February 2012

Or face the end of food sovereignty in Canada

by Ken Larsen

• While the popular media is full of stories of globalization and its corrosive effects on local communities, most are unaware of the back-story when it comes to the Canadian Wheat Board. In the grain trade, globalization is not a new story. In fact, it pre-dates the settling of Canada’s west by over half a century. The Wheat Board was a uniquely constructive and successful response to globalization created in Canada’s west.

By the time our grandfathers and grandmothers were settling homesteads to grow wheat on the prairies in the early 1900s, the global grain market was already a mature, fully globalized market dominated by just five giant corporations. These privately owned companies, mutations of which still operate today and still control 80% of the tradable grain on the planet, were connected to international commodity markets and the world’s grain growing areas by the telegraph. Through the telegraph, stocks were traded and grain prices set instantaneously around the globe. Faced with these giant grain companies, western farmers found they were powerless to negotiate a fair price for their crops. Farmers saw the idea of collective bargaining through a single-desk Wheat Board as a way to have market power through cooperation and thereby get a fair price.

It was not until 1920s that the first Wheat Board was created. An agricultural depression began at the end of WWI and by 1920 speculation had essentially frozen the futures market pushing the international price of wheat to near zero. The west’s farmers faced financial ruin. Under strong pressure, Ottawa created the first Canadian Wheat Board to bypass the dysfunctional private market. This Board acted as the collective sales agent for the west’s farmers. It sold the crop in an orderly manner directly to customers bypassing speculators and the private trade. The Board was very successful at getting fair prices and was immensely popular among the west’s grain farmers.

Under pressure from private trade, then Prime Minister Arthur Meighen’s Conservative government removed the first single-desk CWB in August 1920. Prices in the west promptly collapsed and Canadian grain flooded into the US. To protect their own farmers, the US closed its border to Canadian grain and cattle in May of 1921. In response, Canadian farmers used their Wheat Pool cooperatives to set up a Central Selling Agency (CSA) in an attempt to create another wheat board. However, without government support they did not have the single-desk mandate needed to create the conditions for true orderly marketing to keep prices stable. Western farmers also defeated every Conservative MP in the west in 1921 and continued to lobby for the return of the single-desk Wheat Board.

By 1935, times were so desperate Conservative Prime Minister R. B. Bennett (a former railway company lawyer from Calgary) finally listened to farmers and passed the Canadian Wheat Board Act. Farmers continued pushing for the federal government to take the last step and proclaim the single-desk provision in the Canadian Wheat Board Act. Mackenzie King’s government finally did so in 1943, a little over 22 years after farmers lost their first Wheat Board and more than 43 years since farmers first began lobbying for a single-desk. The initial price for wheat set by the single-desk CWB was $1.25 per bushel, five cents above the private market. The single-desk was supported by all the Wheat Pools and every major farm group in the west. The single-desk finally gave farmers full control over their grain from the farm gate to the customer; the barriers of the private trade had finally been broken.

In 1998, amendments to the Canadian Wheat Board Act enabled farmers to elect 10 out of the 15 members of the Board of Directors. The CWB, which had always been farmer-owned, was now fully farmer-controlled. In every CWB election, 8 of the 10 directors have supported the CWB’s single-desk. The new directors took an aggressive role when it came to protecting farmers’ interests.

In an attempt to undermine the farmer-controlled organization, the two foreign owned railways slowed grain shipments to the coast during 1996 and 1997 costing farmers money for tardy delivery and lost sales. The CWB responded by successfully suing the two railways, winning $15 million in compensation from CP Rail and an undisclosed amount from CN Rail in 1999.

More significantly, Monsanto and other biotech companies started a process to introduce genetically modified (GM) wheat into Canada, the US and Australia. After consulting its foreign and domestic customers, the CWB opposed the introduction on the basis GM wheat was non-salable – nobody wanted to eat it. Ultimately, the proposal was withdrawn in Canada, but it is still in process in the US and is being re-introduced into Australia now that the Australian Wheat Board, which functioned similarly to the CWB, has been removed.

Trouble had been brewing since 1989 when Conservative Prime Minister Brian Mulroney arbitrarily removed oats from the Wheat Board. Private interests persuaded Mulroney to remove oats in the middle of the crop year, creating a $32 million deficit when the Board’s inventory plunged in value – a deficit that amounted to a windfall for private trade. Brian Mulroney went on to sit on the Board of Directors of Archer Daniels Midland (ADM), one of the five giant grain companies.

It was not long before other private groups were demanding the Wheat Board stop selling durum wheat, used for pasta, so they could process it on the prairies. Not unreasonably, farmers asked why they should effectively subsidize a private business by providing cheap grain. Coincidentally, in 1997, the National Citizens Coalition (NCC) found itself with generous funding to allow its then vice-president and later president, Stephen Harper, to attack the legitimacy of the Board with print and radio advertisements across western Canada. Farmers asked where the NCC was getting the funding for these efforts but Mr. Harper remained tight lipped.

Later, farmers again raised questions when the Commons Ethics Committee hearings held in 2007 heard testimony that former Prime Minister Brian Mulroney and Karlheinz Schreiber had a business arrangement in 1993, which Schreiber at least contended included pasta. Mulroney contended the arrangement was legitimate and private, created later based on a special position he took on the Board of Archer Daniels Midland.

Ten years before the hearings, in October of 1996 ADM was fined $100 million in the US for price fixing and two subsequent books based on those court cases documented how ADM financed farmers and other groups to advance its business interests in grain processing. Naturally, Canadian farmers wanted to know if the Mulroney-Schreiber pasta business included financing the NCC’s attacks on their Wheat Board.

By this time, Stephen Harper was Prime Minister. In November 2007, he appointed David Johnston, now our Governor General, then president of the University of Waterloo, to recommend a course of action. Johnston’s January 2008 report recommended conducting a commission of inquiry restricted to dealings between Mulroney and Schreiber pertaining to matters of legitimate “public interest” and not covered in other inquiries. Harper appointed Justice Oliphant to conduct the inquiry.

Justice Oliphant followed the Schreiber-Mulroney money trail on pasta and wrote: “I have concluded that, whatever Mr. Mulroney did respecting Mr. Schreiber’s pasta business, it was not done as part of the mandate he received from Mr. Schreiber on August 27, 1993. Any work done by Mr. Mulroney in respect of the pasta business was done on behalf of his friend and former colleague Mr. [Elmer] MacKay, as well as a friend of Mr. MacKay’s who was involved with Mr. Schreiber in the pasta business.” (Page 233, Chapter 6: The Agreement, Oliphant Commission Report, May 2010.) (Editor’s note: Elmer MacKay is the father of Peter MacKay, our current Minister of National Defence.)

Within days of the conclusion of the Commission, the Harper government ordered the extradition of Mr. Schreiber, over his objections, to Germany where he disappeared into the penal system.

Mr. Harper and the NCC’s obsession with pasta and where the NCC got the funding to spend so freely on its attacks on the CWB never became an issue before the Oliphant commission and remains a mystery to this day.

During the bi-annual CWB Directors’ Elections, private trade-friendly farmers were encouraged to seek Directorships on the Wheat Board, but farmers consistently rejected such candidates, at least in part thanks to the preferential balloting system. Using that system, farmer-voters are able to rank candidates from first to last. On a preferential ballot, if a voter’s first preference of candidate loses, the voter’s second choice comes into effect. This system ensures that, in elections with multiple candidates, no vote preferences are lost and the winner must have secured 50% plus one to win. Over the years, some contests have been simple two-person elections, but even in those cases, CWB single-desk supporters usually won.

Today, Steven Harper is the Prime Minister and on December 15, 2011, the Conservative- dominated Senate passed Bill C-18, legislation ending the Canadian Wheat Board single-desk and dismissing its farmer-elected directors. The Harper-appointed Governor General gave it Royal Assent the same day.

