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Socialist Project • E-Bulletin No. 671
July 27, 2012

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The Day the Wheat Board Died

Gavin Fridell

On August 1, 2012, the Conservative government will bring an end to a major Canadian institution and one of the world's largest, longest-standing, and most successful “state trading enterprises.” After 70 years as the state-mandated monopoly seller of most Western Canadian wheat, the Canadian Wheat Board will officially become “voluntary,” meaning the death of anything resembling what it has been.

Wheat Board Becomes a Plank

The board has been widely praised and defended by many grain farmers and progressive supporters, as well as relentlessly attacked, even despised, by others. In the end, those opposed to the Board, although highly vocal and backed by powerful corporate interests, would appear to be in the minority. This minority, however, has won the day. The Canadian Conservative government of Stephen Harper legislated the end of the board in December 2011 without holding a vote among prairie grain farmers even though it is required by the Canadian Wheat Board Act. Despite a recent Wheat Board plebiscite in which the majority of farmers voted in favour of maintaining the Board's status, and despite a Federal court ruling at the end of 2011 that determined the government's actions were illegal, the Conservatives have continued unabated in their moves to dismantle the Board, with Harper arguing that when western farmers voted Conservative in the last election (which the majority did) they voted for “marketing freedom.”[1]

The government has appealed the court ruling and by the time the issue is cleared up, the Board as it has been known will be long gone. Friends of the Canadian Wheat Board, a coalition of Canadian farmer groups, including the National Farmers Union (a founding member of La Via Campesina, an international peasant movement opposed to corporate control of the global food system) have taken a lead role in the class action suit against the government and are now seeking billions of dollars in compensation for prairie farmers rather than the return of the Board.

“Market Freedom”

The long-standing debate over the future of the Wheat Board has frequently been framed as an ideological one around “market freedom.” And, indeed, ideology has been a major factor. Despite giving hundreds of millions of dollars each year in subsidies to Alberta oil sands companies, to cite just one example, members of the Conservative government fashion themselves as libertarians, opposed to state intervention in the market, and have been virulently opposed to the Board. In partnership with the neoconservative Alberta government and powerful private interests, millions of dollars have been spent over the past several years attacking the Board, portraying it as something akin to a Stalinist nightmare, and attempting to erase its gains from history. “There has been a whole lot of rewriting of history,” says Robert Roehle, President of the Friends of the Canadian Wheat Board, in a recent interview.

At the same time, the battle over the Board was not solely ideological but significantly driven by class interests. Intense economic and political pressure from giant agribusiness was clearly aligned behind the Conservative government and those farmers opposed to the Board. While anti-Board farmers may be a minority overall, this minority likely includes the largest farmers who now produce more grain than the rest of Canadian farmers and are increasingly linked to powerful biotechnology and livestock sectors – more grain is now grown in North America to feed animals than humans. Despite the existence of the Board, the number of wheat farmers in Canada has been on a steady decline for decades, with small farmers increasingly squeezed out, while the incomes of remaining farmers have grown. The future of the Board has long been tenuous in the face of expanding corporate dominance of the Canadian and international agrifood system – and the giant grain traders are now rubbing their hands in anticipation of seizing control of the multi-billion dollar market once managed by the Board.[2] Against these odds, the persistence and long history of the Wheat Board is all that more remarkable.

The History of the Board

In the first half of the twentieth century, when the Wheat Board was formed, class differences among prairie farmers were less pronounced than today. Most prairie farmers were relatively poor, making the distinction between farmers and wealthy private grain, banking, and railway interests all that more apparent. For decades, prairie farmers mobilized against the monopoly powers of these corporate giants, driving a tide of radical agrarian reform that helped lead, among other things, to the formation of a voluntary Wheat Board in 1935 as well as the founding and electoral victory of the avowedly socialist Cooperative Commonwealth Federation (CCF) in the 1944 Saskatchewan election.

