells me shipping across the 49th, without ever coming close to the Crows Nest Pass has just got to cross the mind of anyone drawing up a business plan for CPRail. What’s to prevent it?

    Market logic also tells me that if Canadian grain is moved to US ports, other shipments will be too. This goes for imports as well as exports. It’s just the way the dynamic works.

    Were I running to be the the Premier of British Columbia, I’d be asking some sharpish questions. Of course this isn’t just about BC. It is about the way the numbers work out for the GDP of all of Canada.

    During the Wheat Board debate there have been a huge number of things said about “choice” and “freedom.” These words have a noble sound about them. But when the logic of the market takes hold, noble sounding words count for less than money.

  7. sddickson says:

    Prairie farmers and their local economies will gain big time ! .. because of reduced basis, brought on by grain companies battling for maket share, threw greater efficiencies.

    Thanks Conservatives !
    for returning the CWB to it’s original 1935-43 mandate .. as a VOLINTARY CWB with government appointed commisioners/directors…. Farmers supported it back then.. as a VOLINTARY CWB , before the 1943 war measures act making it a COMPULSORY CWB …No reason to believe they shouldn’t support it today ….

  8. John De Pape says:

    Your politics are very clear through this article, and I have no issue there whatsoever. Unfortunately you rely on errors and misguided assumptions, and that’s where I do take issue. This is a huge issue, fundamental to the economic well-being of western farmers. It behooves us all to deal with real facts, objectively and without a ideological bent.

    The CWB does not control 350,000 railcars – not even 350,000 car shipments in a year. Not even close. Total exports of all grains – including those that the CWB doesn’t handle – is about 28 million a year or just over 300,000 carloads in total. The CWB does about half that.

    The debate over the CWB single desk power had nothing to do with geography. It was about freedom (property rights) and economics. Those fighting against the CWB found it abhorrent that they had no control over the wheat they grew even though they were the ones who invested in its production and took on the risk. The CWB also had a negative impact on the crops it didn’t even handle. No other business has even been under this kind of control, and to make matters worse, wheat farmers east of the Manitoba-Ontario border weren’t under the same restrictions.

    Economically, the CWB has been shown time and again to cost farmers hundreds of millions a year – and to cost the western economy in the area of a billion a year.

    You say not many farmers will benefit from the loss of the single desk yet those of us closer to the market recognize that farmers of all sizes will be better off. Getting rid of the huge costs and delivery restrictions will increase incomes across the board. Consider how a durum farmer will gain. A couple of years ago, the CWB sold only 75% of the durum crop – in the interests of holding the price higher. The following year, the CWB sold only 52% of the crop. This meant that as the next year’s crop was about to be harvested, farmers’ bins were bursting with about 3/4 of a crop already.

    Now consider the price. Notwithstanding the efforts of the CWB to hold prices up, the CWB’s farm price dropped from about $3.50/bu to about $1.70/bu. Getting no movement for their No 1 durum – excellent for pasta – many farmers opted to sell to local hog feeders for $4.50/bu (outside of CWB control). Feeding pasta to pigs – not what most would think is the best use.

    The year that the CWB moved only half the crop, farmers received less for their crop than it cost to produce it. They ended up selling other crops like canola – at any price – just to pay their durum bills.


    As for the quality of our food dropping because of the loss of the CWB single desk, that is just more ideological rhetoric from the CWB Alliance. It shows a lack of understanding of how the grain markets actually work. First, the CWB NEVER controlled imports and couldn’t stop imports even if they wanted to. Second, since Canadian buyers can buy from anywhere, they are already buying the cheapest origin already, and that means from Canada. The odd time it makes sense to bring some wheat in from the North-eastern US (which they will do from time to time), but not that often. If the Alliance is right that the CWB gets higher prices for Western Canadian wheat, then it stands that without the CWB, Canadian prices will be lower. Since the buyers already buy on price and the cheapest origin is Canada, seems that the loss of the single desk just means their local (western Canadian) wheat just solidified its position as their first choice.

