Food Chain lobbies Parliament Hill and challenges the grain and oilseeds boards

by DON STONEMAN

The new group, called Food Chain, was registered recently as an Ontario company and in February began actively selling memberships of $365 a year. Its chief spokesman is John Doner, who, with his son, farms nearly 4,000 acres of land, mostly rented, and runs an elevator at Gormley, north of Toronto. Until a few years ago, he says, he was a typical cash cropper who generally ignored commodity group politics, preferring to farm an ever-larger acreage in an effort to make ends meet. "I never got involved at all. I figured there were people looking after everything," Doner says.

But, in the last couple of years, it has become apparent to him that getting bigger and working harder isn't the road to success, or even just getting by. "I'm 56 years old," Doner says. "I can't work any harder." Weather has become the factor limiting the size of a cash crop operation, he asserts. Cropping acreage is limited by the number of days available to plant where corn heat units are limited and soil types are less than ideal. Farmers have to find another way to boost their income rather than just getting bigger. The 2000 and 2002 planting seasons are a case in point.

Food Chain's leaders have been at the lobbying game for a couple of years. While seeking support in Ottawa to prop up farmers against foreign grain subsidies, Doner and fellow cashcroppers John Holtrop and Bruce Pearse, who farm at Keswick and Sunderland respectively, have prowled the halls on Parliament Hill. They claim, after pulling some political strings, to have been able to put their case for federal farm supports directly to Paul Martin when he was the powerful finance minister.

They've hired Ed Michels, a former buyer for a flour mill to provide them with some market expertise, and have also sought to hire a political lobbyist. They claim to have the support of a number of federal and provincial members of parliament. Food Chain is taking a harder look in its own back yards at how crops are marketed and who buys them.

They're unhappy with Ontario Corn Producers' decision not to support Manitoba's bid last year to have Ottawa impose anti-dumping duties on American corn imports. Their focus is business, business, and business. "We want to see the financial analysis as to why it's bad for us not to pursue (corn) countervail at this time," Doner says. "How many dollars are involved?"

Three sisters of agriculture
For now, much of Food Chain's attention is focused on wheat. It has a lot of grower support from the southwest, a traditional wheat growing area, according to Doner, who is also a licensed wheat board agent. The Ontario Wheat Producers Marketing Board itself says that three quarters of the crop is grown in what it calls "southwest and central Ontario," a dozen counties west of Toronto.

When the white settlers came to North America the aboriginal farmers depended on "three sisters" -- squash, beans and maize. The three sisters of modern agriculture in Ontario are corn, soybeans and wheat. The rotation helps to manage crop disease and maintain soil fertility.

Arguably, over the years, wheat has been the poorest of the sisters. Only recently have a number of wheat varieties been available with different qualities and characteristics for different markets.

Corn got its big agronomic boosts with chemical weed controls beginning in the 1960s and average yields have grown steadily over the years. Soybean acreage boomed when short-season varieties were developed in the 1970s and '80s.

For many years, Ontario's wheat consisted entirely of soft white winter varieties. A price pooling system legislated in place in 1958 mandated that all growers sell their wheat through the marketing board.

Some growers still admit that they hope for breakeven at best, and grow wheat mostly for agronomic benefits to later crops of corn and soy. A winter crop holds the soil in place. Others plant it as much for bedding for livestock and a place on which to spread manure after the mid-summer harvest, relieving the enormous pressures at spring planting.

That's not how it should be, says Doner. Wheat is a food grade product. Why, he asks, does it consistently bring the grower a lower return than corn, which is fed to animals?

One reason is that until recently, wheat hasn't received the agronomic and breeding attention accorded to corn and soybeans. Then there's the weather. A late fall soy harvest precludes planting winter wheat. Freezing and thawing during the winter can kill the crop that is in the ground. Heat and moisture at heading puts the crop at risk of fusarium. And the marketing system has been buffeted as well.

Free trade with the United States has alternately benefited and hurt returns for the crop. In the 1970s, when international grain prices went through the roof, the Ontario wheat board was bound into a two-price system that capped returns on grain sold into domestic markets. The federal government made up the difference with payments for the wheat board to distribute to growers for some years, then gradually cut the support to zero, so that wheat growers were subsidizing consumers.

