The Canadian Wheat Board

36 CHOICES Firs[ Quarter 1997

The Canadian Wheat Board

by Andrew he Canadian Wheat Board (CWB), a monopoly amined CWB monopoly operations and their ef­ Schmitz, T exporter of Canadian wheat, barley, and du­ fect on Canada/United States grain trade. These Hartley rum, has been challenged by a segment of Cana­ included the 1990 U.S. International Trade Com­ Furtan, dian farmers, u.s. farm groups, and the U.S. gov­ mission (ITC) study-a fact-finding study under Harvey ernment. We offer, here, our assessment of an im­ Section 332 of the Tariff Act of 1930, as amended Brooks, and portant part of the CWB monopoly controversy. in 1990-of Canadian durum wheat exportS to the Richard Gray We evaluate the effect of the CWB on prices, mar­ United States; the 1994 Canada/United States ket shares, and other measures of its performance. Trade Agreement (CUSTA) Binational Panel to in­ Canada is a major exporter of wheat and barley. vestigate Canadian durum exports; and the 1994 In 1996/97, Canada is forecasted to have 22 per­ ITC investigation into Canadian wheat exports that, cent of the wheat export market, 61 percent of the in 1994/95, led to a U.S. wheat and durum import durum export market, and 40 percent of the barley control agreement with Canada. Also, the United export market. By law, all these exports must be States is indicating that, under the World Trade made through the CWB. This monopoly on ex­ Organization (WTO), state-trading organizations ports, however, is now under fire from a number should be required to make notifications to the of fronts. First, in 1993, the Honorable C. Mayer, WTO that would insure transparency of their ac­ former minister of agriculture, removed the sale of tivities (Article XVII of the GATT, 1994). barley to the United States from the sole jurisdic­ tion of the CWB. A subsequent court challenge, The Canadian Wheat Board however, placed barley back under the CWB's ju­ The CWB markets grain on behalf of farmers in risdiction. Second, since 1995, a segment of prairie the western provi nces of Manitoba, Saskatchewan, farmers have openly defied Canadian law and have Alberta, and parts of British Columbia. It is the sold grain to the United States without CWB per­ sole seller of these farmers' wheat, durum, and bar­ mits. The farmers' defiance of the law is now work­ ley for export to world markets and for human ing its way through the courtS. Third, in the fall of consumption in the domestic market. The extent 1995, a group of Canadian farmers challenged the of the CWB monopoly is limited by many com­ CWB monopoly under the Canadian Charter of peting international sellers who also can export Rights and Freedoms. This case, often called the wheat and barley into Canada. The CWB con­ Charter case, began in the federal court in Septem­ tracts for Canada's elevator services (including clean­ ber 1996, and a ruling is expected to be made by ing and storage), transportation, and terminal el­ May 1997. Fourth, in 1995 the current minister of evator services. The CWB is the thirty-third largest agriculture, the Honorable R. Goodale, put into business corporation in Canada and the fourth larg­ place a review process (Western Grain Marketing est exporting company in Canada, with annual gross Panel) to examine the Canadian grain marketing sales greater than $4.0 billion. system. The Panel's report called for far-reaching The federal government first marketed wheat in changes in the way the CWB operates, but it did 1917 when it appointed a Board of Grain Supervi­ not suggest changes to the CWB monopoly in sors. To fulfill wartime needs for the 1917/18 and wheat, durum, and malting barley. Fifcli, in 1997, 1918/19 crop years, this board ass umed monopoly farmers will vote their preference for or akainst control. After WW I, other institutions, including CWB monopoly control over barley. the major farmer-owned cooperatives, sold wheat In several investigations, the United States ex- for export (Schmitz and McCalla). Following the CHOICES Firs[ Quarrer 1997 37 financial collapse of the prairie pooling coopera­ calls grain into the system as required to meet sales tives in the early 1930s, the CWB was instituted in commitments. This delivery quota evolved from a 1935 as a voluntary marketing