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A prairie ocean : the new tidal wave of globalisation and prairie wheat marketing policy Röpke, Peter Norman 2002

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A PRAIRIE OCEAN: THE NEW TIDAL W A V E OF GLOBALISATION A N D PRAIRIE WHEAT M A R K E T I N G POLICY by PETER N O R M A N ROPKE B.Comm., The University of Toronto, 1993 Hon. B. A. , The University of Toronto, 1996 M.A. , The University of Western Ontario, 1997 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE F A C U L T Y OF G R A D U A T E STUDIES Department of Political Science We accept this thesis as conforming to the required standard THE U N I V ^ S l ¥ y n 5 F ^ R l T l W C 0 L U M B I A November 2001 © Peter Norman Ropke, 2001 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department The University of British Columbia Vancouver, Canada DE-6 (2/88) A B S T R A C T This dissertation examines the multifaceted and pervasive impact of globalisation on the Canadian public policy environment through a detailed analysis of the monopoly marketing of prairie wheat. The study argues that forces associated with globalisation, working through regionally differentiated configurations of farmer opinion and interest groups amidst varying partisan settings, are key to understanding the changing nature of policy-making processes, structures, and outcomes in the wheat marketing arena. The forces associated with globalisation include the increased presence of transnational corporations, the expansion of international trade regimes, increased interaction and co-operation between Canadian provincial governments and US state governments, the international harmonisation of regulations, advances in transportation technology, and heightened levels of education, knowledge, and information. In attempting to understand how globalisation influences the wheat policy arena, the examination uses a comparative analysis focusing on Alberta, Saskatchewan, and Manitoba. The inter-governmental harmony that had prevailed since the 1940s on the matter of Canadian Wheat Board's (CWB's) wheat monopoly was replaced by conflict by the 1990s as the forces of globalisation washed across the Canadian prairies. The dissertation shows that where the absence of these forces once reinforced the CWB's wheat monopoly, the presence of these forces now poses a formidable challenge to its continuation. Farmer opinion data indicates that a trend away from monopoly selling toward open marketing is present throughout the prairies. Like the presence of the forces of globalisation, anti-monopoly opinion is particularly strong in Alberta. The dissertation will also show how the conflict over monopoly wheat marketing was projected into the policy arena through differentiated sets of interest group configurations and partisan environments. In doing so, the examination points out that institutions, while often providing resistance to change, can also serve as conduits facilitating change. The analysis shows that the public policy network involved with the marketing of prairie wheat, as well as actors within this network, have become increasingly internationalised. The examination indicates that domestic governmental regulation and control have been severely undermined in the wheat marketing arena as north-south ties increasingly undermine and replace the east-west unity previously forged by the National Policy. iii T A B L E OF CONTENTS Abstract i i Table of Contents i i i List of Figures , vi List of Tables vii List of Maps viii List of Abbreviations ix Acknowledgements xi Dedication xii CHAPTER I Introduction 1 1.1 Globalisation, Federalism, and Prairie Wheat Marketing Policy 20 CHAPTER II Literature Review 27 2.1 The Setting 28 2.2 Globalisation 31 2.3 Public Opinion 38 2.4 Interest Groups 43 2.5 Parties and Party Systems 53 2.6 Other Factors 58 2.6.1 The Constitution 59 2.6.2 Political Culture 63 2.7 Globalisation and Wheat Marketing Policy 65 2.8 Conclusion 70 CHAPTER III Institutions, Structures, and Processes of Wheat Marketing 71 3.1 Sketch of a Prairie Farmer , 72 3.2 Potential Marketing Options 74 3.3 Global Market Structure 75 3.4 Marketing Authority 77 3.4.1 TheCWB 78 3.4.2 The OWPMB 85 I V 3.4.3 The A W B 88 3.5 Management and Governance Structure 92 3.5.1 TheCWB 93 3.5.2 The OWPMB 94 3.5.3 The A W B 95 3.6 History of the Canadian Wheat Board 96 3.7 Conclusion 98 CHAPTER IV The Role of Political Parties and Electoral Systems 99 4.1 Theoretical Notes 102 4.2 Stances of Relevant Parties 104 4.3 Bases of Partisan Stances 108 4.3.1 The Geographical Base of Support for Partisan Stances 108 4.3.2 Political Culture 117 4.3.3 Leadership 121 4.3.4 Federal-Provincial Party Relations 123 4.3.5 