Time to pull the plug on the Canadian Wheat Board

It’s time to put an end to the Canadian Wheat Board, the government-mandated monopoly for marketing barley and wheat in Manitoba, Saskatchewan, Alberta, and the Peace River District of British Columbia. Dismantling the wheat board would then allow Western wheat growers to form their own association to pool their product and individual farmers would have a choice whether to join.

Eliminating the Canadian Wheat Board would put western grain farmers on the same footing as grain farmers in Ontario and Quebec. Since 1935 with the passage of the Canadian Wheat Board Act, farmers in Western Canada have been required to sell all wheat and barley produced for human consumption to the Wheat Board. Meanwhile, grain growers in other parts of the country are permitted to market their grain independently.

Clearly, the Act is discriminatory in that it treats different regions in Canada unequally. It is also an injustice to individual farmers who do not have the right to sell their own product to whomever they want. Whatever illusory economic and social benefits this monopoly was imagined to produce in the 1930s, it has long outlasted any basic reasons for limiting economic or individual liberty. Many studies, including one by the Western Canadian Wheat Growers Association, have shown that the Board does not consistently achieve higher farm gate prices for farmers.

When some farmers have tried to bring attention to this travesty of economic freedom by selling their home-grown grain on their own, they have faced fines and even imprisonment. In 1995, Andy McMechan was imprisoned for 155 days for trying to sell his barley for $6 a bushel in the United States while the Canadian Wheat Board was only offering $3 a bushel.

The monopoly also limits the farmer’s selling or storing options. When oats was removed from the Board’s mandate in 1998, more Canadian oats processing resulted. The state-imposed cartel also limits innovation. Using the Wheat Board’s non-transparent pricing policy as their ammunition, American interest groups have used the Board’s policies 14 times in the last two decades to start trade action against Canadian grain exports. These actions have cost Canadian farmers millions of dollars. The notion that the Board can have real clout in terms of setting world grain prices is dubious. In 2005, Canada produced only 14 per cent of the world’s wheat exports and only 10 per cent of its barley exports.

Given the violation of individual farmers’ rights and the distortion of economic incentives and trade, the current Conservative government was correct to begin changing the Board’s mandate. In a careful manner, Chuck Strahl, Minister of Agriculture, has started the process of removing barley from the Board’s mandate. Alas, this move towards market choice was bitterly contested by some of the bureaucrats and appointed officials of the Board, leading to the recent firing of its Chief Executive Officer, Adrian Measner.

In what looks like a political move, Stephane Dion, the new Liberal leader, has vowed that if the Liberals form the next government, he will roll back Strahl’s decision and perpetuate the economic enslavement of Western grain farmers while farmers in his own province of Quebec as well as in Ontario have full freedom to market their grain individually or through a marketing board.

Arguably, there is enough regulatory room inside the Act for the government to act at once. Alternatively, it could introduce legislation to change the Act. The idea, as some interpret the Act to say, that a majority of farmers must first agree by vote to allow any individual farmer the right to sell his own product should be null and void as it is appears to be a violation of individual rights and freedoms in the Canadian constitutional context.

It’s increasingly clear that the Wheat Board no longer serves the best interests of Canadian farmers or the country as a whole and the government should waste little time in dismantling this economic relic from another era.