agency for wheat. quota per seeded acre, through a quota based on In 1943, the Canadian government made the CWB total farm acreage, to a combination of both farm the mandatory monopoly marketing agency for prai­ acreage and delivery contracts. These delivery quota rie wheat. The government added barley and oats changes were designed to match the limited capac­ to the board's authoriry in 1949. The CWB con­ iry of the Canadian elevator and grain-transporta­ trolled the export of these grains, the interprovin­ tion systems with the specific export demand by cial movement of grain, and the sale of grain to all grain and grade. Second, the CWB pays farmers a domestic users. Beginning in 1935, the CWB op­ pooled price for each class and grade of wheat, erated under the Canadian Wheat Board Act and barley, and durum. When farmers deliver grain was established as a federal crown agency in 1967. within the quota, they receive a government guar­ Over time, certain powers of the CWB monopoly anteed initial payment-usually 70 to 80 percent were removed. First, in 1974 the government gave of the projected final realized price. The CWB farmers the option to domestically sell feed wheat, makes adjustment payment(s) throughout the pool oats, and barley for nonhuman consumption year. After all of the grain sales are complete for through the open market. Currently, feed wheat each sales period, the CWB closes out the sales and feed barley contracts are traded on the account and gives farmers a final payment. This Winnipeg Commodiry Exchange (WCE). Second, final CWB payment is the amount paid to farmers the CWB no longer controls interprovincial grain from sales receipts above the initial and interim movement. Finally, in 1989, the government re­ payments made to producers, after all operating moved the CWB's monopoly status over oats and cOSts of the CWB have been deducted. After ac­ WCE now trades oat contracts. counting for transport costs, each farmer receives According to various CWB publications, the the same final price for each grade and class of CWB mandate is to (aj obtain the best prices avail­ grain delivered to a particular location. able for producers during the marketing period, (bj pool the risk associated with adverse price move­ Economic performance of the CWB ments, and (cj guarantee, for producers, equitable The CWB's performance is a hotly debated issue, access to markets during the delivery period of a in part because there is no single yardstick by which crop year. The CWB achieves this stated mandate to measure its performance, and in part because through two basic mechanisms. First, as a result of other components of the grain system affect farm the limited capaciry of the grain-handling and grain­ grain prices and sales. In addition, the international transportation systems in western Canada, the CWB grain markets are difficult to model because they allocates to each farmer a delivery quota that allows are imperfectly competitive in nature. To under­ him or her access to the commercial grain-han­ stand its performance, the CWB must be viewed dling system over the course of the crop year (each within the context of the entire Canadian regula­ farmer who sells grain to the CWB has a CWB tory framework. This framework includes the Ca­ quota book). Through these mechanisms, the CWB nadian Grain Commission (CGC), which is a fed- 38 CHOICES First Quarter 1997

eral agency that sets grain quality standards and keting provides in the neighborhood of Can$265 grades, as well as the Car Allocation Policy Group million per year to Canadian wheat farmers. that regulates rail car allocation. It is important to stress that the Canadian grain­ The performance of the CWB, debated in the afore­ marketing system emphasizes quality, end-use char­ mentioned Charter case, can be evaluated in the con­ acteristics, product availability, post-sales services, and text of four major criteria: price premiums, marketing technical knowledge. These factors are encompassed and basis costs, farmgate prices, and market shares. in die CWB's approach to the sale of wheat, durum, and malting barley. The premiums found by Carter Price premiums (1992), by Schmitz, Gray, and Ulrich, and by Wil­ At least five major reports argue that the CWB is son are a result