When international prices fell below domestic prices, the two-price system, by then perceived as a producer subsidy, was no longer politically sustainable. Under the free trade agreement with the United States, a 20-cent-a-bushel tariff was abolished and, Ontario wheat found a ready market in U.S. mills. Gradually hard red varieties and new agronomic practices were developed for Ontario's humid climate. Separate pools were developed. When the giant monopoly Canadian Wheat Board faced International Trade Commission hearings in the mid-1990s, the Ontario Wheat Producers Marketing Board (a smaller monopoly) was exempt from a cap on wheat exports to the United States because most of the products milled in the United States were ultimately re-exported to Canada.

Aggressive education program
Meanwhile, cash-hungry growers chafed under the Ontario board's agency marketing powers. Wheat payments are spread out over more than a year and growers don't get their last payment until more than a year after harvest. Data Transmission Network (DTN) reports "spot prices" that exceed the wheat board's pool returns and fuels the frustration of mostly larger growers.

In 1997, under pressure from its directors, the Ontario wheat board announced that it would hold a plebiscite to determine if the board's agency powers should continue. That plebiscite was cancelled in the fall of that year, shortly before it was to be conducted.

After a couple of starts and starts, growers got an opportunity to market their crop themselves.

In 2000, forward contracts written totalled a modest 61,620 tonnes. By the end of August last year, however, things had changed. The board wrote almost 4,500 contracts for the 2001 crop, covering 195,000 tonnes of wheat. It credits an aggressive education program for producer acceptance and the subsequent strong adoption of these options. And then there is the direct marketing exemption program. For the 2000 crop, a total of 1,320 direct marketing exemption contracts were written. Sixteen were voided and 250 were returned to the board by the June 30 deadline. The remaining 1,054 covered more than 151,000 tonnes.

The board says virtually every program that it runs has been changed since 1994, except on-farm storage. Storage is one of Food Chain's targets. It's a leftover from a time when the wheat board was obliged to serve the domestic market first and it really benefits the millers, not farmers, says Doner.

For mostly the same reason, he challenges a document known as "the miller's agreement." This agreement lays out the terms under which wheat will trade between the wheat board and the province's flour mills. He questions whether this is really a good business arrangement.

In April, Doner, Holtrop and Pearse talked with the board of Ontario Wheat Producers at its offices in Guelph. A few days later, the wheat board announced a higher price for soft white winter wheat and Food Chain subsequently issued a press release stating that "the members of Food Chain believe that their discussions resulted in an improvement in the price of soft winter wheat."

Not so, says wheat board chair Bruce Webster of Little Britain, near Lindsay. He said the wheat board price change had been in the works for some time and was clearly miffed by what he calls a "lack of factual information." Wheat board general manager Jaye Atkins chimes in: "Our marketing manager wasn't even in the room at the time."

Jim Whitelaw, who has spent 26 years as the wheat board marketing manager, asserts that the price change was a result of recent structural changes in the milling industry that allow the board a more accurate view of what the market is willing to pay. Instead of using a collage of prices that "are all over the place" in Michigan, as well as information from an industry newsletter to determine a price point, the wheat board now uses a price from a Nabisco mill in Toledo. Since Kraft took over Nabisco the price in Toledo is "more transparent," Whitelaw says.

The wheat board was "pretty negative" in its reply to Food Chain, Doner says simply. Subsequently, Food Chain replied that the wheat board wasn't getting the best price it could for soft white winter wheat, offering farmers $153.05 a tonne when Archer Daniels Midland was offering $177.38 per tonne for exempted wheat delivered to its Port Colborne mill.

The $23.88 difference is a "sweetener" to cover transportation and elevation fees, says Whitelaw. Port Colborne is "a dead end. If you were a producer you would go to any processor before you go to Port Colborne."

The grower trend in the Golden Horseshoe is to grow hard reds, Whitelaw says. For agronomic reasons, white wheat "hasn't worked" in the Golden Horseshoe area for a number of years, he argues. Below Highway 7, heat and humidity encourage both fusarium and sprouting, which ruin the crop as a food product.

Major marketing changes ahead
Undeterred, Doner questions the wheat board's policies in terms of the cost of its hedging programs and calls for "revenue recovery." In the wheat board's 2000 report, its most recent, options and futures cost the wheat board $9.42 per tonne of wheat marketed, compared to revenue of $4.34 per tonne.

Stung, Whitelaw calls that sort of criticism "armchair quarter-backing. At the time it was a good corporate decision to spend 10 or 15 cents per bushel" to protect against a down market and also be able to take advantage of a rising market, he argues. The people who run the advance payments program in Ottawa encourage the use of options, he says, and when a hedging program is in place, the wheat board can hand out a larger advance payment.

