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Sunday, January 14, 2007

Canadian Cow Conundrum

Kate McMillan, of “Small Dead Animals” has been attacking the Canadian Wheat Board as an anti free choice, bureaucratic nightmare that prevents prairie wheat and barley growers from reaping full profits from their crops. She has been doing an excellent job of revealing the Wheat Board’s failings but as a one-time farm boy I think there are other targets that need the same sort of examination. I am speaking of marketing boards for dairy products and eggs. The two agencies are The Canadian Dairy Commission and the Canadian Egg Marketing Agency. These are government agencies with many similarities to the Canadian Wheat Board. Their web pages are:       http://www.cdc.ca/cdc/index.asp   and   http://www.canadaegg.ca/bins/index.asp      Both agencies have provincial counterparts.   

The milk market has two parts, industrial milk which is used for butter, ice cream, yogurt and  powdered milk, and the second, fresh liquid milk and cream. The fresh sector is generally under the oversight of the provincial agencies.

I do not know whether these two agencies are good or bad for the producers or the consumers of their products but I get very suspicious when I learn of situations such as dairy farmers in the lower mainland of BC being forced to dump gallons and gallons of wholesome fresh milk due a strike or some other delivery problem and being unable to sell it to cheese makers because they had no industrial milk quota. The most recent outrage occurred in Ontario when police raided a poultry farm because the farmer apparently was selling products without the blessing of the provincial egg agency. Another anomaly was an egg farm being set up in the North West Territories, north of Alberta, to get around provincial quotas. I am also suspicious when you hear that often the largest tangible asset a poultry farmer has is his permit itself.

The following figures were taken from the Canadian Dairy Commission website dated in 2006:

Provincial Shares of Milk Share Quotas (MSQ) for Industrial Milk

Province                                                           Percentage

Nfld & Labrador                                                   0.3

PEI                                                                             1.8

Nova Scotia                                                            1.1

New Brunswick                                                     1.2

Quebec                                                                   46.5

Ontario                                                                   31.2

Manitoba                                                                3.6

Saskatchewan                                                       2.6

Alberta                                                                    6.3

British Columbia                                               5.5

If those figures don’t make your eyes bulge you know a lot more about the dairy industry than I do or you are from Quebec. It might be that those figures had reasons behind them when the Canadian Dairy Commission was set up thirty or more years ago but I cannot believe those reasons are still valid. It sort of makes you wonder about the wisdom of picking the next Prime Minister from Quebec with him maybe appointing the Minister of Agriculture also from that province.  Now the conundrum, what can the Harper government do to achieve a fairer balance without enraging a very powerful agricultural lobby in Quebec and losing much needed support from there?

Posted by Bob Wood on January 14, 2007 | Permalink


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The Wheat Board, the Egg Boards, the Chicken Boards, etc. are leftovers from very different times. I don't know their history, if and how far their existence was justified *then*, but IMO nothing justifies their existence *now*. The financial interest of some (few or many, it does not matter) farmers is in no way a justification for such intrusions in individual rights, not for the subventions.

Proponents of these kolkhozes don't stop repeating the garbage about a "democratic decision".

First, this is not about democracy but tyranny (btw, the former Communist led countries called themselves "proletar dictatorships", not "democracies").

The more important aspect is, that the stakeholders in this issue are not only the farmers, but the entire population, for

1. the legal framework is not given by the Government of Farmers but by the Government of Canada respectively of some provinces,

2. the government heavily subsidizes the Wheat Board, which means taxpayers' money, and that comes only in tiny part from the farmers,

3. the choice and price on the market for the entire population is distorted by these boards.

It would be interesting to see, if and how much subsidies these other boards receive. Their own declarations are unreliable; the Wheat Board proudly announces, that it is not subsidized, which is *plain lie*.

How to get rid of them? I think Harper mentioned including property rights in the Charter; that would solve this problem. Though he said just for two days ago, that "it is not a high priority". Harper is wrong. It IS a very high priority item. Another issue is, that he can't do this single-handedly, and the socialist parties (i.e. all others) are scared by such ideas.

Posted by: Cato | 2007-01-14 6:11:32 PM


Didn't know you knew Russian.

kolkhozes = collective farm.

Be afraid, marketing board comrades, be very afraid.