of both price discrimination by the able to obtain price premiums (Schmitz 199Ga). CWB and the fact that the Canadian system pro­ C\l!e are not aware of any studies that argue the vides attributes, such as grain cleanliness, that other CWB price premiums are negative. However, Carter systems do not. However, the premiums found by and Loyns extensively discussed the premiums Kraft; Furtan, and Tyrchniewicz are solely a result earned by the CWB.) A premium is defined as the of the CWB's ability to price discriminate. difference between the price obtained by the CWB Canada's focus on quality has provided a mar­ and the price that would be obtainable under a keting advantage over the United States. As Canadian multiple-seller environment. The CWB Christianson pointed out, " ... quality issues are be­ earns price premiums primarily because it can price coming increasingly important in the grain trade .... discriminate (charge different customers different The United States may have the most inconsistent prices for the same quality grain) among markets product of any wheat exporter in the world. Incon­ (Schmitz 199Ga; Kraft, Furtan, and Tyrchniewicz) sistent quality is the number twO problem of the Carter (1992) was the first to estimate significant U.S. wheat industry, right behind wheat cleanli­ price premiums. He found premiums to range as ness" (pp. 21-22). high as Can$27/tonne for Canadian wheat sales to For barley, different studies showed different the former Soviet Union, Can$26/tonne to Japan, CWB performance. These studies evaluated CWB and Can$8/tonne to China. Kraft, Furtan, and performance alongside a continental barley market Tyrchniewicz estimated that the CWB premium for (CBM). The CBM is a market in which private wheat ranged between Can$13.35/tonne and traders could export Canadian barley to the United Can$36/tonne, depending upon how the U.S. Ex­ States outside the CWB. Carter (1993) contended port Enhancement Program (EEP) was factored into that the CBM would provide significant gains, while the analysis. EEP increased the ability of the CWB Schmitz, Gray, and Ulrich argued that the CBM to price discriminate because under EEP the United would greatly reduce CWB premiums on malting States, one of Canada's major competitors, also price barley (additional arguments on the effect of a CBM discriminated among markets through the use of can be found in Schmitz and Koo) . A CBM was governmental rebates to private grain traders. put in place by the federal government on 1 Au­ Schmitz, Gray, and Ulrich made a similar claim for gust 1993, but was removed on 10 September 1993, CWB malting barley premiums at roughly Can$30/ because it was deemed to be legally invalid. Carter tonne. More recently, Schmitz et al. (1997) esti­ and Loyns alleged that the CBM was a major im­ mated that the CWB earned premiums of Can$3.52/ provement over the CWB system. However, tonne for feed barley, Can$34.06/tonne for two­ Schmitz (199Gb) argued that the analysis upon row malting barley, and Can$42.01 /tonne on six­ which these conclusions were reached was highly row malting barley. (The CWB earned barley pro­ questionable. For example, their analysis was done ducers an additional Can$72 million over what would for the period beginning 1 August 1993, whereas be the case with multiple sellers.) Wilson also found the appropriate starting point was when the CBM a "Canadian factor" of approximately Can$25/tonne was announced-3 June 1993. for CWB sales to Japan. These premiums often raised the prices of farm wheat and malting barley by at Marketing and basis costs least 15 percent over prices that would prevail in a Carter and Loyns contended that the CWB increased multiple-seller environment. farmers' cost (roughly Can$20/tonne for wheat and The United States and the European Union are Can$37/tonne for barley) over what would exist in a also state traders because they manage EE~ and mul tiple-seller environment. They attributed these in­ restitution payments, both of which distort trade creased costs to many factors, including excess clean­ (Rossmiller and Sorenson). Because of the premi­ ing, delays in varietal development, and excess coun­ ums earned, the CWB helps Canadian farmers com­ try elevator charges. However, their cost estimates seem