    Interesting thought that taxpayers will have to support farmers. Most of us see it another way – western farms just became more sustainable on their own.

    The Legumex-Walker plant in Washington Is NOT an export facility – its a crushing facility. It was located there to access canola from the prairies on both sides of the border (the US is growing more and more canola) and from Washington state. We’re already crushing about half our canola crop already in Western Canada and the competition for geography is getting tough.

    I am in the camp that believes that we will see more wheat and barley processing in the praires – just not as much as some have suggested. Flour milling is a mature industry and the current capacity is sufficient to supply our needs – there’s no need for new facilities just yet. But many plants are very old and will need upgrading at some point. Western Canada will be a candidate for new locations.

    On malt barley, I have personal knowledge of three plants that were built in the US to avoid being forced to deal with the CWB. That industry is over-capacity right now and so will not likely see any new plants soon. But in time we will, especially now the single desk is gone.

    As for your basic thesis that Vancouver is at risk of losing employment due to grain that would’ve gone through Vancouver going through the PNW, I don’t think that will happen any time soon either. I did a port comparison study for Trnasport Canada a number of years ago, aimed at assessing whether we were at risk of this happening. Shipping from the prairies to Longview of Portland would mean using an additional railroad at a substantially higher total cost than going to Vancouver. Since we have more capacity in Vancouver than we need, there will be little economic incentive to go elsewhere.

    You seem to suport protecting Canadian routes (and jobs) even if it means a higher cost, but who pays for that? The farmer. Go that route and you and I as taxpayers will indeed be bailing out farmers. But as it stands with the removal of the CWB – the Compulsory Wet Blanket – the farm community is poised at becoming much more self sufficient.

    • K Larsen says:

      Mr. DePape is blowing a lot of smoke. Actually the total number of gain cars unloaded was 278,000 in the 2000-01 crop year with 178,000 going through Vancouver. Volumes are up since then, so the news today for Vancouver is even worse than stated. The farmer controlled CWB always had a “good neighbour” policy to accommodate lentil, canola, and other niche shippers. Does Mr. DePape think Longview will only handle wheat and barley? Please spare us the tedium of observing that as older small rail cars are retired, the number of cars goes down. What matters is the volumes.

      Readers can verify those figures by looking at the CWB annual audited statements prepared by Deloitte and Touche if the Con Board has not removed them from the web site. Enjoy the peek into how things work, because all that information is now privatized.

      Of course private brokers (like Mr. DePape?) will say they can do better than the CWB and over the next few years they now have their chance to prove it. However, unlike private companies and brokers, the CWB returned better than 98% of sales back to farmers. No private company with shareholders works for such a small cost to farmers.

      In fact, 14 International Trade Tribunal investigations, usually conducted by the US Dept. of Commerce, all with full disclosure under oath and subject to cross examination, have concluded that the CWB was a fair trader that got market price or better for Canadian wheat, durum and barley as compared to private trade prices.

      A couple of examples: On durum (pasta) wheat they found that in 59 of 60 months, the CWB was getting market or higher prices for farmers.

      And when the US protectionist group R-Calf got western feedlots investigated, the finding was the CWB actually got better prices for feed barley than the private trade – a fact which saved cattle feedlots in western Canada from being subject to US penalties.

      The Auditor General of Canada also gave the CWB a clean bill of health and confirmed it was financially efficient and well managed.

      As to processors sourcing local wheat: of course the balance between freight costs and price matters. So what? Since these processors are large factories, they also look at many other factors like who can arrange consistent quality of supply, the volume available for a given grade and quality, etc. Without the single desk Wheat Board being the sole seller of Cdn grain, the private trade will also step in and the price farmers will get will be bid down as processors play many sellers off against each other. We are already hearing calls to lower our quality standards to match the US.

      As with everything in the grain trade, economies of scale in all of these things work against individual farmers or grain brokers who are not affiliated with one of the major private grain handling corporations.