Recently the Ontario wheat board sent growers some extra money, abut $15 a tonne for wheat grown last year. This advance on the final crop payout was guaranteed under the Agricultural Marketing Programs Act (AMPA), which ensures marketing agencies, such as the Ontario Wheat Producers' Marketing Board, have the credit necessary to make up front payments to producers and cover marketing costs. The guarantee essentially covers losses to the board in the event that prices drop below the initial payment levels.

Board chairman Bruce Webster and general manager Jaye Atkins allow that major changes in marketing will be announced at the wheat board's annual meeting in Stratford in late August. Wheat isn't the only target Doner, Holthrop and Pearse have in view. Doner wonders what the point is in encouraging more ethanol plants when Commercial Alcohols in Chatham regularly imports corn from Michigan. The same goes for soybean crushing in Hamilton. The CanAmera plant there is regularly filled with soybeans grown across the lake in the United States, and nearly half of the Ontario crop is exported elsewhere as an Identity Preserved crop. Both the wheat board and the soybean board need to develop cost of production information so that they can make a stronger case to governments when they ask for aid, Doner says. (The Ontario Corn Producers Association already has developed a cost of production formula.)

Doner muses that part of the shortcoming of the marketing boards and associations supporting farmers is that their income is based on the size of the crops produced. There's nothing there to reward them on performance, he says, and he is pushing hard for a review of how all marketing board and associations operate and their business plans. He and the other Food Chain partners have sat down with Farm Products Marketing Commission (FPMC)) chair Rod Stork, and also with provincial auditor Erik Peters to talk about marketing boards and how they use their powers and the monies that farmers give to them.

Last winter, Peters held hearings which examined the workings of the food inspection side of the Ontario Ministry of Agriculture and Food. Doner would like to see a similar review of the Farm Products Marketing Commission (FPMC). But there's no pushing the provincial auditor and his officers, Doner says. They run on their own schedule. Another provincial auditor's official told Better Farming the auditor has no mandate to audit marketing boards' performance directly.

In early winter, Elgin-Middlesex MPP Steve Peters, the Liberal party's agriculture critic, reminded Agriculture Minister Brian Coburn by letter that some of the province's farmers think that the FPMC, which oversees marketing boards, also needs some oversight. And a letter on behalf of Food Chain from Clinton-area farmer Stephen Thompson, who is a professional agrologist and MBA holder, noted: "Even though individual members of the FPMC may have the highest qualifications, and the best of intentions, the apparent absence of any such review process, if for nothing else than their own protection, is troubling."

A subsequent letter from Mr. Coburn said: "You have raised some thought-provoking points which I will consider."

That was January. By early summer, Ontario had a new Premier, Ernie Eves, and a new agriculture minister, Helen Johns. But it's not all retracing old ground for Doner, Holtrop and Pearse. The burgeoning threat of a huge farm bill south of the border has put agriculture near to the top of the news. Add to that figures from the latest census which revealed that, in the last four years, the largest exodus from agriculture in Canadian history had taken place.

In early June, Doner attended the Premier's Roundtable on Agriculture in Guelph. Provincial farm leaders gathered there to kick around issues with the Premier in the room. The group was relatively exclusive. One representative was invited for each commodity group. Spectators and media were not present.

Doner got a seat in the room, sponsored by an MPP from north of Toronto. "I represented producers in York as well as Food Chain," he said.

On his drive home from the round table, he mused about the efforts at the workshop, which looked at a wide variety of issues. Profitability will take care of just about every other problem in farming, Doner said. If farming were profitable, farm succession wouldn't be an issue. "You and I may be stupid enough to keep farming," he said, laughing. "Kids go where the opportunities are," and right now opportunities in agriculture are few. He rejected the concept put forward by the Christian Farmers Federation of Ontario of paying farmers to plant buffer strips around their fields and along streams. Five thousand dollars here and there isn't going to save farmers who are losing money as they grow crops, he says. "Why pay them for something that is unproductive and don't pay them for what is productive?" he asks.

In Doner's book, that isn't good business. BF

In total, 94 per cent of producers grow less than 200 tonnes of wheat but account for 62 per cent of Ontario's production. About four per cent of the province's producers (447 in number) produced nearly 25 per cent of the crop. And 144 producers, or one per cent, grow more than 500 tonnes and produce 13 per cent of the 2000 crop. The largest single producer in the province grew 3,762 tonnes of wheat in 2000. BF