Posted by: Set you free | 2007-01-14 7:22:32 PM

First, Thank you Bob Wood for putting up a new thread to comment on.
I'm glad you aren't on the cruise and hope you are too.
(not to disparage the cruise)

I think we need to remove all provincial trade barriers, subsidies, penalties, etc. so Canadian consumers can profit and Canadian producers can compete in a free Canadian market.(especially the deal that Eastern Canada has from the Trudeau/Lougheed era where Alberta sells it's energy resources to the East 25% below world market)

This illiberal unfree market can only be eliminated if Provincial First Ministers(Premiers)agree to turf it and, of course, the Premiers of the provinces that benefit aren't about to become beneficent any time soon.

Thanks to Kate and you, Bob, for raising the issue for discussion but wish in one hand and s**t in the other and guess which will be filled faster.

Posted by: Speller | 2007-01-14 11:20:52 PM

Right you are Cato - Property Rights in the charter is the highest priority IMO too. If we all start squawking about it the politicians will be forced to address the empty commie hole in the scrap of misinformation that Turdo had the nerve to label 'Rights and Freedoms'. When they vote - we will all know who must be turfed for their nasty power/control aspirations.

Posted by: jema54j | 2007-01-15 12:08:15 AM

As with all things federal - control has always, still is, and most likely will continue to reside in Central Canada - primarily, but not exclusively in the case of marketing boards, for the benefit of Central Canada. With the exception of the Wheat Board, it is highly unlikely that other marketing boards will come anywhere close to the radar.

The price to consumer has a whole lot more to do with the profits at each stage in the input/"added value" sectors than it does on the price of products going out of the farm gate.

There are many more areas in need of attention than are the marketing boards - except for the Wheat Board of course.

Posted by: calgary clipper | 2007-01-15 7:47:33 AM

"It might be that those figures had reasons behind them when the Canadian Dairy Commission was set up thirty or more years ago"

A single reason. That is approximately the proportion that existed when the commission was set up.

Why is it still?

Multiply your numbers by 100 and assume that's the number of farms and everyone produces the same. You get 10,000 units of production in Canada (4650 in Que and 260 in Sask). Now ask yourself how to expand the production 5%. Easier to add 500 units of production and infrastructure to Quebec? or to Saskatchewan?

On the same hand you also have land use models like Von Thunens model: (http://people.hofstra.edu/geotrans/eng/ch6en/conc6en/vonthunen.html) showing land use. Such models are based on the economics of transporting product to the market and inputs to the "manufacturing" site.

While a place like BC should have more, a place like Saskatchewan will never have much production like dairy until they have the people to consume the product.

Posted by: Barcs | 2007-01-15 12:09:28 PM

Several other such inequities exist; off the top of my head

Chickens, eggs, lumber, CWB, Healthcare, Education, Union shops.

Posted by: Barcs | 2007-01-15 12:14:02 PM

comparing the cwb to egg marketing and dairy marketing are very two different things. the latter 2 agencies use quota systmes to control the amount of raw product produced and give the producers a price based on the cost of production plus a profit. the CWB only markets farmers grain and gets the going price and then after costs like wages, christmas bonuses, office furniture, interest, penalties, demurage return whatever is left to farmers. cost of production has no bearing on price recieved. also if farmers have a good crop the cwb simply dumps the grain for whatevcer it can get, baring that it will only allow farmers to haul in a protion of there producion, for exapmle in 2006 farmers where only alloweed to haul in half of there durum production, if farmers needed the money they had to sell their durum as animal feed. Conversely in a short crop year like 2005 the cwb will simply withjdraw from the world market and sell only to their"best customers" this happened in malt barley and those customers certainly did not have to pay the world price for malt that year.
people like cato who do not know anything about the subject can either learn or shut up......yammering on makes you look stupid

Posted by: tim | 2007-01-15 12:47:22 PM

As a farmer who has had to deal with the Canadian Wheat Baoard for 25 years I believe I can throw a little light on the the Wheat Board. Cato's first and third points have some merit but the comment that the Government heavily subsidizes the Wheat Board is False. The Federal government guarantees the Initail Price paid by the Wheat Board to the farmers. This price has only been supported by the Government 2-3 times in the boards 60 year history. All other costs are paid out of the money collected from wheat and barley sales. The CWB does have a government mandated monopoly (ONLY IN WESTERN CANADA) on wheat. Usually a monopoly seller has a better bargaining position than many sellers. Let the farmers decide thru a plebisite whether they want the monopoly to continue or not.

Posted by: Will-jr | 2007-01-15 12:47:52 PM

These boards have nothing to do with "Central Canada's hegemony" (control). All they have to do with is the almost-all Canadian mindset: coercing others into something, which is good for you (the "winner takes all" attitude is part of this).

Other examples are: compulsory union membership, liquor boards, the property tax system, ban of marihuana, the health care system.