In 1943, the Canadian Wheat Board was authorized by the federal parliament to act as the “single-desk seller” for all Western Canadian wheat, durum, and barley sold internationally and for human consumption domestically. Its formation occurred in the wake of the Great Depression of the 1930s and in the context of the Second World War. This created a unique set of conditions for often competing interests to come together and agree on a unique government-mandated monopoly. Farmer agitation combined with the interests of the Canadian state, which feared a temporary spike in wheat prices were negatively affecting its ability to deliver sufficient grain to wartime allies, in particular Great Britain. Hesitant and somewhat tepid support for a board also emerged from groups in the business sector, in particular the food processing industry, who, in wake of the Depression, feared the prospect of a total collapse of domestic grain farming, and major Canadians banks, concerned over the status of their loans to Western grain pools and provincial governments.[3]

Although originally envisioned as a temporary measure, the Board proved to be highly successful and popular, and was continually renewed and expanded over the next several decades, frequently receiving support from all major federal parties. During this time, Canada emerged as a leader in the international grain trade. Despite producing only around 4 per cent of the world's wheat, Canada today accounts for around 14 per cent of the world's wheat exports and the Board has been the largest marketer of wheat and barley in the world, managing annual sales of between $4 and $8-billion. This economic weight has given the Board a variety of marketing advantages – advantages that, notes Roehle, “every company in the world would love to have.”

The Power of the “Single-Desk”

Private grain companies would indeed love the advantages that come with the Board's single-desk status, and in fact the largest ones already have them and more. It is estimated that between 70 and 90 per cent of the entire global grain trade is controlled by just four corporations: the “ABCD group,” composed of ADM, Bunge, Cargill, and (Louis) Dreyfus.[4] These transnational giants use their oligopolistic control of markets to pay producers as little as possible and charge consumers as much as possible, pocketing the margin as private profit. The Wheat Board, in contrast, works as an agent of the farmers, making deductions only for operating costs and not for private profit, with its primary task to pay farmers as much as possible.

While the Wheat Board's activities are frequently confused with “supply management”, the Board, in fact, places no restrictions on supply but instead collectively manages and markets most prairie wheat. The direct benefits to farmers that come from collective management are many, but the most immediate ones consist of price pooling (farmers are paid an annual price based on the pooling of all grain over the course of the year, spreading risk collectively and ensuring more reliable and steady prices for all) and quality controls (involving what Roehle calls a “disciplined” system for regulating the introduction of new plant varieties, resulting in stronger qualities guarantees and higher price premiums for Canadian wheat). The Board has also been able to use its immense weight to attain higher prices by meeting the strategic foods needs of major wheat importing nations, like Japan, the UK, and China, offering them coveted large contracts guaranteed over a period of several years.[5]

The Board has offered farmers many indirect benefits, acting as a representative of farmers against powerful corporate interests. The Board has long played a central role in defending farmer interests against the private railway industry, which is entirely monopolized by only two companies: the Canadian National Railway (CNR) and the Canadian Pacific Railway (CPR). Most recently, in 1997 the Board successfully sued both companies for various delays and shipping failures, winning millions of dollars in compensation. The Wheat Board also played a central role in a campaign which successfully blocked the introduction of Monsanto GM modified wheat in 2004, and has since initiated an organic program that has made Canada one of the world's top growers of organic grain – a small but expanding market.

Despite its many benefits, the politics in favour of such “state trading enterprises” has changed course significantly over the past three decades, and the Wheat Board has undergone a barrage of challenges, domestically as well as internationally through U.S. government trade investigations as well as dispute panels organized under the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). All of these investigations failed to prove that the Board unfairly “distorts” markets, to the chagrin of Board opponents, although the rules at the WTO have been gradually changing over the past decade in the direction of banning state trading enterprises, which are currently permitted under certain conditions.

In the end, it was the majority election victory of the Conservatives in 2011 that brought about the Board's final curtain. In choosing to eliminate the Board without the required farmer vote, the government has acknowledged the popularity of the Board, which many suspect would have won a democratic vote, as well as expressed the view that Conservative support in rural farm areas is so strong they do not feel threatened at the ballot box as punishment for their actions.

Canadian Politics and the Wheat Board's Demise

While the survival of the Wheat Board has been a passionate issue for prairie farmers, Roehle suspects that most farmers will continue to grow their grain, only with less income in an industry now dominated entirely by transnational agrifood companies. Roehle's sober appraisal reflects the fact that the Board, despite its many gains, has never been able to do more than slow down the trends in the global agrifood industry, including the growing concentration of farmers into ever larger units and the corporatization of all aspects of the agrifood system, from farm inputs, technology, machinery, seeds, fertilizers, and herbicides, to the processing, retailing, and marketing of food. The end of the Board does not mark the beginning of the corporatization of wheat farming in Canada, but rather another chapter in its continuing and rapid expansion.