Party Ideology, Programmes, and Areas of Core Support 124 4.4 Partisan Change " 132 4.5 Electoral Prospects 135 4.6 Conclusion 139 CHAPTER V The Role of Interest Groups 145 5.1 Period of Harmony - The Founding of the C WB to the 1990s 148 5.2 Period of Discord- The 1990s to Present 161 5.3 Conclusion 178 CHAPTER VI The Role of Farmer Opinion 181 6.1 Context of Public Opinion Data 182 6.2 Data and Analysis 188 6.2.1 Pre-1990Era-The Monopoly Consensus 188 6.2.2 The 1990s-The Wheat Consensus Erodes 192 6.3 Conclusion 207 CHAPTER VII The Impact of Globalisation: The Role of Transnational Corporations 211 V 7.1 The Theoretical Background 212 7.1.1 Implication 1 214 7.1.2 Implication 2 214 7.1.3 Implication 3 215 7.1.4 Implication 4 216 7.1.5 Implications 217 7.2 The Period of Regulatory Harmony 218 7.2.1 A Noticeable Absence 218 7.2.2 The Core Wheat Monopoly 219 7.2.3 Railway Regulation 222 7.2.4 The Feed-grain Monopoly 224 7.3 The Transnational Era 225 7.3.1 The Deregulation of Feed-grain 225 7.3.2 The Deregulati on of Transportation 227 7.3.3 The Core Wheat Monopoly -Looming Deregulation 233 7.4 Conclusion 235 CHAPTER VIII The Impact of Globalisation: The Role of Education, Trade Agreements, and Transportation 237 8.1 Education, Knowledge, and Information 238 8.2 Trade Regimes 249 8.3 The Regional-International Interface 255 8.4 Transportation 261 8.5 Conclusion 274 CHAPTER IX Conclusion 276 9.1 The Future of Monopoly Marketing in the Canadian Prairies 278 9.2 Canadian Federal-Provincial Relations and Public Policy in an Era of Globalisation 283 ENDNOTES 319 BIBLIOGRAPHY 362 V I LIST OF FIGURES Figure Description Page 1.1 Major Variables 296 LIST OF T A B L E S Table Description Page 3.1 Wheat Exports - Average 1990-91 to 1999-2000 inclusive 297 4.1 Aggregate Agricultural Statistics - Prairie Provinces (1996) 298 4.2 Agricultural Statistics (1996) and Election Results (1995) -Manitoba 298 4.3 Agricultural Statistics (1996) and Election Results (1995) -Saskatchewan 299 4.4 Agricultural Statistics (1996) and Election Results (1997) -Alberta 300 4.5 Interest Group Stances ' 300 4.6 Provincial Political Cultures 300 4.7 Electoral Statistics 301 4.8 Voter Turnout (%) 301 4.9 Seat Bias 301 4.10 Electoral Volatility 302 6.1 Commodity Share of Total Farm Cash Receipts'(%) (1993) 303 6.2 Summary of Farmer Opinion Information 304 6.3 Average Farm Size (Acres) - Prairie Provinces 305 6.4 Number of Farms - Prairie Provinces 305 7.1 The Corporations/Co-operatives (1996) 306 7.2 Provincial Share of Canadian Total Farm Cash Receipts (%) -Wheat (1993) 306 viii LIST OF M A P S Maps Description Page 4.1 1990 Manitoba General Election Results (Riding Basis) 307 4.2 1995 Manitoba General Election Results (Riding Basis) 308 4.3 1991 Saskatchewan General Election Results (Riding Basis) 309 4.4 1995 Saskatchewan General Election Results (Riding Basis) 310 4.5 1993 Alberta General Election Results (Riding Basis) 311 4.6 1997 Alberta General Election Results (Riding Basis) 312 4.7 1995 Manitoba General Election Results (Popular Vote Basis By Census Agricultural Region) 313 4.8 1995 Saskatchewan General Election Results (Popular Vote Basis By Census Agricultural Region) 314 4.9 1997 Alberta General Election Results (Popular Vote Basis By Census Agricultural Region) 315 4.10 1996 Census Agricultural Regions in Manitoba 316 4.11 1996 Census Agricultural Regions in Saskatchewan 317 4.12 1996 Census Agricultural Regions in Alberta 318 LIST OF ABBREVIATIONS Abbreviation Full Name A D M Archer Daniels Midland A E Accredited Exporter A W B Australian Wheat Board B H A Bulk Handling Authorities BHC Bulk Handling Companies BNSF Burlington Northern Santa Fe C A P A Canadian Agricultural Policy Alliance C C A Canadian Council of Agriculture C C A Canadian Cattleman's Association CCF Co-operative Commonwealth Federation C F A Canadian Federation of Agriculture CGC Canadian Grain Commission C N Canadian National CNR Canadian National Railway CP Canadian Pacific CPR Canadian Pacific Railway CTA Canadian Transportation Agency CWB Canadian Wheat Board EEP Export Enhancement Program FFJ Farmers For Justice FTA Canada - US Free Trade Agreement GATT General Agreement on Tariffs and Trade GPS Global Positioning System HTP High-through-put (facility) IE International Exporter K A P Keystone Agricultural Producers N A F T A North America Free Trade Agreement NDP New Democratic Party N F U National Farmers Union OWPMB Ontario Wheat Producers' Marketing Board PC Progressive Conservative PRO Pool Return Outlook TNC Transnational corporation UFA United Farmers of Manitoba U G G United Grain Growers VRO Variety Registration Office W B G A * Western Barley Growers Association W C W G A Western Canadian Wheat Growers Association