> March 2009 Threatened Harvest Protecting Canada’s world-class grain system By Scott Sinclair and Jim Grieshaber-Otto About the authors Acknowledgements Scott Sinclair is a senior research fellow with the The authors are greatly indebted to those who Canadian Centre for Policy Alternatives, where he agreed to be interviewed in person for this paper in directs the centre’s Trade and Investment Research Winnipeg and Vancouver, and to the many others Project. He has advised several Canadian provincial who provided valuable information in other ways. and territorial governments on trade policy These individuals include: current and former matters, including five years as a senior policy senior public officials and staff involved in the grain advisor to the Government of British Columbia. sector, grain producers, producer group and other He is the author of numerous books, articles and non-governmental organization representatives, papers on a wide range of trade policy issues, academics, public interest advocates, and other grain including Putting Health First: Canadian Health industry professionals. Generously contributing Care Reform, Trade Treaties and Foreign Policy (with their time and expertise, these people provided Matthew Sanger), a background study prepared for invaluable insights into Canada’s grain regulatory the Romanow Commission on the Future of Health and marketing system. Care in Canada, Atlantica: Myths and Reality (with This study was done by the Canadian Centre for John Jacobs) and Facing the Facts: A Guide to the Policy Alternatives. We wish to thank the dedicated GATS Debate (with Jim Grieshaber-Otto). He lives in staff at the CCPA, especially Bruce Campbell, Trish rural Prince Edward Island. Hennessey, Kerri-Anne Finn, and Tim Scarth, for Jim Grieshaber-Otto is a research associate with his professional work on layout. The paper was the Canadian Centre for Policy Alternatives. He translated into French by Traductions Tessier. We are obtained his B.Sc. at the University of British especially indebted to Gary Schneider who edited the Columbia and the University of Toronto, and his entire manuscript and re-crafted the summary. His Ph.D., in Agricultural Botany, at the University of skilful editing contributed immensely to the paper. Reading, England. He has served as a policy analyst We are grateful to the Public Service Alliance of for Members of Parliament and with a provincial Canada (PSAC) for their financial support of this legislature, and as a senior trade policy advisor paper and the CCPA’s ongoing project on public with the Government of British Columbia. Recent interest regulation. This is an independent study; the publications include: Perilous Lessons: The Impact views expressed are those of the authors and do not of the WTO Services Agreement (GATS) on Canada’s necessarily reflect those of the PSAC. This paper is Public Education System (with Matthew Sanger), the first in a planned series of studies on regulation The GATS: Impacts of the international ‘services’ in Canada. treaty on health-based alcohol regulation (with Noel Schacter) and Trade Treaties, Privatization and Health The authors wish to thank Bob Roehle and several Care Reform in Canada (with Scott Sinclair and anonymous reviewers for their helpful input and Ricardo Grinspun). He lives with his family on a comments on previous drafts. Any remaining errors diversified 35-hectare family farm near Agassiz, east are the responsibility of the authors. of Vancouver, B.C. and can be reached at jimgo@ Finally, we wish to express our appreciation to uniserve.com. Diane Exley and Rosalind Waters both of whom, in countless ways, make our work possible. isbn 978-1-897569-44-3 Please make a donation... Help us continue to offer our publications free online. 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Suggested donation for this publication: $10 or what you can afford. table of contents 5 Summary Undermining the Canadian Grain Commission Attacking the Canadian Wheat Board Protecting the successful Canadian grain system 10 introduction A Canadian success story Overcoming inherent challenges 13 Section 1 Undermining Canada’s grain system regulator The key roles of the Canadian Grain Commission (CGC) Undermining the Grain Commission 19 Section 2 The move to eliminate inward inspection The flow of grain Impacts of eliminating inward inspection Who benefits from eliminating mandatory inward inspection? 29 Section 3 Eliminating Canada’s visual system for differentiating wheat classes (KVD) Eliminating KVD KVD-related changes to wheat seed registration system and wheat import rules Beyond KVD: Other proposed changes 36 Section 4 Conservative government efforts to dismantle the Canadian Wheat Board Introduction Task force on implementing marketing choice The ”gag order”: Muzzling the CWB A deeply flawed plebiscite Attempted unilateral removal of barley from the Wheat Board Trade treaty pressure on the CWB 47 Conclusion 50 annex 1 Undermining the CGC’s independence 52 annex 2 Loss of the Prairie Pools 54 annex 3 Intensified corporate integration, concentration and control in western Canadian agriculture 56 annex 4 Beyond KVD Beyond KVD — deregulating seed imports into western Canada Removing the requirement for seed to be registered Removing the requirement for seed to be pedigreed Deregulating Canada’s seed registration system Other related government initiatives 61 Notes Summary The outstanding international reputation of redress some of the power imbalances between Prairie grain is a source of pride across Canada. prairie farmers and the large grain companies. International buyers know that when they buy This is achieved in part through the operation Canadian grain, the quality will be high and the of the Canadian Wheat Board, which markets product consistent. A great deal of credit must western grain and returns the benefits each year go to the thousands of farmers who grow grain directly to Canadian grain producers. that is highly acclaimed around the world. The Piece by piece, the minority Conservative other part of this success story is the uniquely government under Stephen Harper is disman- Canadian grain regulatory and marketing system. tling Canada’s highly successful grain system. Unfortunately, this critical component is under Both the Canadian Grain Commission and the attack by Canada’s own government. Canadian Wheat Board are feeling the wrath of Canada’s grain handling and inspection sys- a federal government that seems more interested tem was designed to address the formidable chal- in creating opportunities for transnational cor- lenges faced by Prairie farmers. Higher transpor- porations than in protecting Canadian farm and tation costs put grain growers at a disadvantage consumer interests. compared to their overseas competitors located closer to coastal ports. Through decades of well- Undermining the Canadian considered public-interest regulation, Canada has Grain Commission managed to overcome geographical and trans- portation cost disadvantages by developing a The Canadian Grain Commission CGC( ) plays a high-quality, consistent product. This excellence central role in maintaining and enhancing Can- has enabled the Canadian industry to build and ada’s worldwide reputation for grain quality and maintain strong customer loyalty and to com- consistency. As Canada’s grain system regulator, mand a higher price than its global competitors. it administers the unique grading and inspection Shaped by a generation of grassroots activism, system that allows Canadian grain to command the Canadian grain system is also designed to higher prices internationally. The Commission ThreaTened harvesT 5 also makes sure that the rules of western Canada’s • The federal Minister of Agriculture and grain handling system are applied evenhandedly Agri-Food appointed a highly partisan and that individual grain producers receive fair Chief Commissioner with whom he has treatment in their transactions with powerful close personal ties, undercutting the international grain companies. This provides a independence of the Commission. more stable and predictable marketplace for all • Government plans to downgrade the grain sector participants. Commission’s longstanding mandate to This is no easy task, considering that theCGC protect the interests of producers. is starved for the funds necessary to fulfill its im- • Government plans to allow disputes about portant regulatory mandate. The Commission is the grade assigned to parcels of grain to be prohibited from obtaining greater revenues by decided by private contractors, rather than raising user fees and direct funding for the CGC the established Grain Appeal Tribunals, made up of grain experts with no financial interests in the outcome. > The Harper minority • Government plans to remove the Conservative government is requirement for grain buyers to post dismantling Canada’s world class security bonds that