Farmers for economic freedom
Updates from the Canadian Farm Enterprise Network, Canadian Farmers for Justice and the Prairie Centre. Several of the items appearing here originally appeared in an email list operated by Dwayne Leslie at http://www.prairielinks.com.
web posted August 23, 1999
The end result is always the same
By Kevin Avram
If there's anything that history has proven, and the experience of the 20th century has confirmed, it's that a government-run monopoly of a commercial activity is inefficient and ineffective. It can be effective during a time of war, but over the long haul, government monopolies involving a commercial activity, breed shortages, high operating costs, and poor quality. They also have the effect of turning the discussion that surrounds that particular commodity or activity into a political issue. It's universal too. It doesn't matter if the monopoly is on health care, grain marketing, or canned soup.
The availability of canned soup, its quality and price are never a topic for nightly newscasts. Peter Mansbridge and Lloyd Robertson never talk about it. That's because the government has nothing to do with it. If it did, we'd be hearing about "soup issues" all the time. There'd begovernment labor unions in control of production and distribution, and a minister in charge. That would lead to occasional strikes, which means no one would get soup. And the minister in charge would be issuing statements from time to time, telling us all about the wonderful things the government is doing for us.
Some special interest groups would insist that the government give soup, or at least subsidized soup, to poor people. At the other end of the spectrum, there'd be lobby groups funded by private companies and big business that advocate the privatization of the soup business.
Union bosses and lots of politicians would noisily proclaim that the pro-privatization guys are only motivated by profit. The CBC would trot out a "documentary" about private soup manufacturers in the US and Europe. It would focus on what many claim are obscene profits, and show pictures of glitzy executive offices and stretch limos that are owned by soup companies. They'd also interview a few disgruntled employees who work for these "robber barons" insisting that they, and all their colleagues, are overworked, underpaid, and unappreciated.
Regardless of the product or commodity, when government monopolizes a commercial activity it politicizes everything about it. Government control of the canned soup business would mean that every time the price was raised a few cents it'd be a news story. Politicians would be on the news trying to justify the price hike. Unions would defend it. Opposition members would criticize it. Big business would say that it further proves the need to privatize the whole thing. Meanwhile, the caring souls in the media would be asking questions about "fairness" and collectively wringing their hands over how "poor people" are going to cope.
The bottom line is that except for times of war, every government monopoly of a commercial enterprise there ever was produced exactly the same thing -- shortages, high costs, and political wrangling. In Cuba, North Korea, and the former Soviet Union people wait in line for food, clothing, and everything else the government controls. In Canada people wait in line for health care services like CT-Scans and MRI procedures. In Saskatoon, there are 5 000 names on the waiting list for cataract surgery.
In rural areas, farmers can't get enough for their wheat and barley to stay in business, and to make matters worse, the Canadian Wheat Board recently stopped hundreds of farmers from opening up a pasta processing plant. It doesn't take a genius to figure out what's going on. A government monopoly is a government monopoly. And regardless of the commodity being monopolized, the end result is essentially the same.
Kevin Avram is a former director of the Prairie Centre/Centre for Prairie Agriculture, and continues to sit as a member of the Prairie Centre's Advisory Board.
web posted August 9, 1999
Who's greedy now?
By Craig Docksteader
The Canadian Wheat Board's recent decision to deny the Prairie Pasta Producers (PPP) an exemption, and the support of this decision by a handful of farmers, illustrates that a fundamental attitude is still alive and well in prairie agriculture: It's better to all go broke together than see anyone get ahead.
If you look at it, the PPP group wasn't really asking for much. They expected to mill and process about 5.4 million bushels of durum a year, which would be provided by the farmers who owned the mill and processing plant. By turning durum into pasta before selling it, participating farmers could climb up the value-added chain that constantly leaves them behind.
In order to make this happen PPP simply needed an exemption from the CWB's pricing policy for wheat destined for "domestic human consumption" (DHC). They didn't get it, and some farmers are gloating.
You'd think that at a time when farmers are going broke and demonstrating in the streets we'd be cheering for someone with the ideas and guts to take a risk and get ahead.
Nope. Not in my backyard. "That's just greedy," the whiners say. "What about those farmers who don't have access to such a venture? Why should a few farmers be allowed to extract the premiums from the milling market for themselves instead of sharing them with every other farmer?"
Well, perhaps I can explain why.
For starters, you have to realize that the detractors think in a "zero-sum" mind set. In other words, if someone wins, then someone else has to lose. If someone makes more money, then somebody else must be making less. As far as they're concerned, the size of the pie is fixed. That's why it's so important to carve it up "fairly".
If the world actually worked this way, we'd all be living in mud huts and plowing with oxen. There would be no way to improve your standard of living without bringing someone else's down.
But let's suppose they're right. Suppose that whatever amount of durum went to this producer-owned pasta plant couldn't be replaced by producers growing more durum and therefore decreased the amount of durum available for the CWB to market. Under this scenario, the gross annual revenue of durum growers who are not part of the PPP group would diminish by roughly $70 dollars.
The math is simple. Take the average premium realized by the CWB on DHC sales over the last ten years (47 cents per bushel), multiply it by the number of bushels of Canadian durum that the PPP expects to process in a year (3.33 million) and divide it by the number of durum growers on the prairies (22,329 less the 400 involved in PPP) and you've got the impact on the individual non-PPP durum producer's pocket book ($70.72). There would be no impact on the 80,000 producers who don't grow durum.
In a worst-case zero-sum scenario, every miller on the prairies would turn around and ask for the same exemption as the PPP. According to the CWB, this would cost durum growers about $6 million a year. This would translate into $274 per durum producer per year. Once again, there would be no impact on the 80,000 producers who don't grow durum.
Prairie producers who -- for between $70 to $274 -- want to torch the efforts of other producers to bring a $120 million farmer-owned processing facility to the prairies, along with $19 million in direct annual economic benefits and the opportunity for all prairie producers to significantly participate in the value-added chain, are free to do so. But perhaps we should reconsider who we're calling greedy.
On the other hand, those who think the CWB directors are making a mistake need to tell them so.
web posted August 2, 1999
By Craig Docksteader
Without a question, Justice Willard Estey's recommendations on improving the western grain handling and transportation system have been controversial. Estey touched a nerve when he suggested that farmers were better off if the system was subject to the competitive forces of the marketplace, rather than buried under government regulation. And in some areas, the sputtering hasn't stopped since.
But judging by the comments of the committees working on the implementation of the Estey Report, and the contents of recent committee reports, there may be little need to sputter -- that is, if you favour the status quo. While it is too early to call the final outcome, indications are that the effectiveness of reforms proposed by Estey are well on their way to being trashed.
On the surface, everything looks like it is proceeding on schedule. The three subcommittees are meeting regularly to hammer out the details on how to make the recommendations work practically; two public forums have been held, one in Regina, one in Red Deer, with another proposed for Portage la Prairie in late August; detailed progress reports are available, which itemize each committee's terms of reference, principles, issues and the progress to date. There has been a lot of work, a lot of consultation, and a lot of sincere effort. From a bureaucratic vantage point, the activity looks impressive. Things appear to be on track.
Regrettably, the appearances may be deceiving.
The main thrust of Estey's proposals was simple: Government regulation has created a handling and transportation system which is not market-responsive. It doesn't have to earn its business, minimize its costs, or listen to its customers. It is inefficient, over-priced and unresponsive (IOU), and the farmer pays all the bills and carries all the risk. In order to change this, Estey recommended that we minimize government regulation and introduce competition in a contract- based system.
But the practical implementation of Estey's proposals hangs on two essential factors: One, there can be no central player controlling the system; and, two, the railways must be forced into greater levels of competition. On both of these, the implementation team is fudging.
While mouthing the words that they are going to implement reforms in keeping with the spirit of Estey's proposals, Arthur Kroeger's implementation committee is considering an "alternative option" which would give the Canadian Wheat Board a central controlling role. And while giving lip service to the importance of competition, they have all but thrown out the idea of making the railways compete head to head through open access to rail lines.
Instead of implementing Estey's proposals, Kroeger's committee appears to have embarked on a journey into the bizarre world of inventing a system which would operate by market principles, yet be exempt from market forces. They want it to function like it's subject to the marketplace, without ever actually being subject to the marketplace. That's like wanting something to look like a duck, sound like a duck, and act like a duck, without actually being a duck.
The bureaucratic contortions that such an exercise requires can only result in more regulation, more bureaucracy, more performance reviews, more delays, and more costs for farmers. I don't think that's what Estey had in mind.
Craig Docksteader is Coordinator with the Prairie Centre/Centre for Prairie Agriculture, Inc. "Where Do We Go From Here" is a feature service of the Prairie Centre.
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