WGMP Western Grain Marketing Panel WGRF Western Grain Research Foundation Wheat Industry Fund Wild Rose Agricultural Producers Western Stock Growers Association xi A C K N O W L E D G E M E N T S I would like to acknowledge, with great gratitude, the help that I received from my research supervisor, Professor David Elkins, in the preparation of this dissertation. I am also grateful for the help of Professors Donald Blake and Kathryn Harrison, the other members of my supervisory committee. I thank God for all the blessings He has given me through my supervisors. To the glory of God, The Father, The Son, and The Holy Ghost But as for me, I watch in hope for the LORD, I wait for God my Saviour; my God will hear me. Micah 7:7 (N1V) ... "Great and marvelous are your deeds, Lord God Almighty. Just and true are your ways, King of the ages. Who will not fear you, O Lord, and bring glory to your name? For you alone are holy. All nations will come and worship before you, for your righteous acts have been revealed." Revelation 15:3-4 (NIV) Then Jesus declared, "1 am the bread of life. He who comes to me will never go hungry, and he who believes in me will never be thirsty. " John 6:35 (NIV) Glory be to the Father, and to the Son, and to the Holy Ghost; As it was in the beginning, is now, and ever will be, world without end. Amen. Soli Deo Gloria 1 C H A P T E R I INTRODUCTION Silicon wafers now dot the prairie landscape where wooden elevators once stood. Farmers are as familiar with differentiated GPS (global positioning system) as with evaluating soil measure content. Satellites navigate rolling databases across vast stretches of ripened grain. A l l the while, the illustrious prairie wheat economy continues to be transformed by international forces, the likes of which have not been seen for a century. The operative consensus determining the principles of managing the wheat economy, which guided the marketing of grain for more than half a century and which was still in place a mere decade and a half ago, has been torn asunder by the returning tide of globalisation. The tide, at ebb for more than a century, is now flowing with a force recalled from the dust of Western Canadian history. Its impact is massive and blunt. The ebb tide family farm, branch line transportation system, country elevator storage system, co-operative pool management, and monopoly marketing consensus are all in the process of being washed away. The crush of the flow is changing the very basis of the prairie wheat economy and with it a way of life and a Dominion of continental scope forged out of the wilderness, a Dominion which spread its arms outward from its cradle in the Province of Canada with the resplendent gleam of the golden fruit of its blessed soil. The channels through which the tide of globalisation flows to reshape the wheat economy are diverse, each with varying capacities, shapes, and relationships to their surroundings. This study of prairie wheat marketing will analyse how globalisation is 2 projected into various political landscapes through differentiated channels of mediation. More specifically, the current examination will make the argument that both regional and broader international forces associated with globalisation are central to understanding the changing nature of the policy-making processes, structures and outcomes in the arena of prairie wheat marketing. These forces will be seen to work through differentiated sets of farmer opinion and farmer interest groups as well as different partisan environments. Far from being monodimensional and homogeneous, a close examination of the impact of globalisation on the marketing of wheat from the Canadian prairies reveals that not only is globalisation multidimensional in its constituent forces, but heterogeneous in its initial political impact. The forces of globalisation also appear paradoxical in nature: they disintegrate yet integrate, they internationalise yet provincialise, their impact is differentiated yet homogeneous. Globalisation is anything but new to Canadian agriculture. Prior to the US War of Independence, the Imperial colonies of the New World traded relatively freely with one another and with their mother country within an Empire of truly global proportions. Some semblance of internationalised commerce was restored in North America with the Reciprocity Treaty of 1854. The expanded local market opened by the treaty allowed Canada to, at least temporarily, overcome the economic constraints imposed by the geographical barriers to its own expansion by the Laurentian highlands.1 Within this setting of continental free trade, the Canadian wheat-growing west, namely the western portion of Ontario, was transformed. The forces of globalisation expressed in the Reciprocity Treaty moved the region from basic diversified agriculture to one crop agricultural production by the time it was cancelled at the end of the US Civil War. 3 By the time the Reciprocity Treaty was in place, a measure of freer trade had also already been gained for Canadian agriculture through the gradual diminution of the Corn Laws. The strong protection of the British Corn Laws had, by the late 1820s, been transformed into a system of relatively modest preference for British producers.2 The system was further loosened in 1843 with the passage of the Canada Corn Act which, for a nominal tariff (1 shilling per quarter (i.e. per 8 bushels)), allowed Canadian wheat to enter Britain irrespective of the level of local British prices.3 To be sure, the Canadian government had imposed a tariff on US produce of 3 shillings per quarter the previous year. Nevertheless, international trade flows were high, particularly in the 1840s and 1850s, in response to strong British demand and a growing US market for Canadian grain. It was the Reciprocity Treaty, however, that served as the key force of globalisation within North America during this period until it was abolished. Although the subsequent opening of the Canadian prairies would again lead to one crop agriculture and significant global exports, the forces of globalisation, with the defeat of the proposed reciprocal trade agreement between Canada and the US in the 1911 federal election,4 remained in the background, hidden from sight, until the mid-1980s when they re-emerged with unprecedented strength, breadth, and depth. The recognition of the centrality of staples, including wheat, to Canadian economic development has a long and venerable history. Harold Innis and others have pointed to the pivotal roles played by a succession of key staple products in the eventual forging of a transcontinental Canada.3 Although the success of the staple trade itself, including the extent to which the staple trade has allowed for economic diversification through forward, backward, and final demand linkages, has been and still is a matter of debate 4 amongst staples theorists and other economists, the importance of staples as the backbone of Canadian economic development is not.6 During the interregnum between the decentralisation of the North American market in the mid-nineteenth century and the movement toward decentralisation that occurred in the late twentieth century, the centralisation of market control held sway in the prairies. In fact, the ebb tide of globalization ushered in by the abrogation of the Reciprocity Treaty in the 1860s cleared the way for a return to a tradition of eastern control, albeit in a new guise; whereas previously the fur trade was under the commercial and political control of the Northwest Company, the wheat trade was subjected to the commercial control of Montreal and later Toronto, and the political control of Ottawa. Various means of control were used including the centralisation of the banking industry, the National Policy, the construction of a transcontinental railroad administered from Montreal, and the implementation of a wheat marketing board ostensibly headquartered in the prairies but run from Ottawa. It is most specifically within this context, namely the eastern centralisation of trade in wheat, that writers from the two major schools of staple theory, the Innisian and Mackintoshian, are in essential agreement. The Innisian line of analysis was generally more likely to emphasise the potential of the Canadian economy to be permanently reliant on staples production, to be caught in a "staples trap." The Mackintoshian line of analysis, meanwhile, tended to place more emphasis on the ability of the economy to use the "spread effects" of staple trade to diversify and develop a manufacturing base. When we focus on the prairie economy, instead of the Canadian economy as a whole, however, the Mackintosh line of analysis quickly becomes marked by Innisian shades. In this regard, Vernon Fowke and Kenneth Buckley, both scholars in the Mackintosh tradition of Canadian political economy, persuasively argue that the extraordinary wheat boom of the late 1800s and early 1900s failed to provide diversification linkages and other benefits to the farmers of the Canadian prairies and their provinces. Instead, the prairie staple paved the road to the industrialisation of Ontario and Quebec. Viewed from the standpoint of the prairie economies, the proximity of benefits promised by the Mackintosh approach was so distant that Innis' line of argument would appear to have held. Such a diagnosis would appear to be in keeping with Donald Smiley's argument that Western Canada was, for much