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Kevin Hursh on Agriculture: Hursh Comment

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Lake freighter debate

Posted in Uncategorized by Kevin Hursh
Feb 14 2011

The old debate over the Canadian Wheat Board has developed a new twist. The CWB is purchasing two new lake vessels at a cost of $65 million. The CWB says there’s a need to replace the aging fleet of freighters on the Great Lakes. The cost is equal to approximately $1 per tonne, paid over the next four crop years. Meanwhile, the transportation cost savings are supposed to amount to at least $10 million per year. CWB opponents have been quick to pounce noting producers were never consulted on the purchase. That’s true, but the CWB directors are elected to make decisions on behalf of producers. Although $65 million sounds like a lot of money, it pales in comparison to the money that is made or lost during the CWB’s regular marketing decisions on wheat, durum and export barley. And there is a precedent for the CWB owning transportation assets. It has long owned a fleet of 3,400 rail hopper cars. Some opponents also argue that the benefits of ship ownership, if any, will not necessarily accrue to those who finance the purchase. Producers who are planning to retire soon will end up paying the tab without seeing the longer-term benefits. Using that argument, the CWB shouldn’t invest in new computers or staff training either. The true, but unspoken reason for most of the opposition is probably the distaste for the CWB expanding its sphere of influence. I’m Kevin Hursh.

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