      In reading Mr. DePape’s post, it is interesting to note how the rhetoric has changed already on value adding. It was just a few months ago the Prime Minister was in Regina to help a private company announce a new pasta plant now that the CWB single desk was on the chopping block. A few weeks ago the same company quietly announced it was shelving those plans.

      This shows what is sauce for the canola crushing goose (Legumex doing value adding of Canadian canola in the States) is also sauce for the (wheat, durum and barley) gander.

      So I suspect when those Canadian factories are due for an upgrade, they will tell farmers they need to take less so they can afford to upgrade in Canada while their Astroturf front people talk about high Canadian labour costs or even more oddly how “competition for geography” is getting tough.

      For private brokers working for the major private companies, ending the CWB single desk is a licence to print money. Once the drought in the US and Eurasia is over, time will tell if those farmers cheering the end of the single desk Wheat Board are living in a fool’s paradise.

      Lastly, as a full time farmer I really resent seeing a claim that farmers are not self reliant because they have the good sense to work together rather than use the services of a private commodity broker. The fact Harper and company broke the law so we were not allowed to vote on keeping or ending the Wheat Board’s single desk speaks volumes about what has been done.

      • John De Pape says:

        Ken, we can argue all day long about how many railcars are used, but the fact remains that Mr. Climenhaga was wrong, exaggerating the number significantly, coincidentally supporting his argument.

        Your view that the CWB had a “good neighbour” policy accommodating other shippers is pedestrian. Suggesting that the CWB had that much control over the assets of the grain companies, and to call canola shippers “niche shippers” exposes your lack of objectivity when it comes to the CWB and it role in the business.

        Concerning Longview, I never stated what I believe it will handle.

        And concerning what you call the “tedium of observing that as older small rail cars are retired, etc, etc” – I never made a comment or even hinted about that either. Best not to try to put words in my mouth – it does nothing to help your argument.

        I agree that those that are interested should review the CWB annual reports – but be sure you know how to interpret them. By the way, they are not “prepared” by Deloitte, they are audited by Deloitte (NOT Deloitte and Touche anymore, either).

        Also, Mr. Larsen, I am not a “broker”, never have been. But i will disregard the attempt at discrediting me, since you don’t know me.

        Your argument that the CWB returns 98% of sales values back to farmers needs to be put into context. It comes from the simple calculation of comparing the administration expenses of the CWB (as reported in their annual reports) with the total sales value (as reported in the annual reports). In 2010-11, total sales were $6.071 billion and admin expenses were $72.3 million, or 1.2%, leaving 98.8%. However, this doesn’t include other CWB “expenses” such as excess freight, terminal handling, storage payments, financing costs, “other direct expenses” (such as demurrage) and the like. Once you include all these expenses, the net revenue was $4.02 billion – from sales of $6.071 billion. So, in reality, the CWB system cost farmers about $2 billion to make $6 billion – or about 34%.

        And for reasons that I have never gotten a good answer about, Larsen and his colleagues never consider the fact that the grain companies make very good money with the CWB system – more per tonne than they make on non-CWB grains. So to say that the CWB system is better because the CWB gives so much of the sale value back to farmers – more than the private trade would – they overlook the fact that with the CWB system farmers paid twice – once to the CWB and once to the grain company.

        And then there is the FACT that other crops have lower prices because of the CWB and the costs of the CWB system become staggering.

        As for the Auditor General’s Report, make sure you put it into context. The AG didn’t necessarily give the CWB a “clean bill of health” – the only thing that was made public was that the CWB needed to improve its “managerial reporting” and that the financial systems it used were adequate. I speak from experience as I worked for the AG on the Special Audit of the CWB.

        Your comment “the price farmers will get will be bid down as processors play many sellers off against each other” shows an unfortunate lack of understanding markets. The Canadian domestic market is just a part of the North American market, which has many buyers already. Taking out the CWB, which mimicked the market anyway, will have no perceptible effect on the price millers pay.

