Canada has lost cred­i­bil­ity and grain cus­tomer trust thanks to dereg­u­la­tion

Prairie Post (East Edition) - - Farm News - BY KEN LARSEN

Prairie farm­ers have sel­dom faced such a bar­rage of bad news. The three gi­ant agro-chem­i­cal-seed com­pa­nies are cam­paign­ing to take con­trol of all seed ge­net­ics away from farm­ers and charge more for the pedi­greed seed that is the foun­da­tion of Canada’s qual­ity as­sur­ance system. At the same time, our ma­jor cus­tomers for grains, oil seeds, and pulses are turn­ing their backs on our prod­ucts. In spite of what some in the pri­vate trade loudly pro­claim about re­cent events, run­ning through all these is­sues is the com­mon thread of cred­i­bil­ity and trust.

With­out the Cana­dian Wheat Board, the mar­ket­ing for prairie grain has de­faulted to the three or four gi­ant grain com­pa­nies dom­i­nat­ing the world mar­ket. The two Cana­dian-based com­pa­nies, Par­rish and He­im­becker and J. I. Richard­son In­ter­na­tional, have tried to fill the mar­ket­ing gap left by the CWB, but on the world stage they are, to put it kindly, only mom-and-pop op­er­a­tions. They have little in­flu­ence on ei­ther do­mes­tic pol­icy or in­ter­na­tional events, as the re­cent prob­lems with the Chi­nese canola mar­ket demon­strate.

The goal of the prairie grain ex­port system, whether it was Board grains or non-board grains, was to have po­ten­tial cus­tomer ten­ders spec­ify “source: Cana­dian.” Most of the time this was achieved by us­ing the Cana­dian Wheat Board and three in­ter­locked govern­ment agen­cies – Agri­cul­ture Canada, the Cana­dian Grain Com­mis­sion, and the Cana­dian In­ter­na­tional Grains In­sti­tute.

First is Agri­cul­ture Canada plant breed­ing and re­search sta­tions across Canada. They pro­vide im­par­tial seed breed­ing done in the in­ter­ests of farm­ers and our in­ter­na­tional cus­tomers.

Sec­ond and most im­por­tant is the Cana­dian Grain Com­mis­sion. It pro­vided an in­de­pen­dent and im­par­tial third-party ver­i­fi­ca­tion of the qual­ity of grain loaded into ex­port ships. The CGC’s “Cer­ti­ficate Fi­nal” car­ried the pres­tige and au­thor­ity of the Govern­ment of Canada and was re­spected around the world. Cus­tomers could rely on the fact that a Cana­dian grain ship­ment con­tained ex­actly what the CGC’s in­spec­tors spec­i­fied and noth­ing else. The Cer­ti­ficate Fi­nal made buy­ers trust the qual­ity of Cana­dian grain.

Third is the Cana­dian In­ter­na­tional Grains In­sti­tute. Each fall CIGI gath­ered rep­re­sen­ta­tive sam­ples of the prin­ci­ple grains grown on the prairie to pro­vide in­for­ma­tion to po­ten­tial cus­tomers. If a noo­dle maker in Asia was in­ter­ested in wheat, the CWB would often fly them to the prairies to meet some farm­ers who had grown the grain they were in­ter­ested in pur­chas­ing. Then at the CIGI of­fices in Win­nipeg this po­ten­tial buyer would see a sam­ple of the grain milled and pro­cessed in the demon­stra­tion-scale flour mills, pasta ma­chines, or, in the case of malt bar­ley, a brew­ery. So our cus­tomer left Canada with the spec­i­fi­ca­tions for how to set their fac­tory to ob­tain the best qual­ity prod­uct us­ing the spe­cific Cana­dian grain they pur­chased and with the con­fi­dence it would be de­liv­ered as promised.

For Board grains the Cana­dian Wheat Board pro­vided mar­ket­ing, fi­nanc­ing, and cus­tomer follow up. Prairie farm­ers grained all the ad­van­tages of hav­ing the ben­e­fi­cial own­er­ship of their grain from farm gate to the cus­tomer’s ter­mi­nal. Of­fices in Ja­pan, China, and Europe al­lowed the CWB to have on-site staff fa­mil­iar with cus­tomers and their cul­tures. It should be re­mem­bered that CWB staff often as­sisted other Cana­dian grain ex­porters in nav­i­gat­ing the labyrinth of the in­ter­na­tional grain trade.

