What happens when the Canadian Wheat Board monopsony goes away?

I don't know much about the CWB, but a couple of angles spring to mind. I'm in the UK, so different conditions will apply elsewhere. (I have farming family and watch the industry, but am not directly involved, so experts may be able to correct me on some points of the following.) Here, some farmers sell forward to the processors or middlemen and some sell spot at harvest or even some time after if they have storage. Grain is a major actively traded commodity on the futures markets, so the price they sell is related to that. Hence, you have little certainty on prices except what you lock in yourself. You don't get that much room to negotiate on contracts - you sell a certain amount of a certain quality at a certain price. I don't know to what extent the CWB ignored market trends, but it seems likely they are going to see more price volatility. That doesn't necessarily mean more farms going out of business and bigger groups taking over - farm profits vary from year to year and in many places the banks are understanding(ish), extending credit to get them through to the next year. However … In the UK, we had a near-monopsony milk buyer, the Milk Marketing Board, which was deregulated in 1993. Immediately after the MMB lost its monopoly, farm gate milk prices rose as the independent dairies competed for supply. That didn't last too long. Several dairies went bust and prices quickly began to fall again - and indeed, now thousands of smaller dairy farms have gone out of business because they can no longer make a living. Now, the milk picture is complicated because you also have imports (milk from Europe, dairy products from New Zealand, which has a much lower cost of product), the effect of subsidies, the common agricultural policy, the market structure is different (dairy farms produce all year round, they have a supply contract with the dairy which agrees to take the milk but essentially tells the farmer what price they're getting - not much scope for negotiation or shopping around), the pricing power of the supermarkets (who are perhaps an oligopsony for much agricultural produce in the UK, but certainly have no intention of increasing the prices farmers get). Still you could perhaps consider MMB as an example that led to concentration in farming. MMB's processing operations actually still survive as Dairy Crest, which is one of the big dairy groups in the UK market, but it had its own collection and processing infrastructure, so it sounds like it's different to the CWB

From the 2008 article. Flour went from $12.50 for a 20kg bag to $19.00 over a year. If you need 0.5kg of flour for your loaf the cost of flour went from 31.25 to 47.5 cents. The bakery owner was expecting it to rise to $27.00. Making the cost for such a loaf 67.5 cents. So the increase from his baseline of a year previous to an expected future increase was 36.25 cents. The increase from the then current price to the increased would be 20 cents. But the baker in question thought consumers should expect the price of a loaf to increase by $1.00 or more. The cupcake person is looking for an increase of 25 cents. If a cupcake had 50 grams of flour in it this would result in an increase of 6.75 cents. http://allrecipes.com/Recipe/Lemon-Lime-Cupcakes/Detail.aspx have 15.625 g of flour in them, so the increase in flour cost would add 2.11 cents per cupcake. In both cases, these producers were expecting to charge their consumers much more than the cost of the increase in flour. They're is taking advantage of a "crisis" to improve their bottom line.

How will selling work? http://www.canolacouncil.org/chapter14.aspx#ch14 on how it works for canola, a "non-board" commodity. Seems staggeringly complex to a simple urbanite like myself. (Canola, by the way, has far surpassed wheat in terms of farm cash receipts, and is the most important single crop in Canada.)

You might look into what happened when the Australian equivalent, the http://en.wikipedia.org/wiki/AWB_Limited, was privatised, followed by the later http://www.google.com.au/search?hl=en&biw=1280&bih=618&q=Australian+wheat+market+deregulation&btnG=Search of the wheat trading market. I'm somewhat across this, albeit with only limited knowledge of the market-side of things. But as I understand it, in Australia :Farmers, either directly or as a co-op, deal with a marketing/trading company (e.g. AWB). The co-op itself may also be a marketing/trading company, dealing directly with domestic & overseas purchasers.AWB is still going 3 years after deregulation (although, as I mentioned, it was privatised beforehand). It's still the largest marketing/trading organisation locally. I won't comment on the whole "class of shares" issue mentioned in the wikipedia link, except to say that progression of ownership/control structure is extremely common when similar organisations and groups are privatised into a deregulated market.It actually does add some flexibility for producers - they can pick-and-choose where & who they sell their grain to, which allows them the option of targetting their production to suit those markets. That has its http://www.theaustralian.com.au/business/opinion/dangers-in-the-new-deregulated-wheat-market/story-e6frg9if-1226082328544, of course, but it also adds the potential for creating new domestic & international markets (e.g. the market for "organic" non-pesticide treated wheat is expanding here).Dunno. I too am an uninformed urbanite, albeit one working on grain-related issues ;-)Overall, I'd say it probably does have a tendency to increase concentration of ownership into the same old agribusinesses (boo! hiss!), but other already-existing factors that do the same (e.g. access to capital, economies of scale, etc) outweigh it. My personal feeling - and, again, I'll reiterate that I'm not and have never been a farmer - is that it opens other opportunities that farmers may or may not be ready to take advantage of.

The MMB is the case study referred to in http://www.metafilter.com/108473/Reorganizing-a-Canadian-institution#3979005 in that thread. Thanks for the memory refresh! The Wheat Board will survive in some fashion for a while but you'll see the more successful farms either go it alone full stop or try some way to privatize the profits and socialize the losses by only selling to the Wheat Board when they can't get a better price elsewhere. Long term either the more marginal farms will be shut down/sold off or a new Wheat Board will be made, only this one actually will require constant government money as it will be made up of only the more marginal farms. In any event, don't expect flour* to be any cheaper for Canadian consumers. Not that cheaper flour would matter, it already is cheap, I couldn't imagine even a 20% increase in the cost of flour causing much trouble to any Canadian. Bakeries may complain, but even then what is the cost of the flour in a cheap loaf of bread? It must be a low percent. *I'm using flour here because for consumers I think wheat = flour.

Changes in the cost of flour actually have a serious impact on the price of bread, as seen in Canada in http://www.cbc.ca/news/canada/edmonton/story/2007/10/03/bread-rising.html and http://www.canada.com/theprovince/news/story.html?id=2939a502-1046-49cf-9ba5-c714fae2744d. The cause of the price jump wasn't the dismantling of the wheat board (obviously), but the effect was substantial. It was a big story for a short while.

I should also say that the pro- and anti-Board factions are strongly divided. The CWB had to do a lot of fudging of the voters' list to get that two-thirds support in the recent plebiscite. They really haven't been doing much other than frenetic self-promotion lately. It's painful to watch them go down like this.

These answers are fantastic. Thank you! bluebelle, the point about shipping and fees is exactly the sort of thing I was wondering about with that first question, so thank you especially for that (and welcome to Metafilter!).