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Canadian Wheat Board Takes Steps Towards An Open-Market System

posted on November 17, 2006

The Chicago Board of Trade is considering changes in the soft red winter wheat futures contract. According to Dow Jones, the Board is concerned with convergence in the contract. That's when futures prices move toward cash prices as the contract nears expiration. Among possible changes, the Board may enlarge delivery territory for the contract and increase storage rates.

Changes are afoot for wheat growers in Canada, as well. The wheat-growing provinces of Saskatchewan and Manitoba have called on the Canadian federal government to hold a referendum on the Canadian Wheat Board. The referendum would allow growers to vote on the Board's single-desk marketing authority ... and whether farmers can choose where they market their grain.

Canadian Wheat Board Takes Steps Towards An Open-Market System In Canada, the Conservatives are pressing ahead with an election promise to make participation in the wheat board voluntary... a change opponents fear will erode the Canadian Wheat Board's influence as the world's leading wheat marketer.

Since 1943, western wheat farmers in Canada have been compelled by law to sell only through the board. According to Saskatchewan Premier Lorne Calvert, "the supposed implementation of an open-market system would result in a serious financial loss for western Canadian grain producers of more than $500 million."

U.S. wheat growers long have held that heavily government subsidized wheat from Canada has depressed domestic wheat prices. In hopes of stemming the flood of cheaper Canadian wheat into the country, outraged U.S. producers have, at times, attempted to block shipments at the border.

Canadian critics of the move to an open market system denounced the plan this week as "unprecedented, unethical and undemocratic."

Tags: agriculture Canada crops markets news wheat