Wheat Kings

Stephen Harper's turbulent relationship with the Canadian Wheat Board has given us an excuse to delve into the nebulous world of economic theory. Like any good Albertan, the Canadian Prime Minister believes that a free and open economy is beneficial to all, and that free trade in farm products will inevitably create a better agricultural industry. Perhaps he is taking a longer view, but it is not one shared by many farmers, particularly those in the West, outside of Alberta. In recent Wheat Board elections, farmers outside of Alberta chose to elect candidates who believed in upholding the Board's current policies. The sacking of the head of the Wheat Board for failing to introduce open market reforms provided a politically infused backdrop to the elctions.

What is at stake here is conflicting beliefs in the directions that the Wheat Board should go. Currently, farmers across Canada sell their wheat to the board, who then market it internationally. A small coterie of Albertan farmers have found that they can individually negotiate better deals with buyers than the price they receive through the Wheat Board. This may be true, and we at The Daily Wenzel do not pretend to understand fully how the Wheat Board arrives at its prices. However, we consider that by pooling wheat nationally, the Wheat Board limits the size of contracts that it would consider, a sort of minimum purchase requirement. This is in turn creates a scarcity and demand for wheat among small to medium-sized consumers. Under this model, indivudal farmers with much smaller stock sizes, would be able to meet the artifically high demand for wheat among this smaller class of consumer. Thus, evidence from the Alberta farmers' group would indicate they are correct in saying that laws requiring the sale of wheat directly to the Wheat Board prevent them from maximizing their profit.

However, as is typical perhaps in a conservative viewpoint, a wider perspective is traded for a much narrow individual focus. These few farmers are benefiting from the gaps created by a system they hope to abolish. Higher prices from small-to-medium sized consumers exist only as long as the Wheat Board is unable or unwilling to meet their demand while satisfying the demand of large-scale consumers. In the absence of the Wheat Board, the purchasing power would shift to the large-scale consumers, forcing small-to-medium sized producers into the reverse situation, competing against one another to fulfill large orders, giving the large-scale consumers the ability to drive prices down.