This mindset needs to be changed for the health of Canadian society, and eliminating the CWB and alike is part of that process; it should be persued with high priority.

Unfortunately, this is not about to happen. The CPC leadership does not have the intellectual competence for this task (and then who else does?). The conservative government should have exposed the CWB (as the first in the row) as a tyranny and explain, that they are thriving on the cost of the general population. It is obvious from reactions, that many if not most people don't know, that *they* are paying for the CWB et al; they think, that it is a business of only the farmers.

Posted by: Cato | 2007-01-15 12:53:33 PM

cato... we agree on the need to get rib of big brother and big governement and get them out of our way, but it is only farmers who pay for the cwb, in very rare occurances the price recieved has not been enough to pay all the costs of the cwb and return enough to make up the initial payment for the grains so the governement had to come up with the difference, which was only approximately the same amount as it costs to reun the cwb about $80m so for this one year opnlt canadians as a whole paid for the cwb evey other year it has been farmers.

Posted by: tim | 2007-01-15 1:21:11 PM

"the comment, that the Government heavily subsidizes the Wheat Board is False"

Really false? Let's see it and help the brainwashed on the feet.

1. The Fed gives guarantee for the CWB to borrow money; not a small change, it is $6 BILLION. This way the GWB obtains better conditions/lower interest rate, than obtainable on the marker otherwise.

The OECD values loan guarantee subsidies at 1 percent of the loan value.

In fact, the CWB is making money ($55 million in the last two years only) by borrowing money at low interest rate and lending it at normal rate.


2. The Fed backs the initial payments to the farmers, which is about 75% of the estimated final price. As the final price may be much lower than expected, this 75% may be higher, than the effective price; in such cases the Fed pays the difference.

The initial payment guarantee has been used several times, the value together is $1.2 billion over 30 years, or $40 million per year. There were four years with deficit of wheat sale, last time in 2002/2003 ($85 million); in 1990/1991 it cost $670 million to the Feds.


3. The Feds give export guarantees. For example Iraq is overdue with over $700 million.


4. The federal law gives the CWB the right to have the domestic consumers pay higher price, than they could negotiate on a free market.


Note, that the Japs have been chastized and punished for the same kind of subsidy on high-tech products, and it is still so with rice and beef.

5. The federal law prevents farmers from competing with the CWB.



"Let the farmers decide thru a pebisite [sic] wheter they want the monopoly to continue or not"

This is the sickest possible idea in this subject, unfortunately it surfaces very often.

Why don't we let [for example] Toyota dealers vote on the question, if they should have monopoly on selling cars in Canada?

Or let's give Bombardier the right to decide, if they receive government subsidies. How does that sound?

The farmers should be allowed to have their wheat (or whatever) board (or boards); they should enjoy the freedom of association (which includes the freedom of NOT to associate) - but WITHOUT subsidy, coercion and market distortion.

IF Canadian agriculture does need government subsidies, then that has to be widely discussed AS SUCH, (not hidden under titles as Wheat Board), and if such subsidies are given, they should be subjected to guidelines, performance guarantees, expense and time limits, etc.

However, such subsidies are very COUNTERPRODUCTIVE in normal times (i.e. not in war time, not under special circumstances caused by natural catastrophes, etc.); they contribute to the fossilization of bad/outdated practices, they eliminate the need to improvement of productivity.

Posted by: Cato | 2007-01-15 1:32:15 PM


For once we agree.

Posted by: deepblue | 2007-01-15 2:14:28 PM

There are limits to what Prime Minister Harper's government can achieve with a minority of seats.

I'm sure there will be changes if the CPC gets a majority next time around.

Posted by: Speller | 2007-01-15 3:45:42 PM

Sure there are limits, but these limits can be even increased by unprofessional actions/utterings of the members of the government.

Until now the government let the officiers of the WCB spread garbage, instead of explaining the public the facts in clear-text; especially, not countering the "democratic voting" was very damaging (see some posts above).

Posted by: Cato | 2007-01-15 4:58:34 PM

'the government HEAVILY subsidizes the Wheat Board'

Now that's a good laugh. If Cato thinks that 'subsidizing the Wheat Board' is the same thing as 'heavily subsidzing farmers', he/she/it is sadly mistaken. By 'heavily subsidizing the Wheat Board', the feds are actually 'heavily subsidizing' the consumers in central Canada.

BTW, why would the feds subsidize a CWB with $6.0 bil/yr, when the CWB only actually sells $4 or $5.0 bil/yr of grain? That makes no economic sense at all unless it is important to the Liberals to keep the CWB around so that they can continue the shell game of pretending to subsidize farmers when they really want to have cheap inputs for the food industry and consumers in central Canada.

