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He Said, She Said

Last October Saudi Arabia put out a bid for 550,000 metric tons of hard wheat at 14% protein. The Canadian Wheat Board (CWB) successfully obtained the bid by discounting $16 to $25 per metric ton below the cheapest offers from the United States and Australia, once again sparking criticism of the CWB's monopolistic, and some say trade-distorting, power.

The U.S. Wheat Associates, a long-time critic of CWB, said the sale left in excess of $11 million on the table.

That is just one example of the many skirmishes that go on in the oft-acrimonious relationship between U.S. Wheat and CWB, the largest wheat and barley marketer in the world and the last remaining wheat monopoly (Australia disbanded theirs two years ago).

Even so, the U.S. has challenged CWB in World Trade Organization disputes many times and each time the Canadians have prevailed.

"The Americans don't like the ability of the wheat board to price differentiate, because it's something the American traders can't do," says Maureen Fitzhenry, media relations manager at CWB. "Our objective is to sell at the highest possible price for the overall crop and return it all back to the farmers. We're not making money for any sort of shareholder group. It's all working entirely on behalf of the farmers."

In 2008 an Informa Economic study, commissioned by the Alberta Government, looked at the impact of moving to an open market in wheat and barley. According to the Western Canadian Wheat Growers, which opposes the mandatory sales aspect of CWB, moving to a voluntary CWB in an open market would generate an additional $450 to $600 million in additional revenue or reduced costs to farmers.

'Seriously flawed' CWB contends that study was "seriously flawed." In 2001 a University of Saskatchewan study showed that, under the CWB's 'single desk' selling, Canadian farmers received $10.49 per ton more at the farm gate (country elevator) than they would have received under identical market conditions if the CWB did not exist.

"We can provide lots of documentation to show that Canadian farmers receive less from the CWB than nearby U.S. farmers selling the same type of wheat," says Alan Tracy of U.S. Wheat Associates. "The Doha round of WTO negotiations, if ultimately successful, will give western Canadian producers what the CWB has long denied them: the right to sell to whomever they choose."

The main source of discontent toward CWB is farmers who live along the U.S.-Canadian border, says Fitzhenry. "That's because they could drive their truck into the U.S. and capture from time to time a price that is significantly higher than what they could get from the CWB," she adds.

"The reality is, if the CWB disappears and people truck grain across the border, we will have one North American market place and prices will come down with that extra supply coming in from Canada. I don't know if the Americans would put up with that for very long," she adds.

Steve Mercer, communications director at U.S. Wheat Associates, isn't so sure. "We feel the lack of transparency and trade distortion from CWB is worse than if we had the border open," he says. "Let's compete on the basis of quality and value."