Canadian Wheat Board
The Canadian Wheat Board (CWB) was established in 1935 as an agricultural marketing board. For much of its history, it was the sole buyer and seller (i.e., the “single desk”) for prairie wheat and barley destined for export from Canada or for human consumption in Canada.
The Canadian Wheat Board (CWB) was established in 1935 as an agricultural marketing board. For much of its history, it was the sole buyer and seller (i.e., the “single desk”) for prairie wheat and barley destined for export from Canada or for human consumption in Canada. It was also the world’s largest exporter of high-quality wheat and much of its barley. Following a change in government policy, the single desk model was discontinued in August 2012 and the CWB became a voluntary marketing organization. The CWB is headquartered in Winnipeg.
Early support for government-regulated grain marketing in Canada was founded on western farmers’ concerns with their lack of individual power relative to large and powerful grain handling and marketing companies. Farmers worried about unfair pricing by these companies, and did not want to be discriminated against in moving grain to market. These fears contrasted with the experience of stable, relatively attractive grain prices when grain marketing was regulated under emergency powers during the First World War. Farmer’s marketing concerns were reinforced by unstable low prices for farm products immediately following that war, in the depression circumstances of 1929–30 and in the Great Depression of the early 1930s.
Following temporary forerunners, which operated from 1917 to 1920, the CWB was established in 1935 as a voluntary marketing agency. However, selling prairie wheat through the board became compulsory in 1943, in order to facilitate Canadian sales to Britain during the Second World War. In 1949, CWB powers were extended to include prairie oats and barley.
Changes in feed-grain policy in 1974 and 1976 led to the removal of the board’s exclusive marketing rights over interprovincial sale of prairie grain to be fed to animals in Canada. Domestic and export marketing of oats, which had become a relatively small, specialized crop, were also removed from CWB jurisdiction in 1989.
After the removal of control over oats marketing, the CWB’s role in marketing barley was widely debated. In 1993, barley export sales to the United States were briefly deregulated. However, with the subsequent election of a new federal government in the same year, this decision was reversed, confirming the CWB’s position as the sole buyer and seller (i.e., the “single desk”) for prairie wheat and barley destined for export from Canada or for human consumption in Canada for the next 19 years.
These functions continued until August 2012 when, following the provisions of the Marketing Freedom for Grain Producers Act (passed into legislation in December 2011), the previous CWB Act was repealed and the CWB became a voluntary marketing organization. This change abolished the single desk powers of the CWB, promoting a free market approach to grain marketing and allowing prairie farmers to freely sell their grain to any buyer, including the CWB. Originally a Crown Corporation, under 1998 amendments to the CWB Act, it became a corporation with a majority of producer-elected directors. The provisions of the 2012 legislation provide all directors of the CWB to be government-appointed, as well as requiring the CWB to reorganize within five years to an approved independent organization (this could be a business corporation, a cooperative or not-for-profit corporation) or be dissolved.
Until August 2012, as a self-financing institution reporting to the federal minister responsible for the Canadian Wheat Board, the CWB administered the government-guaranteed initial prices paid to producers and operated a system of annual averaging (pooling) of producers' prices for each of the different types and qualities of grain under its control. Under a pooling system, all the revenue generated from a crop year is deposited into accounts organized by type of grain. The revenue from these pools is then returned to farmers based on the average price received for the pooled grain, irrespective of where and when it was sold during the season. The CWB also regulated producers' deliveries of grain to country elevators through delivery quotas and contracts, monitored grain markets and prices, and helped to co-ordinate delivery of grain to export ports. The board generally did not own or operate physical marketing facilities but used various grain handling and marketing companies as agents to handle and sell grain on its behalf, and also directly sold export grain to trading agencies of importing countries.
Since August 2012, the CWB has entered into agreements with major grain handling companies to handle grain on its behalf. It also buys grain from farmers using price pooling and other pricing methods, and sells Canadian grain in competition with other sellers. During the transition period, initial payments continue to be guaranteed by government.
Major arguments in favour of the single desk powers of the old CWB were that its position as the sole buyer and seller of all western wheat and barley destined for export gave it market power in its sales to different buyers, leading to higher revenues for farmers. As well, its system of price pooling across all grain sales was seen as equitable in providing an average farm-level price to each grain farmer (adjusted for grade and location relative to export shipping point), regardless of where and when that season’s grain was sold. Those in favour of removing the single desk powers of the original CWB, many of whom were larger entrepreneurial farmers, disputed that revenues were higher from CWB operations and preferred being free to seek market opportunities that might increase their returns from selling grain.
Merril W. Menzies, “Grain Marketing Methods in Canada—The Theory, Assumptions and Approach,” American Journal of Agricultural Economics Vol. 55, No. 5 (1973): 791–99.
Michele Veeman, “Who Will Market Western Canada’s Grain?,” Canadian Journal of Agricultural Economics Vol. 46, No. 1 (1998): 1–16.
Parliamentary Research Branch, The Grain Industry in Canada, Prepared by Sonia Dakers and Jean-Denis Frechéte (1998). Revised 26 June 2001. PRB 98-2E.