The release of Canadian Wheat Board (CWB) final payment information confirms the final prices that prairie farmers received for their wheat in the 2009/10 crop year were again lower than the returns that were available on the open market.
The final pool price for the CWB’s flagship wheat class (1 CWRS 13.5% protein) in the 2009/10 crop year was $185.87 per tonne, basis Manitoba. Over the same time period, the average daily price for wheat of similar quality at over 300 northern U.S. elevators was Cdn $197.80 per tonne.
“The analysis shows there were only 11 days throughout the entire crop year in which a U.S. farmer would have got a lower price than the pool price received by prairie farmers,” says Rolf Penner, Manitoba Vice President of the Wheat Growers. “If a prairie farmer could have sold an equal amount of his crop on the open market each week, he would have fared much better than selling his crop through the CWB marketing system.”
The Wheat Growers have also compared returns based on its estimates of the CWB’s pricing pace, which takes into account that the CWB starts selling the anticipated crop prior to the start of the crop year. Pricing pace information for the 2009/10 crop year is not available, however if similar to the pricing pace established for the 2010/11 crop year, then the U.S. average price over this time period was about Cdn $23 per tonne higher than the returns achieved by the CWB pool. In other words, if a U.S. farmer had been pricing his crop at the exact same pace as the CWB, his return would have been Cdn $23 per tonne, or more than 60 cents per bushel, greater than the return received by a Canadian farmer.
This comparison does not take into account the higher storage and interest costs incurred by western Canadian farmers. U.S. farmers have the opportunity to deliver their grain at a time of their choosing, whereas prairie farmers in general incur higher storage and interest costs due to CWB delivery restrictions.
The Wheat Growers stress the comparison to U.S. returns is not based on the assumption that our wheat would be sold into the U.S. under an open market. The comparisons to U.S. returns are made because it is the nearest open market and its prices arbitrage with the rest of the world. In an open market, Canadian prices would also reflect these world values.
“It is often argued that the CWB monopoly should remain in place because it gives farmers a price premium. Once again there is no evidence this is the case,” says Penner. “How can politicians or anyone else justify taking away the right to sell our own grain, when there’s no demonstrated benefit to farmers?”
