State wheat producer organizations in the United States formed Western Wheat Associates and Great Plains Wheat in the 1950s and merged these organizations in 1980 as U.S. Wheat Associates.
During all those years and decades, USW has worked to promote U.S. wheat to our customers in the face of several competing organizations that had monopoly control over their countries' wheat supplies and prices.
It has been frustrating to watch markets we built with our customers over many years be taken away just because a monopoly exploited its ability to price wheat at whatever it took to buy market share, bury the discounts in its price pools and tell its farmers what a great job it was doing on their behalf.
Yet, we watched Argentina dismantle its wheat board and South Africa end all its commodity control boards, including for wheat, in the 1990s.
The Australian Wheat Board finally lost its monopoly over export sales in 2008 after former AWB executives were caught paying hundreds of millions of dollars in kickbacks to Saddam Hussein's regime to control the Iraq wheat market — a sordid affair in which USW was among the first to publically call for an inquiry.
Then, on Aug. 1, 2012, the last of the old monopolies died when the “Marketing Freedom for Grain Farmers Act” took effect in Canada. The Canadian Wheat Board, though renamed and recast as a private grain merchandising company, still gets government loans and support, but that, too, is scheduled to end in no more than five years.
Still some problem areas
There are still some commodity boards with pricing or volume control in smaller crops such as cacao, and Russia and Kazakhstan sometimes seem to be heading fitfully in the direction of re-establishing government-controlled wheat marketing.
For the moment, however, the monopoly dinosaurs have died out for the major commodities. That is even more important for wheat, which represents the largest volume, fully one third, of the world’s annual grain trade. So Aug. 1, 2012, marked marketing freedom day not just for Canadians, but also for an entire global industry.
U.S. wheat producers are still a little uncertain about how this new marketplace will work.
For example, there are lots of details to be resolved related to U.S.-Canadian cross-border trade. But, we welcome the opportunity to compete openly and fairly based on the value of wheat to our customers, especially overseas where markets are growing.
We have a lot to offer in terms of value and reliability of supply, and we are confident that the new, fairer marketplace will work both to our favor and to the benefit of buyers. Pricing shenanigans will no longer distort markets, disrupting logical supply lines and skewing trade. It is past time.
We must also tip our hats to our northern neighbor's wheat and barley producers, who will now be able to market their wheat to whomever they choose. On average, we expect the open market to improve their returns and that the end of monopoly pricing tactics will improve ours.
Buyers, too, are better served by markets that send the right signals back to the sources of supply and forward to end users.
To our customers, the best guarantee of a steady supply of wheat is the U.S. wheat producer. We repeat our promise of reliability, quality and service, and we genuinely look forward — finally — to a global market that works as it should, without monopoly trade distortions.