In fact there are numerous studies that have been done that make the point that if the CWB sells all this grain for premium prices, these 'premium' grain prices never make to the farmer.
I wonder if it really goes to subsidizing the consumers, or to the Liberal party of Canada, ala Adscam? I mean really, how can anyone question why the corrupt Adscam Liberals wouldn't flow money thru the CWB to the Liberal party also. In fact the CWB is the PERFECT vehicle because the CWB is IMMUNE from the Auditor General audits. Maybe that's why Liberals Ritter and Measner are fighting so hard to keep it secret. And why Steve Dion said he would re-instate the CWB if the Harper dismantles it. Don't forget Liberal campaign organizer David Herle sat in in Board meetings. And they hired a Liberal campaign organizer to lobby in Ottawa.

The CWB has been overly concerned with the re-election of the Liberal Party of Canada since the days of Trudeau. It absolutely does not market grain in the best interests of the Western canada farmers.

I once read that the capital city of a nation is like a lighthouse. For a period of time, there are the waves of the darkness of subjugation, eventually followed by the waves of the light of freedom. Looks like the darkness is finally lifting in Western Canada.

Posted by: rockyt | 2007-01-15 5:20:53 PM

Comments about the CWB being different (at least in general) to the marketing boards are correct along with the statement that it is only western producers who are forced to sell to the CWB. The east is thus favoured (what a surprise!), especially Quebec, and that explains why the loudest screams against ending the CWB's monopoly come from Quebec and Ontario.

However such a totalitarian approach with disregard for individual rights is not restricted to the CWB or marketing boards in agriculture. It touches today every segment and is getting worse. Nowadays it is usually touted as "food safety"/"traceability, etc., which sounds good and reassuring to joe and mary public. In reality it favours the big multinationals (factory farms) while putting more squeeze on the small and family farms. By the way the same is going on south of the border no less.

How do I know this? I operate a small diversified organic farm which is becoming more and more difficult due to on-going and increasing interference.

Posted by: Alain | 2007-01-15 5:29:37 PM

Kate McMillan has picked up on this post and shows the percentage per province table for Industrial milk on SDA. For other reaction visit her site. Kate, I thank you very much. My skills and knowledge at research are limited but I would invite those more adept at muck raking to go to the Canadian Dairy Commission site at least at
http://www.cdc.ca/cdc/index.asp and the Canadian Egg Marketing Agency at http://www.canadaegg.ca/bins/index.asp to roam around and find who the Chairmen (Commissars) are, how big are their staffs, how much expense money they spend, er claim, What their past political affiliations were, what their political donations have been and to who and such like. Reading all the aims and objectives seems to be staight out of a Communist manifesto, so be prepared to hold your nose.

Posted by: BobWood | 2007-01-15 5:31:09 PM

1. Monetary subsidy for the CWB means, that the CWB can distribute more among the farmers than w/o this subsidy. So, it is *indisputable*, that the Feds subsidize the farmers as well. Saying otherwise equals to accusing the CWB managers by stealing that money.

Some farmers may lose money because of the CWB; that's another issue, independent from the subsidies.

2. $6 billion/year subsidy: please a bit reading comprehension. The $6 billion is not a subsidy; it's a *guarantee*. How much of this becomes actual subsidy depends on the situation.

However, the CWB is making money *directly* from this $6 billion, by prematurally taking the money at a lower than market interest and investing (lending) it at market interest.

3. Re the Feds subsidizing the consumer: this is *utter nonsense*. As the money comes from taxes and the farmers pay only a tiny fraction of those taxes, the money comes *from the consumers*.

Furthermore, the monopolistic position of the CWB lends them extra strength by excluding the competition. The *natural* consequence of that is, that the consumer prices are higher than they would be on a free market.

4. Re the accusations of the CWB with diverting money to the Federals: I am pretty sure that if there had been such cases, they would be exposed now, that the Libranos are not in government. The lack of such exposures, in fact the lack of any *serious* accusations puts these "studies" in the realm of SciFi.

Note, that some of the CWB's top leaders are appointed by the government, but others are elected. The elected ones would have to play this game as well; I find this idea unserious.

Posted by: Cato | 2007-01-15 5:56:22 PM

All these expensive monopolies that rip off consumers will kill the industries they're designed to 'protect' in the long run due to inefficiencies and the usual graft and corruption. It can't happen soon enough.

Posted by: Philanthropist | 2007-01-16 10:32:36 AM

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