These actions were done in spite of a ruling by Federal court judge, the Honourable Douglas Campbell, that Agriculture Minister Gerry Ritz had broken the law by introducing legislation to gut the Canadian Wheat Board without consulting the farmer-elected Board of Directors and holding a fair vote among farmers to determine their wishes on the fate of the organization that they owned, controlled and paid for as the law stipulated.

With the passage of Bill C-18, Canadians have a Prime Minister who contends that following the law is optional for his government. Judge Campbell called this “an affront to the rule of law.” There have only been three times since the repatriation of the Constitution in 1982 when a government has implemented legislation the courts have determined is illegal; all three occurred under the Harper Conservatives.

On December 14, in an act of courage and integrity, the farmer-elected directors of the Canadian Wheat Board held a news conference in Winnipeg, announcing they would be challenging Harper’s arbitrary and unlawful use of executive power and would ask the courts to make the Harper regime follow the law. Since C-18 removed them from their elected positions, the elected-directors brought the challenge forward as individuals.

This news conference was reminiscent of another historic news conference held decades ago in Alberta. In 1929, a group of women, prominent among them Irene Parlby, a farmwoman from Didsbury, Alberta, announced they had successfully used the courts to establish that women were persons under the law. This established the basis for our modern system of individual rights. These women were heavily supported by the western farm community and Mrs. Parlby, as a Cabinet Minister in the United Farmers of Alberta government, had its full support.

Like the above-mentioned case, the results of the farmers’ challenge to C-18 will set the course for the future of Canadian democracy. By ignoring Judge Campbell’s ruling and implementing Bill C-18, Prime Minister Harper and his government have shown disdain for the rule of law. This is not how Canadian democracy should function. In his ruling, Judge Campbell quoted Chief Justice Fraser who wrote: “The detrimental consequences of the executive branch of government defining for itself – and by itself – the scope of its lawful power have been revealed, often bloodily, in the tumult of history.”

Farmers from western Canada are now fighting a battle by standing up for Canada’s traditions of community action, democracy and the rule of law. Court cases on this matter will be ongoing in 2012 and farmers could use your financial and moral support.

Donations for this critical court case may be made:

– To Friends of the CWB online at http://friendsofcwb.ca/j/donate

– Cheques may be mailed to The Friends of the CWB, P.O. Box 41, Brookdale, MB, R0K 0G0. – Donations may also be sent to the Canadian Wheat Board Alliance, Box 125, Hussar, AB, T0J 1S0. Please make cheques payable to Canadian Wheat Board Alliance, noting it is for court challenges. There is also a paypal donation button at www.cwbafacts.ca/donate/

For more information, see cwbafacts.ca. Ken Larsen runs a commercial-scale farm west of Red Deer, Alberta, using organic principles to grow barley, non-GM canola and forage crops. A long- time farm activist, he has participated in most of the major farm policy debates in western Canada over the past 25 years. He has numerous publications and articles to his credit and is an occasional commentator on CBC radio. He helped to found the Canadian Wheat Board Alliance.

The Alliance is a politically non-partisan organization of several hundred farmers focused specifically on the Canadian Wheat Board. Members of the Alliance recognize the advantages the Board brings to producers through the single-desk and price pooling, quality assurance through the Canadian Grain Commission (CGC), as well as the important role the CWB plays as an advocate for farmers in transportation, producer cars and on the world stage in trade disputes and negotiations. The Alliance draws memberships throughout the west.

Footnotes:

1. Lieber, James B. Rats in the Grain – The Dirty Tricks and Trials of Archer Daniels Midland. Four Walls Eight Windows Publishing: New York, 2000.

Eichenwald, Kurt. The Informant. Broadway Books: New York, 2000.

2. Johnston wrote: “These are concerns about the integrity of high-level government officials. The key issue is the relationship between Mr. Mulroney and Mr. Schreiber that led to cash payments. An inquiry should not be a wide-ranging review of Airbus, Eurocopter, the Bear Head Project or any of Mr. Schreiber’s other dealings.” (Page 22, Report of the Independent Advisor into the Allegations Respecting Financial Dealings Between Mr. Karlheinz Schreiber and the Right Honourable Brian Mulroney, David Johnston, January 2008)

A memorable book about money sparks memories of an in-flight conversation

by Geoff Olson

• Back in 1998, I was sitting on a plane at Heathrow airport, thumbing through a volume on finance I had picked up in a London bookshop. It wasn’t my usual area of interest, but the title caught my eye: Frozen Desire: An Inquiry Into the Meaning of Money.

This nonfiction work by former Financial Times writer James Buchan turned out to be an appropriate choice for in-flight reading. As the jet began to taxi onto the runway, a white-haired man in the seat next to me struck up a conversation. Let’s call him Ted. “I always fly coach even though I can afford first class,” Ted said. A resident of the Lower Mainland, he described his boat, his travels and his post-retirement consulting work, which involved buying up companies around the globe and “making them more profitable” by taking them apart.

Ted’s job was to identify functioning companies that were worth more to investors in pieces. This meant outsourcing, downsizing and smashing pension funds like kids’ piggy banks. Although the tern “vulture capitalism” was not in currency at the time, Ted sounded like one of the carrion feeders. Essentially, he was in the same kind of business, at the same time, as Republican presidential candidate Mitt Romney, who’s been taking heat for his “disaster capitalism” tenure at Bain Capital.

With a wry smile, Ted told me he hadn’t paid taxes in Canada in 18 years. He said he directed most of his money into offshore investments, but Revenue Canada eventually took note of the gap between his living standards and his tax statements and audited him. The case went to court where Ted protested his innocence. “But you pay no taxes!” replied the judge, who released him after finding no technical violations of any laws.

From one angle, this amiable guy was simply a rational actor in the booming, Clinton-era market. Adam Smith’s invisible hand was guiding his money to a safer berth while he played Where’s Waldo with Revenue Canada. From another angle (mine), Ted was a corporate welfare cheat. By the late nineties, the de-industrialization and financialization of the western economy was in progress and this character was playing his bit part by wrecking functioning companies for profit. I was alternately fascinated and repelled by my airline companion’s remarks and eventually the conversation petered out, replaced with the muffled howl of wind rushing against the fuselage. I returned to my salted peanuts and Buchan’s book.

The Stephen Hawkings and Niall Fergusons of the publishing world are rare and Buchan is not among them. Nonfiction studies of deep topics don’t usually fly off the shelves and in spite of some stellar reviews in 1997 for Frozen Desire, it had about as much impact as a Post-It note dropped into the Grand Canyon. Yet the lucid and luminous volume deserves a wider audience, especially now that money has come to dominate every sphere of human experience from the boardroom to the bedroom.

Most writers and thinkers on the left limit their criticism of money to its allocation, rather than its nature. Buchan isn’t concerned about who gets how big a slice of pie; he questions the pie itself and the oven it was baked in. In his mix of memoir and historical survey, he identifies money as “frozen desire,” an abstract representation of human wishes that sheds old forms to take on new ones, from cowrie shells to precious metals to various kinds of surrogate money such as bill of exchange, local cheques, marketable securities and certificates of deposit, municipal bonds, annuities and derivatives.

Buchan is the Eton-educated son of William Buchan, 3rd Baron Tweedsmuir. According to a Wikipedia entry for the author, in 1986 he married Lady Evelyn Rose Phipps, daughter of Oswald Phipps, 4th Marquess of Normanby. A novelist and former contributor to the Financial Times, Buchan is that rare bird, a blueblood conservative that has lost faith in money even though he doesn’t lack for it. He sees the market as a false idol and this golden calf – or bronze bull if you prefer – is cut with fool’s gold. (Buchan’s musings are supported by the investigations of anthropologist David Graeber. In his 2011 book, Debt: The First 5,000 Years, Graeber determines that money did not have its beginnings as a replacement for barter, but mostly as a means of transacting the business of slavery and war.)