pete against these trade-distorting policies. :kraftl questionable because they failed to specify either the Furtan, and Tyrchniewicz estimated that CWB mar ~ time period of analysis or the norm used for the basis CHOl ES Firsr Quarrer 1997 39

of comparison. Also, we argue that the costs outlined Table 1. Grain export shares of Canada and United States, 1989/90- 1996/97 by Carter and Loyns, if indeed they do exist, res ult (percentage) from the entire regul ato ry framework and the market Year Wheat Durum Wheat Barley structure in Canada, not just from the CWB (Schmitz Canada United States Canada Canada United States 1996b). W e contend that if the CWB were dismantled, 1988/89 12.8 41 .8 n.a. 15.3 10.0 many of the costs would remain. For example, the 1989/90 16.0 35.7 43.8 23.9 10.2 CWB does not concrol the registraci on of vari eci es 1990/91 19.8 32.1 48.3 24.5 8.1 (since 1981, ninety-six wheat and barl ey varieti es were 199 1/92 20.7 32.9 39.3 17.6 11 .0 registered for use in wes tern Canada), nor does it set 1992/93 19.2 34.2 39 .5 16.2 9.6 country elevator charges. The Prai ri e Regional Rec­ 1993/94 17.8 36.8 50.7 20.6 8.4 ommenrung Committee on Grains provides recom­ 1994/95 19.7 35.4 58.8 20.8 9.4 mendations for the registraci on of wheat and barley 1995/96 16.8 38.2 63.8 n.a. n.a. variecies in wes tern Canada. It consists of industry­ 1996/97* 18.7 29.4 61 .0 n.a. n.a. wide representation from the Canadian Grain Com­ Source: Canadian Wheat Board . Note: n.a. = not available; • = projected. 'mission (CGC), the CWB, Agriculture and Agri-Food Canada, uillversiry researchers, plant breeders, pro­ Table 2. Canadian bulk durum exports, 1986/87-1994/95 ducers, and end-users. Handling charges by elevator Crop Year' United States World companies are es tablished by the companies them­ Percentage to U.S. selves and nor by the CWB. thousand tonnes Kraft, Furtan, and Tyrchniewicz compared the 1986/87 062 1957 03.2 return to risk management for CWB wheat versus 1987/88 202 2753 07.3 nonboard crops, such as canola and fl ax . T hey felt 1988/89 186 2003 09.3 the compariso n was valid: Canola and fl ax were 1989/90 218 2838 07.7 1990/91 370 3224 11.5 predominantly export-oriented crops that used the 1991 /92 421 3085 13.6 same handling and transportacion facilities as wheat. 1992/93 404 2260 17.9 T hey found the cos t of carrying the risk to be 1993/94 554 2877 19.3 Can$17/tonne fo r fl ax, Can$9.38/tonne for canola, 1994/95 293 3997 07.3 and Can$3.85/tonne for wheat. T his lower COSt of Source: Canadian Wheat Board. risk management in wheat is attributable to tlle self-insurance inherent in the CWB pooling sys­ Australia, and the Euro pean U nion (EU)-largely tem . T he CWB has provided significant savings to because of the expansion of EU exports. U nited western Canadian producers. States wheat export share is projected to drop to 29.4 percent in 1996/97. Farmgate prices Canada and Australia (both use a va ri ation of Many farm price co mp'arisons have been made be­ monopoly selling arrangements) combined have tween Canada and the United States . At times, more than 50 percent of the export barley market U.S. prices for wheat, durum, and barley were (forecasted to be 50.6 percent in 1996/97). In 1994/ higher and at times they were lower. McCalla and 95, Canada had 44 percent of the world export Schmitz, however, claimed it is virtually impossible mal ting barley market. Fo r 1996/97 durum exports, to determine, by simply examining far mgate prices, Canada is fo recasted to have more than 60 percent whether the Canadian or Ameri can grai n market­ of the market. The CWB is not solely res ponsibl e ing sys tem is more efficient. T he uniqueness in for these rather impressive market share statistics, policies, institutions, etc., makes it di ffi cult to at­ but we believe the CWB and the entire Canadi an tribute any difference, or lack thereof, to the mar­ grai n marketing system, which promote quali ry and keting sys tem. This difficul ty is well documented other facto rs essential to grai n marketing, have in recent U.S./Canadian far m price comparisons boosted shares . Also, transportation COStS and other for wheat and feed barley (Schmitz 1996b). fac tors have an influence on market share outcomes, but isolating their individual effects is beyo nd th e Market shares sco pe of this article. McCalla and Schmitz co ntend that market shares T he effecciveness of a marketing inscitucion, such can be used as a performance criteri on, as long as it as the CWB, depends on how rapidly it can adjust is recognized that government policies affect mar­ sal es to changing market conditions. Indeed, tlle CWB ket shares. T ra nsportation, climate, soil , and popu­ has been very flexi ble in its marketing strategies. As lation also influence a country's export performan ce. theory suggests, when the U nited States introduced Market shares are shown in table 1. U nited States EEP, U.S. exportS of durum should have increased lost export market share for wheat and barley rela­ alo ng with CWB durum exportS to the United States. tive to its major competi tors in cl uding Canada, Indeed, tllis is what happened (table 2). Canadian 40 CHOICES Firs[ Quarrer 1997

United States Views of the Canadian Wheat Board

Some of the concerns about CWB performance stem from differences between the United States and Canada have led to the strong views of U.S. interests, as shown in the following curbs on Canadian wheat imports into the United States and statements. the establishment of a joint commission to look at all aspects of the two countries' respective marketing and support systems American Farm Bureau Federation (John Skorburg, Senior for grain. Canada's elimination of transportation subsidies to Economist, 13 November 1996) Canadian producers, its reviews of CWB operations and Our government should insist on strict implementation of Canadian agriculture, and its ongoing discussions with the international trading rules to prevent unfair practices by United States may reduce the CWB's potential to distort trade competing nations and to assure unrestricted access to in the future. domestic and world markets. All trade agreements should be continuously evaluated with emphasis on fair trade as well as National Barley Growers Association (Herb Karst, Vice­ free trade. President, 15 November 1996) In short, Farm Bureau is supportive of more open trading What is important to remember is the CWB was formed to systems around the world. At this point in time, we do not manage trade in such a manner as to provide social equity to consider the Canadian Wheat Board to be such an open Canadian producers by pooling prices, grade, freight, and time system. Movement toward more open markets would be factors. Its monopoly status may be the only way to do that appropriate from an economic efficiency standpoint. since the averaging of those factors has implied winners and losers. For the U.S. farmer faced with a continental market, he U.S. Feed Grains Council (General Report, adopted on 16 or she, lacking reciprocal access to provide price arbitrage, is July 1996) faced either with competing against the winners, who may have The U.S. Feed Grains Council opposes direct government a comparative advantage into U.S. markets, or the losers marketing of agricultural products and the negotiation of an whose domestic Canadian prices do not show the full value of international coarse grains agreement. The U.S. Feed Grains their commodity, and thus is artificially induced into selling into Council supports tariffication of all nontariff trade barriers and the U.S. marketplace. Either way, especially for a high-bulk, the timely elimination of such tariffs. relatively low-value grain, such as barley, the market cannot U.S. General Accounting Office (Report to Congressional adjust well to inefficiencies in transportation. It seems as if only Requesters, 24 June 1996) two conditions exist which can provide grain trade equity in The CWB's relationship with the Canadian government, as North America. The first is a totally homogeneous market place well as its relationship with Canadian wheat and barley which unites all grade and market policies, and the second is producers, provides the CWB with opportunities to potentially the continuation of the marketing monopoly in Canada, but with distort trade. Since the establishment of CWB in 1935, the a very real restraint on cross-border trade in recognition of the Canadian government has provided more than $1.2 billion trade distortions present under a State Trading Enterprise, or (U .S.) to the CWB to help it cover periodic wheat and barley any form of marketing order. pooling deficits. Canadian wheat producers also benefited Montana Farmer's Union (George Paul, Executive Director, from a government railway subsidy; this subsidy was eliminated 13 June 1996) in August 1995. CWB also receives indirect subsidies as a This group enthusiastically supports the creation of a farme r­ result of its STE status, such as a lower interest rate on controlled International/North American Marketing Board and , commercial loans. Through its monopoly authority over states, "Such a board would protect the average farmer against Canadian wheat and barley sold for domestic human the near-monopoly lock on the buying, grading, and selling of consumption or export, CWB has a limited ability to cross­ grain now enjoyed by the giant multinational grain corporations." subsidize its wheat exports and an even greater potential for According to Paul, the CWB is already set up to do this. cross-subsidizing Canadian barley exports between its domestic and export markets. Finally, the CWB's monopoly U.S. Wheat Associates (Winston Wilson, President, authority may provide it with greater pricing flexibility in its November 18, 1996) relationship with foreign buyers than is found among private The CWB monopoly has long outlived its usefulness. What was sector traders. perhaps a practical idea during the World War II era is no longer U.S. Department of Agriculture (USDA) officials serving Canadian wheat producers in terms of efficiency or net acknowledged that they did not have any evidence that CWB returns. was violating existing trade agreements. However, trade Canadian producers' marketing options are nonexistent

durum exports (0 the U ni ted States in 1986/87 u.s. grain shipments (0 that region have not de­ were only 3 percent of Canadian (Otal durum ex­ clined as rapidly as in the Canadian case.

ports. T his in creased (0 19 percent in 1993/94-a year of hi gh EEP subsidies. At one time, over 50 Support and opposition percent of CWB wheat exports went (0 Chin a and Our evidence suggests the eWB earned prame the Former Soviet U nion, where the latter repre­ fa.rmers a price premium over what a mul tiple-sell er

sented the larger share. Today, due (0 lack of. pur­ marketing sys tem would have achieved. Also, the chasi ng power, the Former Soviet Union has been CWB has lowered the basis risk cost of grain mar­ a very small market fo r Canadian wheat. However, keting. T he CWB has been able (0 maintai n its CHOICES First Quarter 1997 41

except occasionally when the CWB permits sales into the National Association of Wheat Growers (Chuck Merja, United States (after paying a fee to the board). As a President, 13 December 1996) consequence, they are recipients of the residual that remains In theory, as a monopoly seller of Canada's wheat, the CWB after relatively high pool expenses and pricing practices which should be able to extract a premium for consistent supply, are usually geared to maximizing tonnage shipped rather than protein, cleaning, and homogeneity. In practice it fails to to net returns to producers. extract full value for the fact that Canadian wheat goes A free market option would well serve the Canadian farmer through a post-harvest mechanical cleaning. as well as world grain trade by at least partially eliminating one In practice, it often delivers higher protein than is contracted, source of artificially low administered prices. Such an option thereby not extracting full value for this quality of wheat. would be the ultimate referendum on the future of the CWB. In practice, the CWB doesn't appear to have good crop quality reconnaissance, so as to take advantage of rallies U.S. Department ofAgriculture (Richard Rominger, Deputy such as the one experienced in the spring/summer of 1996. Secretary of Agriculture, from the report to the House When forced to compete for markets and grain delivery from Committee on Agriculture, September 12, 1996) its own farmers as it was in the brief period that we had a ... Both the Canadian and Australian wheat boards practice continental barley market, the CWB showed its true nature as price discrimination-different prices to different importers. a price discounter by trying to cover all the major U.S. barley There are similar concerns about the ability of the New Zealand markets, at steeply discounted prices, so as to foreclose Dairy Board to engage in price discrimination and potential sales by its own farmers and the U.S. grain companies that cross-subsidization between foreign markets (using higher the Canadian farmers would have used to access those same prices in one import market to subsidize sales in another end users. market at prices below acquisition costs) , as well as the special In practice, it rewards farmers who produce poor-quality advantages it accrues through its subsidiaries in more than wheat while not rewarding those producers of high-quality sixty countries, including the United States. wheat the way the marketplace WOUld , thereby providing Many STEs, including the Canadian Wheat Board and the incentive for the production of mediocre quality. New Zealand Dairy Board, have other important advantages as In practice, the CWB's primary marketing ploy is to offer well. An STE that controls domestic supplies or one that grain $2-$5 tonne less than competitors' cheapest bids. This controls exports representing a major share of domestic action from a monopoly seller of "high quality" is not bullish to production has a sure supply, as long as the weather cooperates. a market but bearish, thus causing buyers to "wait and see" This gives the STE much greater freedom than a private firm in rather than "buy now." This action is not only an insult to the making export sales commitments, resulting in a significant Canadian farmer, it has a dampening effect on world markets advantage in reaching long-term trade agreements with and thus farmers world wide. importing governments. The Canadian Wheat Board also In fact, about the only item that the CWB appears to extract benefits from government support ranging from direct subsidies value for above what its competitors in the world are able to to indirect subsidies, such as subsidized interest rates on accomplish is water. Canadian grain is historically higher in government loans. The lack of pricing transparency has been moisture than any of its competitors, yet buyers haven't a particularly contentious issue in the case of the Canadian figured out that they are buying more water from Canada than Wheat Board, but it is an important issue with most STEs. It is from anywhere else in the world . a key issue .... Lastly, it persecutes its own farmers who try to prove that .. . With regard to the Canadian Wheat Board, one potentially they, as individuals, can extract more from the marketplace encouraging development is the recent report by a grain than it can . industry panel there (the Western Grain Marketing Panel) that All these things combined make the CWB a formidable reviewed Canada's grain marketing system and presented its competitor in world markets, but for all the wrong reasons. If recommendations to the Canadian government. Among other it were truly an astute marketer of grains, it would be able to things, the panel recommended that export sales of feed barley extract significant premiums for cleanliness, protein , be removed from the board's exclusive control. Canada's consistency, and uniformity, but, choosing to be a discount minister for agriculture announced that he would address the seller instead, it has a negative effect on world grain prices recommendations by the late fall or early winter. We await any until it gets "out of position," at which time the marketplace Canadian decisions with great interest to see if the government extracts its toll. intends to adopt these recommendations. m arket share in the hard red wheat market while T he CWB also faces some oppos ition in the expanding i ts market shares in both durum whea t U nited States from groups that feel the CWB does and m al ting barl ey. Notwithstanding this perfor­ not adhere to fair trade practices (the upcoming mance, there is a segm ent of prairie farmers that WTO debate on state trading co uld affect the op­ wishes to eliminate the CWB m onopoly on ex­ era tions of the CWB). T hey feel that the CWB ' ports . Perhaps this is due to allega tions of exces­ undercuts prices in some foreign markets because sive CWB m arke ting cos ts. We contend, how­ of i ts monopoly powers within Canada. I t is not ever, that the added cos ts attributed to the CWB clear, when reviewing co mments made by U.S. in­ are grossly overstated. ' terests (see the box inse t), whether the CWB is 42 CHOICES Firs[ Quaner 1997