of the twentieth century, essentially an economic colony of Central Canada.9 The wheat trade analysed by both Fowke and Buckley indeed provides a replay of the prior colonial trade in staples of the New World with its mother country described and analysed by Innis. Control had shifted from London to Ottawa; the Corn Laws were replaced by the National Policy and the Canadian Wheat Board Act, the central regulation of a global empire by the central regulation of a continental empire. Although fractures in the system were present prior to the late 1980s, the centrally administered prairie wheat monopoly remained largely unchallenged. In the 1990s, however, under the return of the globalisation tide, Canada's de facto Colonial Office for Wheat, the Canadian Wheat Board, and its monopoly came under severe and sustained attack. The study that follows will analyse how an entrenched policy of central control came to be broadly assaulted and, in some respects, relatively quickly changed in the face of the return of the globalisation tide in the 1990s. In doing so, it will serve to highlight the impact of globalisation on agricultural policy-making. The substance of the wheat 6 marketing policy which was in place for more than sixty years came under intense scrutiny in the final decade of the twentieth century. The scrutiny, moreover, went beyond policy substance. The methods by which the policy was administered and the policy-making process itself were at the centre of the prairie challenge. The challenge of the US War of Independence ended the first round of inter-colonial free trade within the British Empire, as cries for representation and the localisation of the policy-making process echoed through the land. The challenge that was posed by prairie producers at the end of the twentieth century marked the start of the next round, again amidst cries for representation and local control of the policy-making process echoing through the centuries from colonial New England. The prairies of the 1930s, racked by depression and the breakdown of international trade, stood in stark contrast to the prairies of the 1990s, swept up in the recontinentalisation of North American trade mentioned above. Within the difficult setting of the 1930s, virtually no protest met the creation of the Canadian Wheat Board (CWB) as a centralised, federal government agency in the 1930s. In fact, the main resistance to its creation came not from prairie farmers or governments, but rather from the federal government. Moreover, the consensus that had emerged on the prairies favoured not only the creation of a centralised wheat board, but also single-desk, or monopoly, selling. The result of this prairie consensus and pressure by prairie premiers, such as Brownlee in Alberta, was a compromise solution, namely the establishment of a voluntary board.1 0 The federal government, however, continued to emphasise the temporary nature of the Board throughout the 1930s. In fact, Ottawa, in line with 7 recommendations from the Turgeon Commission, went so far as to attempt to disband the Board in 1939 amidst intense opposition.11 Against the background of war in Europe and emergency federalism in Canada,12 a federal-provincial consensus on the need for monopoly marketing emerged in the 1940s. The key to the solidification of support for monopoly marketing was, in accord with Fowke's analysis, Ottawa's movement towards the notion as part of its overall policy direction; the monopoly marketing of wheat became, along with general price controls, part of the federal government's war effort.13 The regulation of prices was central to the management of the wartime Canadian economy. As such, the federal government's efforts could have been undermined by failing to control wheat prices, which were, at the time, rapidly rising. In addition, given the rapidly rising prices of wheat, Ottawa also required increased regulatory authority in order to ensure that Canada could effectively meet its wheat selling obligations. As with the creation of the CWB itself, the CWB's wheat monopoly was implemented in 1943 with only minimal opposition on the prairies, mainly from the business interests of the Winnipeg Grain Exchange. The extent of support for monopoly marketing was readily evident; the implementation of single-desk selling received solid support throughout the region in spite of it being established in order to keep prices down. The consensus favouring the monopoly selling of wheat remained solid even after the war. Surprisingly, even the federal government did not break the consensus. C D . Howe, for example, envisioned that the operations of the CWB would "continue indefinitely."14 The strength of the commitment was demonstrated later in the decade when the federal government, with the negotiated consent of provincial governments, which had to pass 8 complementary implementing legislation, extended the monopoly to oats and barley in August of 1949.15 The provincial side demonstrates the depth of policy consensus. Although some legal questions and objections were raised in Manitoba and Alberta, these provinces, along with Saskatchewan, all passed their enabling legislation quickly. 