Eduard Hiebert

Home | Previous Campaigns | Electoral Reform | Political Humour | Recent Updates | Site Map

The Wide Canola basis - On Whose Side is Bruce Dalgarno?

1. Defining the Canola basis and how it is set

2. Two tools farmers had to affect the basis were confiscated

3. MCGA (including Dalgarno) support WCE, ie removing farming deliveries
   against the futures

4. Dalgarno supporting the status quo of a wide $62 basis

Defining the Canola basis and how it is set

By definition, the Canola basis is the difference between the futures price and the elevator pit prices.  Nothing more complicated than that!

The basis levels are effected, not only by the "supply and demand" situation between farmers and the elevator companies, but also whether farmers can by-pass the elevators and arbitrage high basis levels, by selling directly against the futures.

Back to top

Two tools farmers had to affect the basis were confiscated

During my farming life-time, farmers lost two tools by which they could affect basis levels.  At the urgings of the elevator companies and the Wheat and Barley grower associations, (members like Bruce Dalgarno), the "supply and demand" equation was changed to the disadvantage of farmers, when farmers as a group could no longer control farm supplies through a quota system.  Suddenly, the entire remaining whole years supply was pressured the basis from harvest on and basis levels had to widen in order to dampen the available supply. 

Under the guise of ensuring the integrity of the futures market from "defaults" when the Winnipeg Commodity Exchange had never experienced any defaults in deliveries, the Winnipeg Commodity Exchange changed the rules when the Warehouse Receipts were replaced by Warrants.  What the promoters of this change would hide from the farming public was that in effect this change confiscated the farmer's right of delivery against the futures.

Now, whether farmers have a bid-busting crop or a real disaster with little to sell, all the companies need to do is collectively set the demand for less than what farmers want to sell and immediately, regardless of the futures price, farmers bid up a wider basis to get their truck on the driveway...

Back to top

MCGA (including Dalgarno) support WCE, ie removing farming deliveries against the futures

In the "Assessment of the George Morris Centre... Report to the Winnipeg Commodity Exchange September 1995" it is reported in black and white that "The canola grower associations have communicated to the WCE and the Canadian Grain Commission that only the FOB warrants and uncleaned canola recommendations be implemented..."

In effect, by supporting the WCE change from Warehouse receipts to Warrants, the grower associations like and including MCGA helped the WCE confiscate the tool farmers had to arbitrage wide basis and sell directly against the futures.

Dalgarno's 2007 election biography crows about his chairing the prairie wide CCGA association.  Being on both the MCGA board and CCGA board gave him two votes.  When the WCE confiscated farmer's right to make deliveries against the futures, Dalgarno was an MCGA director.  Was he then a director of CCGA as well? Or on the board of the Canola Council of Canada, which with certainty is industry biased and industry friendly.

Back to top

Dalgarno supporting the status quo of a wide $62 basis

From Eduard's letter printed in the FIW

Given all the above, exactly whom is Canola director Bruce Dalgarno representing when in December 2003 with a $62 unpopular basis, he and Cargill are quoted saying "it would correct itself"?  Later, at the Canola AGM, John Boercher much more correctly stated "it's a license to steal". 

For full letter/context please see If the market is king, who wins, who loses?

Back to top