Monopolies… End of Wheat Board monopoly spells opportunity

A classic harvest time scene on the prairies

By Dorothy Dobbie

Monopoly is just another word for abuse of power. It’s never good news and it always ends up the same way – overstepping its once apparently reasonable authority to override the rights of individuals in the pursuit of their dreams and aspirations.

Case in point: the Canadian Wheat Board. It was started out of the co-op movement, was given legs during the Depression, and offered special monopolistic powers over the sale of food grains on the prairies and in British Columbia during the Second World War. Amid howls of looming disaster by some interested parties, those special powers are only now in the process of being rescinded.

Co-ops do not have to be monopolies
Now I have no quarrel with co-operative movements; people have always banded together, putting their shoulders to the wheel to do, collectively, what it is not possible to do individually. It’s a fair weapon against those who have the agility of mind to find ways to corner markets and create commercial monopolies. All is fair in our reach for the top. I don’t even object to the assistance of governments in providing advances for crop payments when banks are reluctant to come to the table, which is what happened during the Depression when farmers were so destitute and their co-ops got into trouble.

But I will never support the issuance of monopoly rights. Nor do I accept the standard defence that co-ops can’t work without monopoly rights. Balderdash! Co-ops do exist and do so very successfully.

Still, monopolies are all around us, directing our lives, dictating prices and stifling enterprise. Manitoba Hydro has become a monopoly. The Freshwater Fish Corporation is a monopoly – federal in this case. The Manitoba Gaming commission is a monopoly. Manitoba Public Insurance is a monopoly. The Manitoba Liquor Commission is a monopoly. Peak of the Market is a monopoly. The list goes on and on and, in the farming community, marketing monopolies are rife, thanks to the province’s Farm Products Marketing Act, an omnibus act giving the government the right to set up more of these bodies, unilaterally.

The restrictive legislation involving food production
“The purpose of this Act.,” it reads, “ is to provide for the promotion, regulation and management of the production and marketing of farm products in Manitoba, including the prohibition of all or part of that production and marketing.”
Whoa! You can stop me from selling my goods? The answer is yes. Read on.

The legislation mandates:
(a) fixing the prices, or the maximum prices or minimum prices or both, at which a regulated product may be sold;
(b) requiring persons who produce or market a regulated product to provide the board or commission with any information or record relating to the production or marketing of the regulated product that the board or commission considers necessary;
(c) determining the time and place at which, and designating the agency through which, a regulated product must be marketed;
(d) requiring producers or persons who market a regulated product to register with or obtain a licence from the board or commission, and providing for the following:
(i) the term of registrations or licences,
(ii) the fees that may be charged for registrations or licences,
(iii) the suspension, cancellation and reinstatement of registrations or licences;
(e) exempting from a regulation or order a person or class of persons who produce or market a regulated product, or a quantity, quality, variety, class or grade of a regulated product;
(f) providing for the assessment and collection of fees, levies and penalties from producers of a regulated product;
(g) requiring a person who receives a regulated product for marketing from a producer to deduct from the money payable by the person to the producer any fees, levies or penalties payable by the producer to the board or commission and to remit them to the board or commission;
(h) controlling the quantity, quality, variety, class or grade of a regulated product that may be marketed or produced by imposing penalties on producers;
(i) prohibiting the marketing or production of a quantity, quality, variety, class or grade of a regulated product;
(j) requiring that the production or marketing, or both, of a regulated product be conducted pursuant to a quota.

The oversight of these extraordinary powers is by a three-person, government-appointed board and the penalties for non-compliance with the rules and regulations set out can be stiff for individuals and businesses alike.

Why can’t you sell your own potatoes?
Now if I were a producer of a regulated product, I would more than chafe under these restrictions. Remember two or three summers ago when Peak of the Market clamped down on potato sales by small growers?  That hurt us all and someone very brilliant would have to work extremely hard to convince me that these restrictions on retail sales can be justified.

But then, think about the taxi drivers who are subjected to a kind of monopoly oversight by the Taxi Board. If just anyone could run a taxi service, would licenses cost hundreds of thousands of dollars? Would taxi fares be unaffordable by the average person? And why can’t just anyone start up a company? What possible, justifiable reason could there be?

Viterra deal
With the end of the Canadian Wheat Board monopoly, things are already beginning to happen. Viterra, the company that grew out of the wheat pools of the last century, has been purchased by a major international player out of Switzerland for $6.1 billion. Two Canadian players will have a $2.6 billion stake in the new operation. Winnipeg’s own Richardson International would get 23 per cent of Viterra’s Canadian grain-handling business, food processing plants and some farm supply stores for $800 million, and Agrium Inc. of Calgary gets most of Viterra’s retail agricultural products and an interest in an Alberta fertilizer plant business for $1.8 billion.

Together, Richardson and Agrium will own 59 per cent of the Canadian operations of the company. The third player is Glencore International, which will get 63 grain elevators and seven port terminals in Canada. For Winnipeg, this means new jobs and for local farmers it means access to new markets.

The interesting dynamic here is the tendency of business to inevitably seek commercial monopolies and the question is whether balance can be achieved by aspirants to the marketplace. But it’s either about free enterprise and true competition or it’s not and the game must be allowed to play itself out.

Time to end supply management
For Manitoba, though, it’s time to move out of the supply management system altogether, taking a leading role in entering the new era and freeing up enterprise in the province once again. This won’t be easy. There are many interests at stake – the dairy quota in Canada alone is valued at $24 billion and many farmers have been using the quotas as collateral upon which banks have extended loans.  But if we are going to compete in a rapidly changing global marketplace, we need to adjust our thinking and our way of doing business.

The old model, somewhat dictated by 20th century European thinking, is changing as Asia becomes an ever more important player in the world of enterprise.  We need to wake up or get left behind.

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