1 6 Extensive producer representation within the C W B and producer control of the CWB's day-to-day operations and overall policy were not at issue during this time period. Wheat producers clearly viewed themselves as farmers, not marketers.17 To the degree that western producers felt a need for input into the Board's affairs, the matter was settled with the establishment of the CWB Advisory Board in 1940, through which producers could interact with the CWB, and thus the federal government, in an advisory manner. Support for monopoly marketing remained strong into the 1950s and 1960s. In accordance with the general setting of the co-operative federalism that prevailed during much of this period, the CWB monopoly was a matter of federal-provincial harmony. Along with a reorientation of federal government policy toward Keynesian economics, Prime Minister John Diefenbaker presented a strongly interventionist agricultural policy. 1 9 Accordingly, the federal government expanded the scope of CWB marketing to include credit sales to China and the distribution of wheat as "food aid." The federal government's support for the single-desk also appeared to command the support of the Parliament of Canada. Although some opposition to monopoly was still evident, it was marginal in significance.21 In fact, the major problem perceived with CWB selling was that the Board was not the marketing agency for all grains. Proposals to minimise futures trading and extend the CWB monopoly to cover other commodities, 9 including rye and flax, were the order of the day.23 Calls for increasing the CWB's jurisdiction continued into the 1960s. A motion requesting that the Board's authority be expanded to cover eastern provinces was, for example, debated in the House of Commons.24 Broad-based support for the CWB was also readily evident in a debate concerning whether the existence of the Board should be made perpetual rather than reviewed every five years, which included a virtually unchallenged conclusion that it was unthinkable that any future federal government would attempt to abolish the C W B . 2 5 The Board was also congratulated for its history of marketing successes by Members of Parliament from all parties.26 Provincial backing of the CWB also generally remained solid during this period. Alberta displayed no signs of opposition to the Board's monopoly. In Manitoba, the government's support of the CWB was overwhelmingly backed by a plebiscite of producers.27 Although Ross Thatcher, who served as Premier of Saskatchewan from 1964 to 1971, interfered with CWB marketing by attempting to barter Saskatchewan grain at the end of the 1960s, Saskatchewan remained solidly at the forefront of CWB support throughout the rest of this period. Motions calling for all grains to be subject to CWB monopoly control and for the perpetual existence of the CWB were, for example, unanimously passed by the Saskatchewan legislature.28 Despite the brief challenge posed by Ross Thatcher in 1969, the consensus amongst policy-makers on the monopoly marketing of wheat remained intact into the 1970s. Even Alberta, which would eventually become the leader of the challenge to the Board's monopoly in the 1990s, remained a steadfast backer of the Board. The Minister for Agriculture of Alberta, for example, supported a motion of the Alberta legislature that 10 called for investigating ways in which the Board's offshore sales could be increased.29 The Minister also readily agreed that the CWB should remain the only exporter of wheat. The Premier of Alberta during most of the 1970s, Peter Lougheed, also voiced his support for the CWB as the sole exporter of Canadian grain.3 0 The federal government's support for the monopoly also continued unabated. Although Otto Lang, who became the federal minister responsible for the CWB in 1974, was more market-oriented than his predecessor, both he and Eugene Whelan, the minister in charge of the Board in the 31 earlier part of the decade, remained committed to the monopoly marketing of wheat. While harmonious relations continued to prevail over the CWB monopoly authority to market wheat during this period, the central governance of the Board began to come under assault. Where individual producers would eventually demand representation during the 1990s, the debate over governance during the 1970s involved government representation. In a prelude of events to follow, the first volley of calls for the decentralisation or localisation of CWB governance and wheat policy-making came from the Government of Alberta. Alberta's proposal, which was included in its constitutional position paper Harmony in Diversity, called for the creation of a Board of Governors to control the CWB with 40 per cent of its members from Alberta. 