Western Grain Elevator Association

Western Grain Elevator Association

August 03, 2006 16:12 ET

Western Grain Elevator Association: Farmers and Grain Companies-Partners not Competitors

WINNIPEG, MANITOBA--(CCNMatthews - Aug. 3, 2006) - The Western Grain Elevator Association (WGEA) has chosen to stay out of the debate concerning the future of the Canadian Wheat Board. However, the WGEA feels it must respond to certain notions from the August 1, 2006 announcement by the CWB, in particular its proposal entitled "Harvesting Opportunity".

The members of the WGEA are disappointed and frustrated with the suggestion that somehow the interests of grain companies and farmers are in direct conflict. This propagates a false notion agricultural policies should be based on the belief that farmers and grain companies have naturally opposing objectives.

In fact, we cannot be a profitable industry if farmers aren't profitable. Grain companies all understand that a healthy value-chain includes a profitable producer base. The right solution is for all industry players to work more closely to improve economic returns for all participants. A key overriding principle that policy makers must understand is that the agriculture industry is not a collection of competing interests. It is an interrelated continuum that must be viewed and supported in its entirety. Agricultural policies that suppose a divisive and conflicting approach, say between farmers and grain companies, will prevent both from attaining their full potential.

To imply that farmers need protection from grain companies is quite frankly an insult to farmers and ignores the fact that each Canadian grain company strives to increase its market share, and in doing so vigorously competes for every one of its farmer-customers. The Quorum Corporation is the independent and impartial grain monitor, charged with measuring how savings are passed through the system to farmers. The following quote is from page 41 of Quorum's most recent (2004-2005) annual report:

"...this result can partially be explained by the heightened degree of competition that has existed between the grain companies themselves, whether it be in terms of the deeper discounts they put forward in their bids to secure tendered grain movements or in the higher trucking premiums they have been willing to pay producers in order to draw grain into their facilities."

The CWB's statement that the grain industry is controlled by a few large multi-national companies simply ignores the basic fact that the majority of Canadian grain is moved by Canadian owned companies. Our members take exception to the CWB's assertion that grain companies cannot be competitive.

Grain companies have built their businesses over decades of significant capital investment, and by enduring natural commercial competition. They do not expect to be supported by the government or taxpayers. They operate on a level playing field with equal opportunity. For a competitor with monopoly power to be created through legislation and an infusion of 1.5 billion taxpayer dollars will distort the marketplace and is fundamentally questionable in its logic.

Whether Canadian or US owned, we should be pleased companies want to invest in Canada and to remain sincerely interested in the future of our agriculture industry and the rural economy. These companies provide considerable employment across prairie Canada, they contribute to our municipal budgets through property and school taxes, they are involved in communities and strive to be good corporate citizens. They are partners with farmers, not opponents. To suggest otherwise is simply untrue.

Each segment of the agriculture industry has the challenge of demonstrating its worth. This should be accomplished based on promoting ones own merits, not by misguiding farmers and the public about others.

Contact Information

  • Western Grain Elevator Association
    Wade Sobkowich
    Executive Director
    (204) 942-6835
    (204) 943-4328 (FAX)