Wednesday, June 25, 2008

Free traders going for the throat

AWB, the Australian monopoly wheat exporter planted the seeds for the destruction of our last great ‘single desk’ marketing exercise. Heavy handed corruption in capitalising on the Iraq food aid program led to the inevitable collapse of the monopoly export concept under a Rudd government.

AWB lost its monopoly in 2007 after the revelations of the Cole Inquiry and new laws will allow Australia's wheat industry regulator to accredit new companies to market and export wheat, and ensure they are granted access to bulk grain port terminals.

The Canadian Wheat Board (CWB) gave the original heads up on AWB’s Iraqi cheating, in a cheeky query to the UN Oil for Food administrators. It was little more than snipe, but led to the opening of a giant can of worms. Now that can of worms is spilling onto the CWB as well.

Harper’s minority Conservative government has been frantic to break the monopoly (more correctly monopsony) of the CWB. Opposition parties blocked a move by the Conservatives to "fast-track" an end to the Canadian Wheat Board's monopoly on barley.

They declined to consent to a government plan to directly send the barley bill to the agriculture committee, meaning it will follow the usual track of debate and a vote in the House of Commons before going to the committee.

In 2006, in an attempt to win Western farmers more freedom to conduct their business as they see fit, the Harper government initiated a number of extra-Parliamentary measures designed to break the CWB's grip on the grain market. Without a majority in the House of Commons to change the CWB law, the Tories tried, instead, to introduce market freedoms through the back door. This was only ever a second-best move, and it was fraught from the start with political and legal risks.

Last week a federal court judge ruled unconstitutional a two-year-old ban by the federal government prohibiting the CWB from spending farmer's money advocating for its continued monopoly over western grain sales. However I suspect unconstitutional relates to the board rather than the country.

Rudd managed to get his bill through because the opposition conservatives here are split on the question of single desk marketing verses free trade. While farmer supporters might have protested the end of the old agrarian socialist model the AWB had already ensured it was dead in the water here.

The Canadian dynamic, however, is more about the pure politics than it is about economic ideology. The opposition Liberals would dearly love to pick up the support of those farmers under threat from Harper’s grand plan. I expect the CWB will survive the free trade push.

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