European Union – North America Farm Meeting Niagara Falls, ON October 20, 2009 Marketing systems and cooperatives The role of the farmer in the value chain

2 Outline Collective marketing and cooperatives in Western Canada What is the Canadian Wheat Board? Benefits of an orderly marketing approach A history of trade challenges State Trading Enterprises at the WTO / December 2008 modalities What the future holds

3 Collective marketing and cooperatives in Western Canada A movement going back to the pools in the early 1900’s Its popularity spread to many agricultural sectors in the 60’s and 70’s Marketing boards in the hog, dairy, poultry, horticultural industries resulted Purpose: to counteract the power that buyers held over individual primary producers because of: – The perishable nature of food products – The small number of buyers – Producers’ need for cash flow – Seasonal variation in production

4 What is the CWB? The only remaining collective marketing instrument for Prairie grain farmers. The exclusive marketing agent for western Canadian wheat and barley, both in the export and human consumption markets It exists to achieve the best possible returns for the total volume of grain that producers commit to the CWB’s marketing program Three pillars: – The single desk – Pooling – Government guarantees

5 What is the CWB? It is not: – A marketing board – A crown corporation – A private grain company or margin trader – A cooperative It is: – A single desk selling agent – A shared governance corporation – Accountable to farmers – Accountable to Parliament through the Minister responsible for the CWB

6 Advantages of collective marketing Increased negotiating clout with customers and suppliers Ability to manage an effective pool Ability to capture the full benefits of market development activities Enhanced ability to service discriminating markets year-in, year-out Size, volume, resources to effectively lobby on producers’ behalf There is strength in numbers.

7 A history of trade challenges International competitors feel that the CWB provides an unfair advantage to the Canadian grain industry. In the past 20 years, 14 separate trade challenges have targeted the CWB All initiated by the U.S. Challenges have been brought before both domestic and international trade tribunals All tribunals have eventually ruled in Canada’s favour. The CWB does not distort trade.

8 State Trading Enterprises at the WTO talks In light of the lack of success in getting rid of the CWB under existing rules, focus has shifted to changing the rules. December 2008 modalities target the CWB. If accepted, they would eliminate the CWB’s monopoly powers by The modalities would not apply to any other STE (specific exemption for Zespri). There are no real benefits for Canadian grain producers in the current modalities.

9 STEs at the WTO talks The federal government has already given up the guarantees on CWB borrowings and payments (July 2004). Overall, the deal currently on the table is not beneficial for western Canadian grain producers. The federal government has said publicly that it opposes elimination of the CWB’s monopoly powers in the Doha Round of WTO talks. It needs to back its public commitments with the same strong actions it has undertaken on behalf of the supply managed sectors.

10 What the future holds International competitors are unlikely to stop working to eliminate the CWB. Consolidation in the grain industry is also likely to continue, making the need for cooperation and orderly marketing more acute. These forces are difficult to reconcile and will probably lead to further trade action. Clear rules and forceful defence of farmers’ rights are needed now and in the future.

11 The future of collective marketing of agricultural products should be for producers to decide. It should not be in the hands of forces that stand to gain from its elimination.