        As for changed rhetoric on processing, nothing has changed. Personally, I never indicated that there would be a flurry of increased processing, although I know others have. I stand by my points and what I know the effect of the single desk has been. It can only get better.

        As for your resentment at comments I made, let’s be clear I never said farmers are not “self reliant” – there you go again, trying to twist my words. I said that farmers will become “more self sufficient”, which means they are doing well now and will need less government support later on.

        As for having the good sense to work together, I’m all for it. But please don’t confuse coercion with cooperation. They aren’t even close to the same thing. So don’t think for a minute that the mandatory coercion of the single desk is anything like cooperation because its not. You and others can definitely benefit from working cooperatively – even in an open market. I say go for it and all the power to you.

        • K Larsen says:

          More smoke from John DePape, long-time something or other. John, I asked if you are a broker. I understand you are a (former?) floor trader at the Winnipeg Commodity Exchange, so your interest in making the private trade look good is understandable. I make all my income from my farm, so I’m getting a little busy as the grain in my neck of the woods is starting to ripen and perhaps it is not sensible to waste time on this, but a lot of eastern urban people need to know why those boatloads of Chernobyl wheat are on their way now that the harvest is starting over there.

          You are wrong on the oil market too. There are 18 oil refineries in Canada, most of which are in Sarnia, Ontario and Montreal, Quebec. They use Middle East oil to make gas and diesel because of transportation costs.

          You consider pointing out the CWB had a good neighbour policy “pedestrian” but a lot of facts are. Wheat, barley and durum are really the biggest volume of Cdn grain exports and the rest occupy niches of various sizes in various areas. That’s a fact too.

          You say “Larsen and his colleagues never consider the fact that the grain companies make very good money with the CWB system.” They make good money on every grain not just wheat, durum, and barley.

          So I hate to bring this pedestrian fact up, but the CWB system is gone, and the shares of Viterra, one of the largest Cdn grain companies were bid up substantially by Glencore, one of the world’s largest trading firms. This morning on the Business News Network the CEO of Glencore said the assets of Viterra were worth much more than when they made that successful bid a few months ago. Along with the better share prices of other grain companies operating in Canada, this shows they are making even more money handling Cdn grain now that the “old” CWB is effectively dead. In fact they are already doing so by no longer paying for higher protein wheat like the farmer-run CWB did.

          It may be pedestrian to note that the New York investment group which took over CP Rail (that big US owned railway) stated they anticipated raising Cdn freight rates substantially and those rates are creeping up already.

          So the private trade are making more money now that the CWB is gone, and there is no magic in knowing farmers are paying that tab.

          Your “extra” costs of the CWB system are wrong, exaggerated, or out of context. What it costs the private trade to get the grain from the farm gate to port is one of their more closely guarded commercial secrets. The farmer run single desk CWB made a lot of this type of information public in their audited statements, which you quote out of context.

          So I call BS on the “extra” freight and terminal handling. These are a cost on all grains, regardless of how it is sold. It is just the private trade that keeps those figures deeply buried. Your “fact” the private trade have lower costs is really just an unsupported assertion. You are also wrong to just look at CWB costs.

          The Deloitte and Touche audited statements of the CWB note several million dollars in grain handling costs and revenues for farmers by the CWB. They found there is a “net benefit” of several millions of dollars to farmers from these activities. Oh yeah, and there were all those International Trade tribunals that found the CWB got better prices than the private trade – pedestrian maybe but more money in farmers pockets than the private trade provides.

          A whole bunch of people lobbied the Auditor General’s office to ask certain questions, but so what? Are you claiming you were on the AG’s staff or just one of those consultants? Aside from some internal technical issues she suggested improvements for, and which the farmer elected Board put in place, the AG gave the financial and other operations as they touched farmers, a clean bill of health.

          Your last point on the difference between cooperation and coercion is meaningless without the third part of that equation: freeloading. Why should we work together to hold the line on prices, negotiate freight and handling, find customers and all the good things the single desk CWB did and then have the private trade buy the same grain from some financially pressed farmers, flip it, and ride on our backs? Or have the private trade undercut our prices to make the flip?

