August 11, 2008

Canadian Wheat Board rejects study findings on single-desk wheat marketing

Based on what it said were "flawed assumptions" and "blatant misuses" of data, the Canadian Wheat Board said Friday (August 8) that it rejects the findings of the Informa Economics study, which found that western Canadian farmers would see greater returns if the CWB's single-desk marketing monopoly were dismantled.

The study by the Memphis-based firm was released last week and was commissioned by the Alberta government. It stirred up the long-running debate among the agricultural industry about the role and future of the CWB.

The study, which found that prairie producers could gain roughly half a billion dollars in annual revenue by moving to an open market system, was released the same week that the CWB announced that its single-desk approach had netted wheat, barley and durum producers an extra C$560 million in the 2007-08 crop year.

The CWB said in a statement that the study focused incorrectly on the Board's overall market share and failed to take into account that because the wheat market is not homogeneous, the CWB "will hold a very large market share for a particular kind of wheat and thus earn substantial premiums."

Also, the study looked at only 11 of the 60 to 70 markets into which the CWB sells wheat and based on false assumptions about what grades or qualities of wheat these markets were buying from Canada, the report wrongly adjusted and discounted the higher prices achieved by the CWB in 10 of the markets, the CWB said.

It also said the study incorrectly compared US and Canadian elevator prices and counted handling system costs twice in the comparison between US and Canadian returns for wheat and durum.

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