C.D Howe report calls for CWB reform

The C.D. Howe Institute released a report this week that shows a big gulf between prices the Canadian Wheat Board paid farmers who signed daily price contracts (DPC) and the prices in Montana for the same type and quality of wheat (CWRS in Canada and Dark Northern Spring in the U.S.). The report’s authors, Sylvain Charlebois, an economics prof at the University of Regina, and Richard Pedde, do not use this information to prove the CWB must go. Instead, they want the board to explain why these prices are so different and to be accountable for the poor performance that caused this price gap.

The whole report is attached below. Here is an excerpt:

Comparing southern Alberta and Saskatchewan price results with those from an average of locations in northern and central Montana reveals that from 2005 through 2008 Canadian growers received a significantly lower price per tonne in comparison to Montana-based producers, for the same type of high-quality wheat. We use reported U.S. prices, which are the prices U.S. farmers receive after deductions for freight and handling. 

We calculate a comparable price, what Canadian farmers receive, by applying the equivalent deductions to the reported DPC price.

Early in the life of the DPC program, the CWB price was lower than Montana prices by, on average, $9.23 per tonne; but later the differential widened dramatically. The price differential expanded to over $12 per tonne in the first half of the 2006-07 crop year and then to an average of almost $40 per tonne at a time when the CWB had told producers that it expected only a $5 per tonne price differential relative to U.S. prices.