A researcher working for a group calling for the return of single desk marketing misinterpreted data in former Canadian Wheat Board annual reports to conclude the board paid lower rates for shipping grain.
Several sources, including a former Canadian Wheat Board director, say University of Saskatchewan Ph.D. candidate Laura Larsen used an inaccurate comparison in the report released by the Canadian Wheat Board Alliance (CWBA) on Wednesday.
To estimate what the private trade paid each year for grain freight during the last decade of the single desk, Larsen subtracted the “freight” cost listed in the CWB annual report from the combined maximum revenue entitlement (MRE) paid to Canada’s two major railways for Prairie grain freight.
However, the freight costs listed in the reports were for shipments outside of of Western Canada such as direct shipments to the U.S. or the winter rail shipments from Thunder Bay to ports in the lower St. Lawrence River, and had nothing to do with the cost of shipping grain from elevator to port, says Ian McCreary, a Bladworth, Sask. farmer and former CWB director.
“It’s not comparable to the number that was used other places in the report… because for the main part of the movement from farm gate to port, the freight was paid for directly by the grain company,” he said.
Under the previous and current marketing system, freight costs are deducted from farmers’ payments when they deliver grain to the elevator. Even under the single desk, grain companies paid the freight to port.
“There’s lots of evidence that the farmgate price, relative to international price has declined with the loss of the single desk,” McCreary said. But the data used by Larsen in her study “is not a direct reflection of the rail freight cost between farmgate and port,” he said.
“Although I haven’t read the report in whole, it’s pretty clear she doesn’t understand the mechanics and the logistics of the system,” University of Saskatchewan agricultural economist James Nolan said.
In an email Friday, Larsen confirmed there have been concerns raised over her paper’s data. She said she plans to spend the next few weeks doing more research and will publish corrections as needed.
The report, which concludes removal of the single desk is at the root of the current problems in grain transportation, marketing and handling on the Prairies, was briefly removed from the CWBA site Thursday but was reposted later that day with a notice that some of its numbers have been questioned and may be revised.
“The current configuration of the Prairie grain handling, transportation and marketing system has not provided prairie farmers with a better share of the port price, nor has it provided better transportation logistics for grain movement,” Larsen wrote in her report.
“Solutions to the problems farmers are facing need to take a comprehensive approach within the context of Western Canada’s agricultural history.”
The CWBA is lobbying Ottawa to reverse the decision by the former government led by Stephen Harper to end the CWB single desk in 2012. — AGCanada.com Network staff and Allan Dawson, Manitoba Co-operatorTagged Canadian Wheat Board Alliance, cwb, CWBA, freight costs, grain freight, MRE, University of Saskatchewan