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Farmers for economic freedom
Updates from the Prairie Centre/Centre for Prairie Agriculture in Regina, Saskatchewan.
Hot off the press! Don Baron's Jailhouse Justice
web posted June 25, 2001
Transitioning the Prairie Centre
By Craig Docksteader
Since it's launch in November of 1993, the Prairie Centre has been committed to advancing ideas on wealth creation in order to enhance the economic and social well-being of the prairie region. Over the past eight years, the Centre distributed over a million copies of its publications across the prairie region, including more than 80,000 copies of "An Act of War" and 110,000 copies of "Wheat Marketing Around the World". Each week the Centre's commentary has been sent free-of-charge to over 200 weekly newspapers and distributed by fax or email to several thousand individuals and opinion leaders on a rotating weekly or monthly basis.
Through publications, press releases, presentations to parliamentary committees, town hall meetings, personal contact with producers, and public speaking engagements, the Prairie Centre/Centre for Prairie Agriculture has promoted constructive change in the prairie ag industry, establishing a supporter base of over 10,000 farmers and ranchers. Its Internet web site (www.prairiecentre.org) has become well-known as a reliable source of relevant and timely information, regularly attracting over 20,000 hits per month. Even the Canadian Wheat Board is a frequent visitor to the Prairie Centre web site, logging more than 6,500 hits in the last 18 months.
Initially, the Prairie Centre examined both fiscal and agricultural issues relevant to the prairie region. In 1997, the Centre's Board of Directors determined that, for a season, the resources available to the organization should be directed primarily to challenges facing the ag sector. Issues such as the lack of marketing choice for wheat and barley producers, the impact of over-regulation on the industry, and the effects of inefficiency in the grain handling and transportation system were moved to the top of the Centre's agenda.
Over the past few months, however, significant changes have been taking place at the Prairie Centre. In late 2000, discussions began to take place about the possibility of transitioning the Prairie Centre back to a more broadly-based organization. These discussions culminated recently with several new appointments to the Centre's Board of Directors, establishing a team of agricultural, business and community leaders to oversee the transition and activities of the organization.
Building on the accomplishments of the past, the Centre will be expanding the issues it addresses, adopting a think-tank model, changing its name to the Prairie Centre Policy Institute, and pursuing charitable status.
Shortly, the organization will begin the process of hiring a Senior Policy Analyst who will carry out and oversee research projects examining opportunities for, and impediments to, wealth creation on the prairies. This research will receive peer review from the Institute's Board of Research Fellows, ensuring academic accuracy. These findings will then be published in a format and style which continues the Prairie Centre's long-standing policy of providing information which communicates clearly to the grassroots. All of these measures will enable the Prairie Centre to pursue its mandate with even greater effectiveness.
The changes being made to the Prairie Centre are timely and strategic. The organization is poised to assume an even more central role as a significant source of ideas for constructive change in the prairie region.
Craig Docksteader is Coordinator with the Prairie Centre/Centre for
Prairie Agriculture, Inc. "Where Do We Go From Here" is a feature
service of the Prairie Centre.
web posted June 18, 2001
Fuzzy thinking on CWB pricing
By Craig Docksteader
With another International Trade Commission (ITC) investigation of the Canadian Wheat Board underway, the Americans appear to be a tad bit confused about which factors influence CWB pricing.
On one hand, the Americans are claiming that the CWB has an unfair advantage in the marketplace because it has no acquisition price. Since the CWB doesn't first have to buy the grain that it sells, it isn't subject to the normal discipline of selling to make a profit. This allows the CWB to undercut the market price with no commercial consequences.
It's a phenomenon that many prairie producers have noted for years. While the CWB claims its single-desk status gives it the ability to obtain premiums in a few select markets, it also leaves it unrestricted in its ability to price below market value. Whether or not the CWB exercises this option is the focus of this investigation, but the fact that the option exists, is undeniable.
It's easy to see why this bothers the Americans. Who would want to compete against a company that doesn't have to make a profit to stay in business? With captive customers (prairie producers) and no acquisition price, there are no market disciplines which compel the CWB to obtain the best price possible. Commercially, the CWB holds a wild card, and secrecy exempts it from accountability over whether they are playing that card or not. It's no wonder there have been nine U.S. investigations of the CWB in the past eleven years.
But the other aspect of this latest trade challenge is based on allegations that transportation subsidies also allow the CWB to undercut prices. Here's where the thinking gets fuzzy.
The Americans insist that "extensive transportation subsidies give Canadian wheat an advantage over U.S. wheat." According to a report tabled with the ITC, Canada's move to legislate a rail revenue cap, coupled with the rail rate deduction, are equal to a US$70 million subsidy. This works out to US$3.83 per metric tonne.
In addition, the report states that the fleet of government-owned hopper cars is equivalent to a subsidy of US$1.25 to US$2.21 per metric tonne. This means that "these two subsidies alone total to between US$5.08 and US$6.04 per metric tonne, well above the amount necessary to give the CWB a critical... competitive edge in displacing U.S. sales."