If something went amiss in that long chain, CWB staff were nearby to the destinatio­n and had the au­thor­ity and abil­ity to rec­tify any short com­ings. This in­ter­con­nected ef­fi­cient system gave Canada the cred­i­bil­ity to boast our farm­ers were “feed­ing the world” and gave in­ter­na­tional cus­tomers the in­cen­tive to spec­ify “source: Cana­dian” for grain pur­chases.

One of the pol­icy achieve­ments of the Harper Govern­ment was putting in motion the pri­va­ti­za­tion of Canada’s agri­cul­tural ex­port system - a process the Ottawa Lib­er­als have been con­tin­u­ing. Now the con­se­quences of that pri­va­ti­za­tion pol­icy are com­ing home to prairie farm­ers as crash­ing prices for canola, pulses, and du­rum wheat. If present trends con­tinue, can hard red spring wheat be far be­hind?

It is so bad on the prairies even the ur­ban me­dia no­tices China no longer wants to buy prairie canola. Sadly, the me­dia can­not re­mem­ber three years ago the Chi­nese com­plained about too much dock­age (stems, chaff and other for­eign ma­te­rial) in canola ship­ments. A cus­tomer want­ing a cleaner prod­uct is ap­par­ently not sexy enough for some of the me­dia. In­stead, they opted for a nar­ra­tive based on a byzan­tine spy thriller in­volv­ing the ar­rest of a Chi­nese ex­ec­u­tive years af­ter the dirty canola is­sue was raised.

Two years ago, In­dia stopped buy­ing Cana­dian lentils and other pulses for much the same rea­son (not clean enough). Be­tween In­dia and China, the prob­lem of too much dock­age has ef­fec­tively crip­pled al­most all those prairie ex­ports. The 80% world mar­ket share Canada often en­joyed for its high-qual­ity du­rum (pasta) wheat is also ef­fec­tively lost for much the same rea­sons.

The dis­as­trous loss of these mar­kets boils down to the fact Canada has lost its cred­i­bil­ity in the in­ter­na­tional grain mar­ket. Canada is no longer seen as a trusted sup­plier of high-qual­ity grains. The rea­son for this is very sim­ple: aside from a cou­ple of mom-and-pop op­er­a­tions, Canada doesn’t mar­ket its own grain any­more. That has been out-sourced to the gi­ant multi­na­tional grain com­pa­nies.

Why would these giants not want to keep the Cana­dian qual­ity as­sur­ance system? Af­ter succeeding in killing the CWB, why are their friends and rep­re­sen­ta­tives push­ing to merge CIGI with the pri­vate trade dom­i­nated Ce­re­als Canada, and why are they work­ing to un­der­mine the Cana­dian Grain Com­mis­sion?

The an­swer is clear. They have no de­sire to ser­vice any cus­tomer ten­ders that spec­ify “source: Cana­dian.” It en­hances their prof­its to have all ten­ders spec­ify “source: op­tional.” This is be­cause it al­lows them to fill ten­ders based on where in the world’s grain grow­ing ar­eas they can pur­chase grain from farm­ers at the cheap­est price and then flip it to the cus­tomer for the biggest cor­po­rate profit. This is their busi­ness model and for the past 120 years it has been very suc­cess­ful for their own­ers and share­hold­ers. With the end of the Cana­dian Wheat Board, grain com­pa­nies are now in a po­si­tion to take huge prof­its out of the Cana­dian prairies. Both the Harper and Trudeau ad­min­is­tra­tions have played right into their hands by de­stroy­ing Canada’s in­ter­na­tional cred­i­bil­ity that made cus­tomers spec­ify “source: Cana­dian.”

For prairie farm­ers this means a lot less in­come and be­ing forced to re­al­ize, as canola pro­duc­ers are learn­ing, that there are many sources of oil seeds and other grains around the world. With­out a trusted qual­ity as­sur­ance system, Canada can­not bully or hu­mil­i­ate po­ten­tial cus­tomers into spec­i­fy­ing “source: Cana­dian.”

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