Going Against the Grain Board in Canada

Stretched out on an easy chair in the sunny living room of his farmhouse, surrounded by an eclectic book collection and an array of modern sculpture, Ike Lanier is bemused that at age 67 he has become something of a celebrated outlaw.

His crime: trucking 300 bushels of wheat grown on his Alberta farm into Montana last summer and selling it on the open market.

In Canada, that is enough to land a farmer in court or even in jail because the law grants an absolute monopoly on wheat and barley exports to the government-backed Canadian Wheat Board. But Lanier and hundreds of other western Canadian grain farmers on the international border have launched a campaign of public law-breaking aimed at ending the board’s exclusive marketing rights.

“We never intended to be anything but civil--it was really very civil,” Lanier said of his renegade venture. “It was an effort to break the monopoly. We feel very, very strongly that we need choice. The Wheat Board may have made sense in the ‘30s and ‘40s . . . but not anymore.”

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Lanier was part of a convoy of a dozen farmers who traveled the 60 miles to the American border, politely informed Canadian customs officials of what they were doing, then crossed to sell their grain--in Lanier’s case a token amount considering the more than 100,000 bushels he grows annually. Customs officers did nothing to stop the farmers but did record their licenses on their return and filed charges later.

This month, after a three-week criminal trial, Lanier learned the price of his principles: He was fined the equivalent of $5,600.

It could have been worse. Among the estimated 200 farmers in three provinces who have been accused of customs violations related to illegal grain trafficking, fines have ranged as high as $10,000, Canadian.

Andy McMechan of Lyleton, Manitoba, galvanized opposition to the board when he spent six months in jail after refusing a court order to surrender his tractor to the government as compensation for illegal sales in North Dakota.

Once spring planting is completed, authorities expect illicit shipments to resume, both in the open and, for smugglers seeking to avoid detection, under cover of night. Lanier, who is appealing his conviction, is unsure whether he will repeat his protest, in part because of the reservations of his wife, Diana.

“If we go across again, the fines will be much higher,” he said. “They’re going to come down much harder the second time.”

Although critics admit they do not represent a majority of the 120,000 or so grain farmers who fall under board jurisdiction--estimates of their strength range up to 35% of the total--their tactic has forced a reexamination of the marketing institution.

The Wheat Board has been a signature part of life and business on the Canadian prairie since the Depression. It was founded in 1935 and granted exclusive control over exports eight years later, in part to guarantee food supplies to Canadian troops fighting World War II.

The board has grown over the years into the country’s fourth-largest exporter, exceeded only by the Big Three auto manufacturers. By most measures, the system is a success. Annual sales total more than $4.35 billion, and Canada has about 20% of the world wheat and barley markets.

Why, then, are so many farmers so determined to break up the board? The answers lie in changing agricultural and marketing technology, the shifting economics of farming in Canada, globalization, even the passing of a generation of farmers with memories of the hard times of the Depression.

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For Lanier, the decision to fight the board in the open grew out of a long frustration with efforts to change it through negotiation and lobbying. Others were emboldened by a rise in prices on the U.S. market after several years of depressed prices in Canada and the gradual erosion of government farm subsidies, he said.

“If you farmed for 20 or 30 years,” he noted, “you realize high prices don’t come along very often. A lot of farmers, after two or three bad years, were heavily in debt and needed those prices, which the board wasn’t getting.”

A farmer today might spend almost as much time in front of a home computer tracking commodities prices on the Chicago market as in the cab of a tractor. But Canadian growers can’t take advantage of a sudden spike in wheat prices with a quick sale because all of their export crop is in the hands of the Wheat Board. And the board pays every farmer on the same scale--an average price per grade over the course of a year.

Critics say this destroys initiative and rewards sloth.

“Farmers know that if they have a very aggressive neighbor who’s determined to get the best prices for his grain, they don’t have to worry about competing with him,” said Greg Rockafellow, a barley farmer from Crossfield, Alberta, who was among the first to organize opposition to the board. “They know that neighbor is going to get the same price as they are. . . . That makes it easy for them.”

Nettie Wiebe, president of the National Farmers Union, dismisses such arguments as narrow-sighted.

“When these guys talk about entrepreneurial spirit and breaking the monopoly, they are almost always talking exclusively about the American market, so they are talking about a very small part of our total exports,” she said in an interview. “Overall, we do far better cooperating on our marketing than we would individually.”

Agriculture Minister Ralph Goodale acknowledged in an interview in Ottawa that the dissidents “cannot be ignored,” and he has promised changes in the board’s governing panel giving farmers control.

But Goodale is adamant that the board must retain an enforced monopoly on exports if it is to remain effective.

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Board supporters classify opponents as naive, inadvertent stalking horses for giant transnational grain companies like Archer-Daniels-Midland Co. of Illinois, which they say would be the real winners if the board falls.

Wiebe grows wheat, barley oats and lentils near Laura, Saskachewan. She says board critics have a fun-house-mirror view of the international grain market, distorted by their limited experience with the American sector, which receives less than 10% of Canada’s grain exports.

“What we’re talking about is a very small opportunity for a very few guys in a very small market, and they’re trying to tell us and the media that they’re on the cutting edge of the future,” she said in an interview. “This is like the mouse wanting to be turned loose in the jungle with the lions because he thinks he knows where the nuts are hidden.”

Considering that 80% of Canada’s wheat crop is exported, the board is a pervasive force in the life of this nation’s grain farmers. It allocates the estimated annual crop among growers, grades the harvest for quality and acts as the exclusive sales agent to overseas buyers.

When they deliver their grain to storage, farmers receive a down payment--essentially a guaranteed minimum based on the projected price averaged over the course of the crop year. At the end of the year, farmers are given an adjustment if the actual average price was higher than projected. The board, therefore, insulates Canadian farmers from short-term price fluctuations and gives them greater clout in the international market.

She quoted board estimates--challenged by critics--that the current system results in annual revenue of about $255 million a year more than would be netted by individual sales.

Wiebe also is fed up with media reports portraying the board rebels as “individual freedom fighters against the Canadian government.”

If the board falls, she argues, the principal beneficiaries will be large U.S.-based grain marketers--which will become the middlemen buying Canadian wheat--rather than Canadian family farmers. With this, Wiebe taps into long-standing Canadian concerns about becoming an economic annex of the U.S.

Lanier also has heard these claims and admits he’s been accused of becoming “Americanized.”

Now, as he gazes past the Canadian flag on his front porch toward the fertile prairie that lured his father north from Kentucky at the turn of the century, Lanier acknowledges the issue has ripened emotions and ruptured old friendships.

“There’s a lot of animosity,” he said. “It’s perceived on one side as having someone else’s hand in your pocket and, on the other side, as being unfair to the group.”

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The high fines assessed against some farmers and the jailing of McMechan have only hardened the opposition, he added.

Agriculture minister Goodale said he believes changes proposed for the board--a farmer majority on the governing council and greater flexibility in marketing-- will dissipate much of the opposition. But he makes no apologies for enforcing the law against those who try to sell grain south of the border.

“I have a sworn duty to respect and enforce the law; it’s not discretionary,” he said. “To do otherwise would be fundamentally unfair to the vast, vast majority who do respect the law . . . whether they support the board or not.”