In a normal commercial relationship, the allegation that subsidies to producers give marketers an advantage, would be true. Subsidizing producers lowers their net cost of production, allowing them to accept a lower price for their product. This lowers the grain marketer's acquisition price, allowing them, in turn, to reduce their sale price on the world market.
But what the Americans appear to have quickly forgotten, is that the relationship between prairie farmers and the CWB is far from a normal commercial one. Since the CWB can acquire its grain stocks from farmers at zero cost, producers have no say in what price they receive for their product. How then, can a five or six dollar subsidy to producers have an affect on pricing when the CWB is already free to price as low as they want?
Leaving aside the fact that the U.S. has little moral authority to lecture Canada on agricultural subsidies, it should be noted that, other than some political or optical significance, a producer's costs are fundamentally irrelevant to CWB pricing. If U.S. farmers are impacted by this, western Canadian ones are impacted more.
Craig Docksteader is Coordinator with the Prairie Centre/Centre for
Prairie Agriculture, Inc.
web posted June 11, 2001
Re-thinking old ideas
By Craig Docksteader
Like many issues surrounding the prairie grain industry, the question of the CWB's impact on value-added processing has been largely polarized. On one hand, the CWB claims that it does not impede value-added activity, and that this sector of western Canada's grain industry is doing better than the U.S. On the other hand, multiple farm groups and industry associations are adamant that the monopoly status of the CWB poses a significant barrier to new entrants in the value-added sector.
Historically, farmers who considered the question have been split on the issue. Monopoly supporters parroted the CWB claims, while voluntary CWB advocates disputed them. There was no common ground, and there was little movement between the two positions.
Recently, however, the polarization has been breaking down. New information has prompted many producers to re-think their old positions.
Perhaps the single greatest factor which has contributed to this re-evaluation was the high-profile struggle of the Prairie Pasta Producers. This group of Canadian and U.S. durum growers struggled for months to obtain concessions from the CWB that would allow them to deliver their durum directly to their own pasta plant, bypassing the CWB pool accounts altogether. The CWB board of directors voted down the request, refusing to change their policies.
The incident sparked a firestorm of protest. At producer meetings across the prairies, farmers challenged CWB representatives to explain their decision. But despite the Board's best efforts, producers remained unconvinced. It was apparent to everyone except the most ardent monopoly proponents, that CWB policies were an obvious barrier to farmer participation in the value-added sector.
Although more than a year has passed since the CWB directors blocked the Prairie Pasta Producer's proposal, the issue continues to smolder below the surface. Frustration over low commodity prices and a lack of marketing options for Board grains boils over quickly as it did when Minister Ralph Goodale suggested recently that producers should be diversifying their operations. Farm groups immediately stampeded the Minister with demands for him to get the CWB out of the way of farmers who want to market or process their own product.
The response was predictable. The CWB attempted to exonerate itself in a number of press releases, noting that processing of western grains in Canada is higher on a per-capita basis than in the U.S.. This defense was then picked up by monopoly supporters and echoed as proof that value-added processing is flourishing under the CWB's guardianship.
What was not pointed out, however, is that comparing the size of your processing industry to the population of your country is irrelevant. What really needs to be compared is the amount of domestic processing relative to domestic production. How much of your production is being processed and how much is being exported unprocessed?
As noted by the June 4, 2001 edition of AGRIWEEK, Canada processed only 10.7 per cent of it's grain production in 1989. Today, it's at 11.9 per cent. The U.S., meanwhile, processes over 60 per cent of its domestic production. In Canada we export almost five times as much wheat as we process. In the U.S., they process more than they export.
Clearly, the U.S. is doing better than Canada in the value-added processing of grain. Although there are likely a number of factors which contribute to this lagging performance on Canada's part, increasing numbers of prairie producers believe that the CWB monopoly is one of them.
Craig Docksteader is Coordinator with the Prairie Centre/Centre for Prairie Agriculture, Inc. "Where Do We Go From Here" is a feature service of the Prairie Centre.
web posted June 4, 2001
A lesson in civics
In some parts of North America, Joe Sobran is well known for his humorous and insightful look at government. Several years ago he wrote a piece on how to teach your child about government. At the Prairie Centre, we came across it recently and thought the humour and wisdom in it was worth passing on to our readers. Here's an edited version of what he had to say:
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Because I write about politics, people are forever asking me the best way to teach children how our system of government works. I tell them that they can give their children a basic civics course right in their home.
In my experience as a father, I've discovered several simple devices that will illustrate to a child the principles on which the modern state deals with citizens. You may find them helpful too.
For example, when your child is a little older, you can teach him about the tax system in a way that's easy to grasp. Offer him $10 to mow the lawn.
