Teaching/Communication/Extension/Profession,

Koo, Won W.

English

Research Papers in Economics

Journtri of  Agric r~lt~lml  rrnd Applied Econol?zic..\. 34. I  (April 2007-):?3  1-23:! 
0  2002 Southern Agricultural Economics Association 
BOOK REVIEW: Schmitz, Andrew and Hartley Furtan. Canadian Wheat 
Board: Marketing in the New Millennium. Regina, Saskatchewan: 
Canadian Plains Research Center, 2000, 328 pp., $29.95 paper. ISBN O- 
88977-134-0. 
The  operation  of  state  trading  entel-prises 
(STEs)  in trading agricultural commodities has 
been  a contentious issue  fi)r the last decade 
mainly  because STEs may  be  able to distort 
trade  flows.  The  Canadian  Wheat  Board 
(CWB)  has  received  special  attention  from 
U.S. growers since (I) it is the world's largest 
cxport  agency.  accounting  for about  12  per- 
cent of  wheat and barley  traded  in  the world 
market,  and (2)  it  has  substantially  increased 
wheat and barley exports to the United States 
since  1989.  Most  producers  in  the  United 
States believe  that  the CWB gives Canadian 
producers an unfair advantage over the United 
States in  bilateral  trade  of  agricultural  con?- 
modities.  mainly  wheat,  between  the  two 
countries. Also. producers in the United States 
believe  that  the CWB provides an  unfair  ad- 
vantage to Canadian producers over the Unit- 
ed  States in  offshore  markets.  Recently.  the 
North Dakota Wheat Commission filed a corn- 
plaint  against the CWB regarding its market- 
ing behavior. 
Curzcidian  Whcclt Bocrrd:  Ml~rketirzg  irz  the 
NL'\v  Millenlzilf~i~  provides  very  useful  infor- 
mation  on the operation of  the  CWB to im- 
prove our understanding  of it. The book cov- 
ers all information regarding the operation of 
the CWB in the world market and reasons why 
the  CWB is  needed  in  Canada  in  the world 
wheat markets. In  addition, the book describes 
the  trade  relationship  between  the  United 
States and Canada and the role of the CWB in 
agricultural trade between the two countries. 
The book has 15 chapters, including an in- 
troduction (Chapter I) and conclusion (Chap- 
ter  15). In  Chapter 2 the authors analyze the 
role of  the CWB in  the world  grain  market, 
which  they  claim  is  far from  a  free market 
system. The authors argue that the CWB has 
monopoly control over the marketing of west- 
ern Canadian wheat, durum, and barley, but it 
does  not  have  such  control  over  the  world 
grain  markets. They claim that the CWB has 
been succcssful because it is able to maintain 
its rnarket share despite the problems in world 
grain  trade. The authors describe the  regula- 
tory framework governing the Canadian grain 
industry in Chapter 3. This chapter provides a 
better  understanding  of  the  function  of  the 
CWB in transporting, handling, and marketing 
grain. Chapter 4 discusses the single-desk sell- 
ing  concept of  the  CWR. They examine the 
role of the CWB, which maximizes returns for 
producers it  repl-esents, and compares it  with 
multinational  grain companies (MGC). Chap- 
ter 5 focuses on recent changes in  agricultural 
policies in the United States, the EIJ. and Can- 
ada. They argue that there is not free trade as 
long as the United States and the EU maintain 
government policies and subsidies. 
In  Chapter 6, the  authors discuss the op- 
eration of the CWR, as a STE, under the world 
trade  organization.  The  authors  argue  that 
STEs will  play  an  irriportant  role  in  world 
grain  markets and the CWB has not  violated 
existing trade agreements. Chapters 7, 8, and 
9 examine trade disputes between the  United 
States and Canada and debates in  Canada re- 
garding thc operation of  the CWB. Since the 
inception  of  the  U.S.-Canada  Free Trade 
Agreement,  Canadian  exports  of  wheat  and 
barley  increased substantially,  while U.S. ex- 
ports  to  Canada  remain  insignificant.  The 
asymmetric  trade  flows of  wheat  and barley 
have triggered  several trade disputes between 
the two countries. Chapter 7 summarizes the 
trade disputes that have occut-sed  between the 232  .lo~~rnul  of'Agric.ulrurtrl and Applicd  Ec.or~or~ric,s,  April  2002 
United  States  and  Canada  over  CWB ship- 
ments  of  wheat  into  the  United  States. The 
authors argue that the increased shipments are 
caused  by  the  export  enhancement  program 
(EEP) the  United  States  used  from  1985 to 
1995.  In  Chapters  8  and  9, the  authors  ex- 
amine Canada's  debates on barley marketing. 
They  carefully  discuss  debates  regarding  a 
dual marketing structure for barley in Chapter 
8. while Chapter 9 looks at the Charter Case. 
The authors discuss  litigation  against the 
CWB brought by Archibald and several farm- 
ers, along  with  the  Alberta  Barley  Commis- 
sion and the Western  Canadian Barley Grow- 
ers  Association.  Chapter  10  focuses  on 
characteristics of the Canadian rail system and 
roles of the CWB in the transportation system. 
The economic performance of the CWB is dis- 
cussed  in  Chapter  I  I. The authors argue that 
the C  W  B performs better than its competitors. 
In  Chapter  12, the  authors argue that  the  al- 
leged cost inefficiencies of the CWB claimed 
by  Carter  and  Loyns  are not  found  and  that 
the n~arketing  costs of non-board grains, such 
as flax and canola, exceed the costs for barely 
and  wheat.  Chapter  13  discusses the  CWB's 
ability to  introduce  additional  price and mar- 
keting flexibility. The dual marketing  debates 
are explored in  Chapter 14. The authors argue 
that  multiple  sellers  under  a  dual  marketing 
system  would  cause  the  price  premiums 
earned by  the  CWB to  disappear.  They con- 
clude that dual  marketing is not a viable sys- 
tem for the western Canadian grain producers. 
In the final chapter, the authors sunln~arize  the 
CWB's  performance in world  grain  trade,  its 
economic  efticiency, and  disputes  against  it. 
They conclude that  the CWB has won  many 
battles to date and has generated higher gains 
for producers than  its competitors. 
This book covers all relevant topics and is- 
sues related  to  the  CWB and  also highlights 
changes  in  the  CWB operation over the  last 
several  decades.  The book  strongly  supports 
the operation of the CWB in world grain trade 
and argues that  the  dual  marketing systern is 
not  a  viable  option  for  C~ltiadian  grain  pro- 
ducers. This  book  is  very  well  written  and 
easy to read.  I  strongly recommend this book 
to those who would  like to know more about 
all  the  issues  regarding  the  CWB, including 
history, regulations.  operations. disputes, and 
debates. 
Won W.  Koo 
North Dakotu  Strrtc.  Uni\>er.~ity 

BOOK REVIEW: SCHMITZ, ANDREW AND HARTLEY FURTAN. CANADIAN WHEAT BOARD: MARKETING IN THE NEW MILLENNIUM

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics