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The Impacts of the Canadian Wheat Board Ruling on the North American Malt Barley Markets

Author

Listed:
  • Bekkerman, Anton
  • Schweizer, Heidi
  • Smith, Vincent H.

Abstract

The 2011 Marketing Freedom for Grain Farmers Act deregulated Canadian grain markets and removed the Canadian Wheat Board (CWB) as the sole buyer and seller of Canadian grain. We develop a rational expectations contract decision model that serves as the basis for an empirically informed simulation analysis of malt barley contracting opportunities between Canadian farmers and U.S. maltsters in the deregulated environment. Comparative statics and simulation results indicate that some new opportunities for contracting are possible, but the likelihood of favorable conditions for U.S. maltsters to contract with Canadian rather than U.S. farmers is low—between 6% and 33% over a range of possible selection rates. The effects on contracting of the termination of the Canadian grain transportation revenue cap policy and of the relaxation of criteria for the release of new spring wheat varieties are also investigated. While changes to grain transportation policies are not likely to significantly affect favorable conditions for contracting, reducing constraints on Canadian farmers' access higher yielding wheat varieties could increase the returns from growing spring wheat but decrease the likelihood of contracting for malt barley with U.S. maltsters by an average of 5.5 percentage points.

Suggested Citation

  • Bekkerman, Anton & Schweizer, Heidi & Smith, Vincent H., 2013. "The Impacts of the Canadian Wheat Board Ruling on the North American Malt Barley Markets," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149818, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea13:149818
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    File URL: http://purl.umn.edu/149818
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    Keywords

    Canadian Wheat Board; contracting decisions; malt barley; rail rates; varietal control; Agricultural and Food Policy; Marketing; Q18; Q13; Q17; L14; D47;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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