In the 1970s, at the height of the Arab oil embargo, Buchan’s career as a business reporter took him to a sweltering outpost in Jordan. His status as a writer grew along with his savings and in an illuminating moment he recognized how interest-bearing investments can overtake an hourly wage. “The money… began to breed, first slowly, then convulsively. While I slept, or was drunk, or made love, or smoked a Dunhill on the porch, my money worked; and far as I could tell, with smaller effort and for greater reward than I did.”

Like most of us, the author’s feelings about money are mixed, although you can probably guess what side of the delight/disgust side of the spectrum he’s on. From the photograph on the dust jacket of Frozen Desire, it seems as if the photographer had just held something foul under Buchan’s nose. The stench has a long pedigree. Most of the world religions nurse a deep ambivalence about money and credit. For centuries, the Catholic Church made usury a crime and, to this day, Islamic banks strictly limit interest. In the New Testament, Jesus recognizes money as a competitive authority, with the understanding that “in embodying happiness and reward in tangible, earthly form, money is more impressively heaven than heaven.”

In the New Testament, Christ’s birth in Bethlehem was presided over by the gift economy, with the Three Wise Men bearing gold, Frankincense and Myrrh. His death was sealed by the money economy, in the form of 30 pieces of silver the Romans paid to the turncoat apostle Judas.

Jesus is also remembered in the Gospels for kicking over the moneychangers’ tables in the temple. While the author is not explicitly endorsing religion over secularism, he insists the Biblical tale of market-mediated crucifixion anticipates the effect of capital on cultures of the west. Money can stand in for human relations as a substitute for trust in people. “It will displace trust in all human relations except those of the inner family,” Buchan writes, summing up the problem in one memorable sentence: “Money enters into the system of values, and then displaces all other values like the cuckoo’s egg in a nest.

“For some time, in many places, money was thought to be bad, but it is now thought, on the whole, to be good. That inversion is the greatest to have occurred in the moral sentiments of the West. Desires that resisted incorporation into money turned pale and lost their power to convince: disinterested friendship, love and philanthropy became as suspect as the goals of once passionate wishes, honour and salvation. Miserliness, which places potential above actual gratification, had once seemed the disease of money… gradually, it lost its pathology and became the condition of moral health.”

From the Enlightenment on, as the lure of filthy lucre mated with technical advances in communication and printing, money became the yardstick for all that is good and true. “Only money would measure success or failure, happiness or misery. Only money could reward or punish. States and governments must just stand back and money – which reconciles all clashes of human will – would see us right,” Buchan notes.

The identification of the almighty dollar with the imperial ego came to fruition in the eighties, during the reign of Reagan, Mulroney and Thatcher and the latter’s TINA doctrine (“There is No Alternative”). The Iron Lady’s parallel dictum, “There is no such thing as society,” served as both as a ‘Dear John’ letter to the public sector and a greeting card to Moloch. By the time I was 30,000 feet above the Atlantic reading Frozen Desire for the first time, the game was well underway in the AngloAmerican world: socialism for the rich and capitalism for everyone else. One year after my return from London, President Bill Clinton would sign away the firewall between commercial and investment banks, the Glass-Steagall Act, freeing Wall Street robber barons for even greater plunder.

In a world governed by money, private vices are reinterpreted as public virtues “and the old private virtues – prudence, thrift, kindness – become public vices in the market economy.” For Buchan, this is the great sadness at the heart of our civilization: that “by using money, we convert our world into it.”

That conversion is ongoing. In the 2003 film The Corporation, former Fraser Institute chairman Michael Walker enthused about a future where there is a sticker price on everything, down to every stream and rock on the planet. A mere nine years later, the fever dream of privatizers and profiteers is turning into a waking nightmare for the planet. With the growing global market in carbon credits, financial institutions have partnered with governments and captured environmental groups to put a price on the very air we breathe.