3 2 In keeping with strengthening the means of intrastate federalism, Lougheed envisioned that CWB governors from Alberta could potentially include M L A s as well as members of the province's civil service. The debate was intense; the dispute included a heated exchange of correspondence between Lougheed and Pierre Trudeau. Lougheed charged that the federal government was "out of touch," while Trudeau claimed that Lougheed, through his actions, was trying to politicise the Board. 3 4 11 Although a market-orientation was increasingly present in the agriculture departments of the governments involved as well as in the widespread support for the off-Board marketing of other crops, such as oats, general agreement on the desirability of the continuation of the monopoly marketing of wheat managed to survive into the 1980s. Support for the CWB and its wheat monopoly was readily demonstrated in Ottawa, even amongst future members of the Progressive Conservative government, which was otherwise to have a market-orientation. Don Mazankowski, who would arguably become the most powerful minister during the Mulroney era, pointed out that "in the final analysis, farmers line up in support of the Canadian Wheat Board." 3 5 Moreover, the breadth of support for the Board was captured by Jake Epp's observation that "it appears to be almost as i f one [Member of Parliament] tries to outdo the other in terms of their loyalty to the Canadian Wheat Board." 3 6 The Member of Parliament from Red Deer, Alberta, Gordon Towers, moreover, claimed that support in the west for the CWB was so great there would be "an explosion" i f it were to be disbanded.37 The broad support for the Board in Ottawa also continued to be mirrored provincially. Even Alberta's Minister of Agriculture, Ernest Isley continued to commend the Board's "excellent job" in selling grains abroad.38 While Isley pointed out that the CWB's performance in the arena of barley marketing was only "reasonably good," he emphasised his backing of the Board where it "performed well ." 3 9 Although a motion suggesting that Alberta withdraw from Board jurisdiction was brought before the Alberta legislature, M L A s who participated in the ensuing debate, including the very member who brought forth the motion, readily endorsed the CWB's single-desk for wheat.40 Elsewhere, the Minister of Agriculture for Manitoba stated his confidence in the Board's 12 ability to deal with the marketing of wheat to the Soviet Union. 4 1 In Saskatchewan, meanwhile, Grant Devine, as Premier of that province from 1982 to 1991, readily congratulated the Board's "excellent job of marketing wheat and barley" while highlighting the role that Progressive Conservative governments have played in supporting a co-operative marketing system.42 The overall and general agreement on the desirability of CWB-controlled wheat marketing that had prevailed since the 1940s amongst the producers and governments would, however, soon come to an end. The consensus was shattered in the 1990s and the extent of the disagreement ran deep. Producers and governments aimed their calls for change at the very heart of the CWB, namely the wheat monopoly itself. These calls were, moreover, combined with calls for decentralised control over Board operations and marketing policy, including effective producer representation within the governance apparatus of the CWB. The first signs of the breakdown came from the barley arena. In the early 1990s, the Government of Alberta proposed that the CWB monopoly over barley be lifted for North American sales, allowing farmers to market their barley either through the Board or off-Board. In response to the Alberta Government's proposal, a continental barley market was implemented during the summer of 1993. Intergovernmental conflict immediately erupted as the Saskatchewan Government attempted to restore CWB monopoly control. After the continental market had operated for only six weeks, the Government of Saskatchewan obtained an indefinite injunction which re-established the Board's single-desk for barley. The Government of Alberta quickly responded by launching an appeal to overturn the injunction. It also subsequently became involved in a Charter lawsuit that 13 claimed the CWB monopoly