          To get back to the subject of Alberta Diary’s post: The Longview Washington terminal has the capacity to handle about 55% of the tonnage the farmer run CWB exported in a year from all of Canada. As one poster pointed out, the logic of the market, now that the whole Canadian system is effectively run by foreigners puts the future of Vancouver and other Canadian ports into a shadow.

          • John De Pape says:

            I know I will never change your mind – I’m sure you dismiss anything I say simply because it’s me that’s saying it. But like you, I think others reading this are interested in the real facts.

            Yes, I was a floor trader at WCE, but not a broker. I traded my own account. I write and say what I do, because it’s the truth. I don’t do it to make the private trade look good.

            You’re stuck on Chernobyl wheat coming to Canada but you’ve never explained why it hasn’t happened before. The CWB couldn’t stop it if they wanted, so what stopped the buyers from using imports to drive the local price down? I’ve been in the business for 30 years and have only seen imported wheat work into eastern Canada once, but it was feed wheat. We had a very high quality crop in Canada but Europe had a poor quality crop and had excess feed quality. I think one cargo came in – but that was it. And note it was feed wheat, not milling. Every year we bring in wee bits from the US, but nothing material.

            Domestic milling of wheat – 2.721 million tonnes
            Imports of wheat – 68,000 tonnes
            (all from the US)

            You say wheat, barley and durum are ” biggest volume” and everything else are “niche” markets?

            2010-11 exports in order by size
            Wheat – 15.973
            Canola – 7.105 (niche?)
            Durum – 3.274
            Dry peas – 3.012 (niche?)
            Soybeans – 2.664 (niche?)
            Corn – 1.660
            Oats – 1.337
            Barley – 1.247 (biggest volume?)
            Lentils – 1.104
            Source: Statistics Canada – catalogue no. 22-007-x

            Grain company revenues:
            CWB wheat:
            Primary elevation & cleaning (paid by farmers) = about $20/tonne. (source CGC)
            Storage (paid by CWB) = $5.66/tonne (source CWB)
            Total = about $26.00 (not including terminal handling)

            Estimated by Federal Grain Monitor to be about $6.00/tonne.

            CWB costs (from annual report)
            Admin = $3.60/tonne
            Depreciation = $0.93
            Grain industry orgs = $0.15
            Freight = $12.58
            Terminal handling = $9.57
            Other direct expenses = $2.64
            Other expenses = $0.74
            Net interest earnings = $0.40
            Other income = ($7.37) (mainly freight rate claw backs from shipping direct to customers – when the CWB ships direct and pays the freight, it would claw back the freight deduction made from farmers)

            Not sure where you get the “net benefit of millions of dollars” from handling – it doesn’t show in the annual report.

            Net costs = $23.24 (paid by CWB)
            Including elevation paid by the farmer = about $43

            Concerning rail rates “creeping up”: grain rates are regulated by the Revenue Cap. CP cannot unilaterally raise them beyond what the cap allows.

            “Extra freight” is not a cost paid by farmers on all grains. If individual grain companies screw up, they can’t claw it back from farmers. But when the CWB screws up, it’s farmers that pay.

            I was not on AG staff – I was one of four consultants working on the audit.

            We will never agree on the difference between cooperation and coercion.

  9. sddickson says:

    Thanks, John De Pape
    Great to hear from somebody that really does no what is going on in the grain buisness !

  10. The Invisible Hand says:

    Corporate donations roll in to pay for the slick ads needed to attack parties and politicians that might go to bat for Canadian farmers, working people and economic development.

    False. Corporate donations to federal political parties were banned in 2007… by Stephen Harper.

  11. Jim says:

    John De Pape, I listened to you when you said the end of the CWB would be good for farmers and that I could still use the CWB if I wanted. Now I’ve got CWB pooled grain I can’t get into an elevator because there’s always no space. What terrible advice you gave and you’ve still giving it!


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