doing an exceptional job for Canadi an farmers or Study prepared fo r the Intern ational Policy Council an in fer ior job. During th e next few years, reso lu­ on Agriculture and T rade, 1991. tion of the many controversial iss ues will have a major impact on farmers in western Canada and Schmitz, A. Economic Perfo rmance of the Canadian on co mpetitors like th e U nited States. ttl Wheat BOa/·d: Myth and ReaLity. Report submitted to Andrew Schmitz Brian H . H ay, Seni or Counsel, Department of] us­ is Eminent ti ce, Government of Canada, August 1996a . Scholar and • For more information holds the Ben Hill Griffin, Jr. , Carter, c.A. An Economic Analysis ofa SingLe North _. Rebuttal to the affidavi t of Dr. Carter filed in the Endowed Chair American Barley Market. Ottawa, Ontario, Canada: court case of Archibald et al. v. CWE 0- HMQ in the Depart­ Report prepared for the Associate D epury M inister, (Federal Court N o. T-2473-93), 17 August 1996b. ment of Food Grains and Oilseeds Branch, Agri culture Canada, and Resource Economics, March 1993. Schmitz, A., R. Gray, and A. Ulrich. A ContinentaL University of BarLey Market: Where Are the Gains? D epartment of Florida; Hartley _. "The Parti cipation of Chin a and the Soviet Agri cultural Economics, Un iversiry ofSaska tchewan, Furtanis U ni on in the Global W hea t M arker. " Improving 1993. professor in the Department of Agricultural Trade Performance under the GA TT. Agricultural T ilman Becke r, Richard G ray, and Andrew Schmitz, A., and A. McCal la. "The Canadian W heat Economics at Schmitz, ed s. Kie1, Wes t Germa ny: Board. " Agricultural Marketing Boards: Prices, Profits the University of W issenschaftsverlog Vauk, 1992. and Patterns. Cambridge, MassachusettS. Ballinger Saskatchewan, Saskatoon; Publish ing Company, 1979. Harvey Brooks Carter, c.A. , and R. M .A. Loyns. The Economics of is professor in SingLe Desk Selling of Western Canadian Grains. Schmitz, T., and W . Koo. "An Economic Analysis of the Department Edmonton, Alberta, Canada: Alberta Agriculture, International Feed and Malting Barl ey Markets: An of Rural Economy at the Food and Rural D evelopment, 1996. Econometric Spati al O li gopolisti c Approach." Agri­ University of cultural Economi cs Report No. 375, North Dakota Alberta, Christi anson,]. "Viewpoint From the Indusny," pp. State Un iversiry, September 1996. Edmonton; and 21-22. Proceedings from [he Agricultural Policy Richard Gray is a professor from Iss ues Conference, Northern Pl ains and Rocki es Schmitz, A., R. G ray, T. Schmitz, and G . Storey. The the University of Center for the Study of Western H emisphere Trade, CWE and Barley Marketing: Pice Pooling and Single­ Saskatchewan, Montana State Unive rsiry, 12- 13 June 1996. D esk Selling. W innipeg, Manitoba, Can: Canadian Saskatoon, who is currently a Wheat Board, 1997. visiting Kraft, D .F., W.H . Furtan, and E.W. Tyrchniewicz. professor in the Performance Evaluation ofthe Canadian Wheat Board. United States General Accounting O ffice. Canada, Department of W innipeg, Mani toba, Canada: Canadian Wheat Australia, and New Zealand: PotentialAbility ofAgri­ Agricultural Board, 1996. cultural State Trading Enterprises to Distort Trade, pp. Economics and Economics at 1-80, W ashington D C, June 1996. the University of M cCalla, A. , and A. Schmitz. "Grain Marketing Montana. Systems: T he Case of the U nited States ve rsus Western Grain Marketing PaneL Grain Marketing, The authors Canada." Amer. ]. Agr. Econ. 6 1(M ay 1979): extend their pp. 1-1 17. Report submitted by the Panel to the appreciation to 199-212. H onorable Ralph Geodde. Agriculture and Agri­ Kim Box and H. Food Canada, 1 July 1996 . Carole Schmitz Rossmiller, G.E., and V.L. So renso n. "S ummary and for their Policy Implications: T heLink to GATT." State Trad­ W ilson, W .W . "Differentiation and Implicit Prices extensive editorial ing in International Agricultural Markets: Institu­ in Export W heat Markets." W ]. Agr. Econ. 140 uly assistance. tional D imensions and SeLect Cases. W as hington D C: 1989) :67-77.