All of this is not to take away from the many gains of the Wheat Board over its long history. The Board has brought countless gains to prairie farmers and served as a model example of effective collective marketing in action, defending the livelihoods of smaller grain farmers against the relentless tide of corporate penetration. Its actual history – not the dark Cold War fantasies put forward by Conservative pundits – offers a great many important lessons for the North American left as well as agrarian and food activists globally. Organizations like Via Campesina have long recognized the need for state-managed trade regimes to support small farmer livelihoods and local food sovereignty initiatives against the weight of corporate juggernauts, and the Canadian Wheat Board has often been evoked as a successful alternative trade model to learn from.[6]

Perhaps the greatest of these lessons is that of the power of cooperative action. American Sociologist Seymour Martin Lipset once observed, in his classic examination of radical agrarian movements in Canada, that their “socialism without doctrine” often resulted in cooperative projects that were more socialistic than “some explicitly socialist parties.”[7] While certainly not without its flaws, the Wheat Board persisted for decades despite being much maligned by powerful corporate interests, because of its overall social effectiveness and popularity among farmers. Against the tide of “free trade” rhetoric, which frames corporate monopolies and market discipline as “freedom,” the Board has offered a pro-poor monopoly driven by collective discipline in the wider interests of society. Its existence has impacted not just on the lives of prairie farmers, but also on the entire political imagination of North America, creating space to discuss and debate collective management in action. The history of the Board has been interwoven with a wider history around collectivist projects in Western Canada, from state managed ones like the Board to countless farmer and worker-run cooperatives, all of which tended to be opposed to free trade and created openings for anti-capitalist or anti-corporate movement with broad, popular appeal.[8]

This is no small feat in a political world where libertarian fantasies so often rule the day (mostly in rhetoric, not in practice as the recent Wall Street bailout so powerfully reveals) and where one third of Americans in a recent survey claim to have read Atlas Shrugged by Ayn Rand, a libertarian philosopher and fervent promoter of “selfishness.”[9] Against the preponderance of a political culture that celebrates individualism and selfishness, the moral force and cooperative ethos of the Canadian Wheat Board will be much missed. •

Gavin Fridell is a Canada Research Chair in International Development at Saint Mary's University. He is the author of Fair Trade Coffee (University of Toronto Press, 2007) and the forthcoming book, Alternative Trade: Legacies for the Future (Fernwood).

Endnotes:

1. CBC, “Wheat Board's Future Sparks Heated Commons Debate,” CBC News, 11 September 2011.

2. Dan Lett, “Wheat Board's Demise Ensures Survival of Biggest,” Winnipeg Free Press, 6 July 2011.

3. For more on the history of the Board and agrarian radicalism, see Anthony Winson, The Intimate Commodity: Food and the Development of the Agro-Industrial Complex in Canada (Toronto: Garamond Press, 1993); Seymour Martin Lipset, Agrarian Socialism: The Cooperative Commonwealth Federation in Saskatchewan: A Study in Political Sociology (Garden City, New York: Anchor Books, 1968).

4. Felicity Lawrence, “The Global Food Crisis: ABCD of Food – How the Multinations Dominate Trade,” The Guardian, 2 June 2011.

5. For more on the benefits of the Board, see Andrew Schmitz and Hartley Furtan, The Canadian Wheat Board: Marketing in the New Millennium (Regina: Canadian Plains Research Center, 2000).

6. Peter M. Rosset, Food Is Different: Why We Must Get the WTO out of Agriculture (Halifax: Fernwood Publishing, 2006), pp. 72-74.

7. Lipset, Agrarian Socialism, pp. 33-34.

8. Lipset, Agrarian Socialism; Lorne Brown, Joseph Roberts, and John Warnock Saskatchewan Politics from Left to Right: '44 - '99 (Regina: Hinterland Publications, 1999).

9. George Monbiot, “How Ayn Rand Became the New Right's Version of Marx,” The Guardian 2012.

Comments

#8 Gavin 2012-08-07 08:40 EST

Thanks Wendy, and the rest, for your very thoughtful comments. The issue is so complex and there is so much to say about it. Its a pity that the Harperites want to pave over all of this complexity with simple rhetoric and destructive policies. Sad days for Canadians, but we might all yet stand up and say enough...



#7 wendyholm 2012-08-05 16:48 EST
The Destruction of Democracy...
Thank you Gavin for an eloquent condemnation of Harper's destruction of the Canadian Wheat Board. This unprecedented and deadly attack on sound farm policy - at the hands of our government no less - would have been unthinkable only a decade ago.

Today, such policy abuse seems the new normal.

As the age of fossil fuels and globalization draws to a close, food security, food sovereignty, food safety, food democracy and community sustainability are clear priorities.

The destruction of sound agricultural policies like the CWB, supply management and farm income stabilization is fully unacceptable.

