Wednesday, August 01, 2007

Good news for barley farmers

The Wheat Board was supposed to lose its monopoly over barley marketing as of August 1. Now, a federal court has stopped this change:
A court decision has derailed, at least temporarily, the federal government's plan to strip the Canadian Wheat Board of its monopoly on western barley sales.
Federal Court Judge Dolores Hansen ruled Tuesday the Tory cabinet overstepped its authority earlier this year when it passed a new regulation to allow farmers to sell their barley independently.
"I conclude the new regulation is ultra vires (beyond cabinet's power) and of no force and effect," Hansen wrote.
The judge sided with supporters of the wheat board, who argued any changes to the board's monopoly must be made via a law passed in Parliament - something that could be blocked by the opposition.
Not only could be, but would be.
The disingenuous aspect of the issue is this: the federal Conservatives keep saying that 62 per cent of farmers voted for 'marketing choice". But did they? Not really. While just over one-third of 30,000 barley producers voted that the Canadian Wheat Board should retain the "single desk" (ie, monopoly of barley marketing), only 14 per cent of producers said the Board "should have no role in marketing barley." In other words, a large majority of barley producers want the Canadian Wheat Board to continue handling barley. But in reality, without their monopoly the Board actually couldn't do it.
Here's why. The CWB is not a grain company like, say, United Grain Growers or the Saskatchewan Wheat Pool. The CWB doesn't own or manage elevators, nor does it manufacture or process a product. It doesn't actually "make a profit".
So here is how things would work if the CWB continued to purchase barley from farmers. It would probably repeat what happened from 1935 to 1939 when there was "dual marketing" for wheat -- for the Board, it wasn't pretty:
The result of a voluntary CWB or dual market was that when the initial payment turned out to be above the world price the CWB got all the wheat and paid farmers the difference between the "world price" and the initial payment. When the initial payment was lower than the "world price" the CWB got no wheat and the trade received all the wheat and hence all the profit.
So without a monopoly, why should the CWB continue to purchase anyone's barley at all? They would just lose money.
As a non-lawyer, the Canadian Wheat Board Act seems pretty clear to me -- Part Five says that the jurisdiction of the Board can be extended to Oats and Barley by Cabinet regulation, but that excluding wheat or barley from CWB jurisdiction is to be done by Parliament. And the federal court judge basically said this too, if I understand her statement correctly.

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