Invitation: Our Board Our Business

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Invitation: Our Board Our Business

RGR

So do markets work -- or not? (RP)

Alan Macdonald

Source: The Leader-Post (Regina)
Date: May 19, 2007
Edition Name: Final
Section: Letters Page: B8

As I was driving to work early one morning, I looked up to check the
latest fuel price -- to see prices I've never seen before.

It was one of those wake-up-and-smell-the-coffee moments -- only this
time I was sucking the smell of high-priced gasoline.

As I tried to make sense of this, I couldn't help but draw a
comparison between food production and fuel production. Apparently,
competition and fair pricing is alive and well in the oil industry,
according to those expected to regulate it. Oil companies tell us the
price at the pump is related to the cost of crude, refining capacity,
supply and demand, and taxation. They remind us when prices are on
the rise and conveniently forget when the price should be falling.
Drive by any gas station before a long weekend and you'll see fuel
retailers marching out in unison to change their signs. Competition
-- or price fixing?

On the flip side, we see food producers paid prices that are what
they were 50 years ago! Federal policies such as removing freight-
rate protection, plant breeders' rights, stabilization and insurance
programs, supply management and trade policies have limited their
earning potential.

Most recently, the Harper government decided farmers need to compete
with themselves more and will remove single-desk selling from the
Canadian Wheat Board. Such a change defies logic.

The proof is at the "pumps". Few sellers and multiple buyers equals
high prices. Multiple sellers and few buyers equals low price. Why
would we think these
laws of economics should be different for food producers than for oil
producers?

Some might suggest there is no money in food production. However,
take a look at some top Canadian companies and you'll soon find
somebody is making money
off agriculture; it just isn't the producer. The policy changes of
the last 15-20 years have tilted the earning potential from
agriculture into the hands of
grain companies, railways and processors at the expense of producers
-- all in the name of efficiency and competition.

Government policy will continue to force farmers to assume the risk,
scavenge for pennies and be even more 'innovative'. It is like a
modern-day reality
version of Survivor, where farmers are forced to turn on themselves
to survive by 'voting their neighbours off the land'.

In contrast, take a look south of the border or to Europe, where
governments provide substantive support for family farms. Don't
expect farmers to compete in a global market if you aren't prepared
to have an agricultural policy competitive with other countries in
that market.

In the meantime, I will put up with oil companies putting their hands
in my pockets and taking the extra $16.50 a week and I will thank my
lucky stars I am not the farmer who is being robbed at the pumps and
raped at the elevator, and told that this is good for him. After all,
competition is working -- right?