When Buchan’s book was first released, the financial elite still concealed their deepest desires and darkest doings in coded language. No longer. “Plutocracy” is a word that means rule by the rich and in 2005 Citigroup coined a variation of it with the term “plutonomy.” This shiny, new term, minted in the bowels of a megabank, refers to a system in which the rich side with government to ensure the continued domination of their class. The following year Citigroup decided to bang the drum for the elite by releasing an “equity strategy” for investors entitled “Revisiting Plutonomy: The Rich Getting Richer.” Among the quotes from this document is this giveaway: “…the top 10%, particularly the top 1% of the US – the plutonomists in our parlance – have benefited disproportionately from the recent productivity surge in the US… from globalization and the productivity boom, at the relative expense of labour.” Karl Marx couldn’t have put it any better.

This brings me back to Ted. It seemed he regarded Canada as little more than a country club with acceptable green fees and moorage, but lacking a place to properly stash his cash. “The IMF almost shut down Canada last year,” he told me with a look of shared confidence, suggesting the country was close to being taken apart like a bankrupt sawmill. The irony was thicker than the mystery-meat of my in-flight meal. Whatever the merit of his IMF anecdote, he had no interest in making the connection between his own sociopathic behaviour and the nation’s solvency.

Since my first and last acquaintance with this high-flying plutonomist, the world of finance has become more invasive into our daily lives even as its practices have become more nakedly criminal and the philanthropy of business titans more desperately public. My airline companion’s sentiments are, arguably, now even closer in line with the values of Wall Street and Bay Street.

Of course, the reader might object that Ted’s tax evasion could have been reigned in by tighter regulation. Straighten out the loopholes and plug any gaps that sociopaths can wriggle through and we will have the revenue necessary to fund our dwindling social programs. Even if North American leaders were willing and able to back-engineer accountability, I imagine Buchan would applaud the idea in one sentence and condemn it as a halfway measure in the next. He sees the problem in capital itself, or at least its current form, that favours the plutocrats over the rest of the populace. At the very least, money talks and those with the most of it have the biggest megaphone. Strangely, Frozen Desire does not address the most problematic form of money – fiat currency, which can be printed on demand and leveraged to insane levels.

Five years after Citigroup’s scented letter to its investors, the one percent/ninety-nine percent has gone from a political slogan to a placard-scrawled cliché. By November of last year, the streets of New York, Athens, Santiago, Vancouver and hundreds of other cities across the world filled with millions of protestors against the criminality of unregulated finance. Plutonomy is on the move across the globe and rising awareness of its social costs is on the move with it.

Today, money utterly dominates politics, social policy and the media. We may rail against the commodification of our lives, yet money remains the measure of all things, whether it’s in the mirrored canyons of the world’s financial districts or in the poorest shantytowns of the developing world. “And that is precisely why the untrammelled pursuit of money is imprudent: one does not issue handguns to the inmates of overly crowded prisons. We need to break the compulsory nature of money and make possible a future in which we are not at permanent war with nature and one another,” Buchan observes.

In all my wanderings across the great cities of the world and all my myopic scans across acres of newsprint and vellum, I’ve come to appreciate the need for forms of social organization that aren’t governed by the whims of fiat currency. The Occupy movement was and is, I believe, a rough draft of more humane social arrangements. We are not talking about just a protest movement, but also an eruption of a communal desire to honour human values that extend beyond the “frozen desire” of precious metals and their surrogates. This is hardly a pipe dream. Canada alone is home to thousands of cooperatives, including credit unions, which serve purposes other than the sole pursuit of profit.

Buchan himself believes money will eventually fail us, as it failed others so many times in the past, from the tulip bulbs of 17th century Holland to the German Marks of the Weimar Republic in the 1920s and beyond. The dreams of high finance will eventually dissolve, he insists, and “The Age of Money, which came after the Age of Faith, will itself draw, as all things under the sun, to an end.” What the author imagines will replace it, he does not say.