Follow my blog on this at http://www.holmonfood.blogspot.com
http://www.wendyholm.com



#6 Mr. Blair M. Phillips 2012-07-31 18:34 EST
small farmers
Someone has to grow wheat and grains. Family farms in Canada have fallen from over a million in 1900 to "I think" around 200,000 today. I saw an interesting graph several years ago about what family farmers received per bushel of wheat in the 1920s in comparison to today. The price per bushel was about the same - maybe a few cents more. It's unfortunate that "more farmers" could not have see the benefits of the Canadian Wheat Board and received a more fair compensation for their wheat. The remaining family farms in Canada "will be steam rolled" with the CWB gone. Hold on to your socks. Our family farm was in Tara,Ontario for about 100 years. Wonderful memories.



#5 Purple Library Guy 2012-07-30 18:52 EST

"the battle over the Board was not solely ideological but significantly driven by class interests" -- Po-tay-to, po-tah-to.

Must strongly disagree with Mr. Richter (comment 4). State farming such as he describes is a terrible idea. Not, perhaps, quite as bad an idea as the corporatist nirvana we are headed for (and in large measure already in). But still terrible; that kind of hierarchical control from above is not the kind of approach the left should aim for. I find much more merit in a Bolivarian or Parecon sort of approach: Protagonistic control from below, but with a co-operative, social flavour. Small farmers are to some extent a case of worker ownership of the means of production. Mr. Richter proposes to take it away from them so they can then sort-of own it again via the state? There's little point in the workers theoretically "owning" the means of production if in reality they operate as tenants doing the bidding of technocrats who turn into rentiers.
The particulars of the "Stalinist nightmare" may have happened because of this or that specific policy. But there will inevitably be problems--of policy, of inefficiency, of misallocation, of injustice, of alienation, of corruption--when control rests with distant elites rather than with the people.



#4 Jacob Richter 2012-07-28 22:59 EST
State farming not considered by the left?
To be fair, though, I do think the writer is too sympathetic towards small farmers and other non-"farm workers" tilling the land.

"State trading" was never the way to go relative to "state production," anyway.

As I wrote before and again, the "Stalinist nightmare" occurred because the Soviet government chose a clumsy, middle-of-the-road approach in kolkhoz-ization.

This turn of the page should present the left in Canada an opportunity to advocate socialized vertical farming and monopoly socializations elsewhere in industrial "agrifood" (to use our peculiar terminology). State-owned farm production worked by only farm workers on wages and/or salaries is the way to go, with no ifs, buts, or ands.



#3 Vicjoe 2012-07-28 14:47 EST
Canada will be disproportionately hurt
Sadly, this passing of the Wheat Board gets hardly any coverage in the media, so that most Canadians don't realize that the de facto illegal shutting down of the CWB by an imperious government has taken place, let alone the consequences not just for farmers but for the end consumers of grain products. As it happens, the corn crisis from drought has hit US growers worse than most in Canada, which means when the pressures and demands for corn escalate, Canadian farmers will be forced to sell the corn products to the massive US market instead of within the country for the benefit of Canadians, meaning that Canadians will pay disproportionately for the more expensive foods that are related to corn. Indeed, a significant percentage of Canadian corn is likely to end up being used by the US government-mandated ethanol producing sector (we don't have an official ethanol program in Canada).

Hence the ripple effect of this noxious situation will directly be increased food prices (that will disproportionately harm poor people) and indirectly higher prices for gasoline and diesel (since Canadians don't have the same resort to ethanol that the Americans do, hence the market becomes distorted, favouring car culture Americans). This may seem counter-intuitive given the surfeit of oil from the Alberta Tar Sands, but in fact by the rules of the N. American Trade Agreement, oil extractive products go firstly to US refiners, who then sell some of it back to Canada with a significant markup for having refined it.



#2 Anonymous 2012-07-27 13:23 EST
question
I don't understand why the government's appeal of the court ruling of 2011 can, simply through creating a delay in a final ruling, in effect ratify the illegal decision. This government seems to be finding ways to do whatever it wants regardless of court rulings or popular opinion. Why are the supports of the board seeking "compensation" rather than a ruling to stay the dismantling of the board until the legality of the action can be established?



#1 Anonymous 2012-07-27 06:42 EST
Harper, CWB and the NCC
Ever since Harper was head of the NCC he has been out to get the CWB among other obvious targets.
BTW, why does this author refer to "Alberta oil sands companies"? I thought only the corporate media referred to the "oil sands." It is in fact the "Alberta Tar Sands."
Massive amounts of water, natural gas and "oil" are consumed to produce "oil" from this environmental economic and social disaster.




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