When he's finished and asks to get paid, withhold $5 and explain that this is income tax. Give $2 to his younger brother and $1 to the neighbor's kid, both of whom did nothing, and explain to him that this is "fair". Then tell him that you need the other $2 yourself to cover the administrative costs of paying his brother and the neighbor kid. When he complains, tell him that's the way government works and that he's just being "selfish" and "greedy".
Another lesson could be in a deck of cards. I used to play a simple card game with my son. It was called War. After a while, he understood that the higher ranking cards always beat the low ranking ones. That's when I created a new game called "Government". In this game, I was the Government and won every trick.
Follow that up by making as many rules as you can. Enforce them arbitrarily. And above all don't tell him what they all are. That way you can keep him on pins and needles and accuse him of rule breaking. Also, make sure he learns that a good number of the rules are irrational.
On regular occasions, promise to take him to the movies or the zoo, and then, at the appointed hour, recline in an easy chair with a newspaper and tell him you changed your plans. When he screams, "You promised!" explain that it was a campaign promise and that campaign promises don't count.
At times your child will express discontent with your methods. He may even suggest that he'd rather live with another family. To forestall and minimize this reaction, constantly tell him that you are the most loving and indulgent parent in the world and that he's lucky to be with you. Then recount lurid stories of the cruelties of other parents. This will make him loyal to you and, later, receptive to schoolroom claims that his country, with all its welfare and governmental intrusion, is the best and freest country on Earth.
Finally, teach him that words mean nothing -- or rather, that the meanings of words are continually "evolving". Tell him that what your words mean tomorrow might be the opposite of what they mean today.
Some readers may object, saying that this is a poor way to raise a child. A few may even call it child abuse. But that's the whole point.
"Where Do We Go From Here" is a feature service of the Prairie Centre. Previous commentaries can be viewed on the Prairie Centre's web site at: www.prairiecentre.org
web posted May 28, 2001
The emperor has no clothes
By Kevin Avram
It was in 1837, that Hans Christian Anderson wrote his famous story about the emperor's suit. It seems there were two swindlers who convinced an emperor and his ministers that they were able to make magnificent clothes from a special cloth. They said the cloth was so special, and so magical, that people who were either naive, or unqualified to do their jobs, couldn't see it.
Not knowing that they were swindlers, the emperor commissioned the men to make him a suit from this wonderful cloth, which they pretended to do. When the swindlers presented the emperor's personal attendants with the new suit, which didn't really exist, they immediately pretended to see it because they didn't want anyone to think they were stupid or unqualified to do their jobs.
The emperor came into his chambers and saw his personal attendants gushing over this imaginary suit of clothes. Being a vain man and not wanting anyone to think he was stupid or unqualified to be emperor, he immediately did likewise.
The day the new suit arrived there was to be a parade. As such, the swindlers dressed the emperor in his new suit, which they said was so light that it couldn't be felt, and made him ready for the procession. They oohed and ahhed over how wonderful he looked in his new clothes. The emperor's ministers and attendants also oohed and ahhed. In response, the emperor pretended to admire his new suit in the mirror. "It does look majestic," he said.
Having been told that anyone who was stupid of unqualified for their job would not be able to see the emperor's new suit, the emperor's subjects expressed wonder at its magnificence. They couldn't see it either, but wouldn't admit such a thing. Finally, a young and innocent child cried out, "But the emperor has nothing on at all!" Realizing they'd been duped, the people began to cry, "But he has nothing on at all!"
This had a great impact on the emperor and his ministers, but not wanting to admit that the people were right and they were wrong, the emperor and his ministers lifted their heads yet higher and walked with still greater dignity. They pretended that the suit was glorious despite the fact that none of them could see it.
So it is with the province of Saskatchewan. The policies that have defined the province for the past fifty years have led to a situation where it is a have-not province that is chronically under capitalized. It gets by because it can collect welfare from Ottawa. The welfare payments are called federal transfer payments. They come from Alberta and Ontario via the federal treasury.
In Saskatchewan, people can wait a year or more for medical treatment yet the government still boasts about the Medicare system and how it makes everyone equal. Taxes are so high that investment has been discouraged, and the accumulation of capital, which is necessary for the creation of wealth, has been made all but impossible due to high taxes and excessive government spending. The government and crown corporations are deeply in debt. The farm sector is on its knees, begging for help, yet the Saskatchewan government continues to defend and support the federal grain monopoly and highly regulated handling and transportation system that perpetuates the farm income crisis. Such policies better serve the interests of labor unions and union bosses than prairie farmers.
Government owned and controlled commercial enterprises have crowded out private investment. Heavy regulation and policies that have favored co-ops over private enterprise have produced a province whose chief export is people. Despite this, there are ministers and MLAs who talk nostalgically about the past and claim that the economic policies that didn't work in the 20th century will bring prosperity in the 21st. Like the ministers and attendants in the fairy tale, they are denying reality. The emperor has no clothes!
Kevin Avram is a former director of the Prairie Centre and continues
to sit as a member of the Prairie Centre's advisory board. "Where
Do We Go From Here?" is a feature service of the Prairie Centre.
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