violated certain Charter rights, including the freedom of association. The debate soon moved into the wheat arena and gained its federal-provincial dimension with the election of the Liberal Party in Ottawa and the appointment of a steadfastly pro-monopoly minister responsible for the CWB in the person of Ralph Goodale. By May of 1994, the Government of Alberta began its calls for an end to both the barley and wheat monopolies. Alberta proposed that the CWB's single-desk be ended for sales in Canada, the US, and Mexico, but retained for offshore markets. Both sides in the dispute, which rapidly came to be centred on the federal government - Alberta Government axis, quickly became entrenched in their positions. The Alberta Government continued to consistently advocate a dual marketing regime (i.e. a choice of Board or off-Board marketing) for western grain, emphasising the need for farmers to be able to choose a particular mode of marketing. The federal government, meanwhile, failed to respond to Alberta's proposal.43 In fact, Goodale set aside "any suggestion" that the Board's monopoly was open to discussion.44 The federal government's intransigence served to increase tensions with the Alberta Government. The Minister of Agriculture for Alberta intimated that a "real problem" had been created by the lack of response from Ottawa.45 Alberta later threatened that i f the matter continued to be ignored, then it would seek to implement a system of dual marketing unilaterally. Alberta's Minister of Agriculture charged that the federal government was failing to admit that "the world is changing" and that it would "have to change with it." 4 5 14 Goodale finally responded to the calls for change from the Alberta Government and prairie farmers in July of 1995 by appointing the Western Grain Marketing Panel (WGMP). The nine-member panel was instructed to study the future of prairie grain marketing. By December of 1995, further fuel was added to the debate; the Government of Alberta organised a "Market Choices Implementation Committee" in order to investigate the possibilities of unilateral Alberta Government action to help farmers in the province avoid the CWB's monopoly.47 In the midst of this increasing federal-provincial conflict involving the Government of Alberta, the Board's monopoly was also coming under assault from the actions of individual farmers living close to the Canada-US border. In early 1993, two border-region farmers from Manitoba started to export grain to the US without first obtaining a 48 C W B permit. By the end of the same year, approximately 40 truckloads of grain were being illegally exported to the US each day. The developing federal-provincial conflict over wheat marketing was bolstered when the scope of the smuggling became generally known. The first reports in the media of grain smuggling began to appear in February of 1994. By June of the same year, customs statistics from the US suggested 1993 had seen the illegal importation of 387 000 tonnes of grain into the US from Canada.49 One of the original smugglers, who had subsequently attained a high profile in the media, became, in September of 1994, the first person to be fined by the federal government under its new "anti-smuggling" law. 5 0 In spite of the federal government's resolve, another 367 000 tonnes of grain, amounting to approximately 10 per cent of Canada's total annual grain exports to the US, managed to slip across the border. Confrontations with farmers continued. One incident involved a stand-off at the border with three farmers, including 15 the original two smugglers. One of the farmers, who was eventually fined $2600, was threatened with incarceration after he proceeded to remove a roadblock and drive his grain truck across the border without a permit from the Board. 5 1 The R C M P also seized various financial records of the original smugglers. By the end of 1994, pro-dual marketing rallies and pro-monopoly counter rallies were becoming increasingly common.52 Border crossing incidents, as well as farmer rallies, continued after 1994. In October of 1995, for example, three trucks carrying grain without a permit were seized. A rally was immediately organised which saw about three hundred farmers form a procession approximately two miles long to the border crossing near Boissevain, Manitoba.5 3 On the governmental side, the WGMP, following extensive prairie-wide consultations, released its examination on 1 July 1996. The report recommended that the CWB continue to retain its monopoly over most classes of wheat. It did, however, suggest that farmers be given the option of selling a small percentage of their wheat outside of the Board's single-desk. The panel also recommended that the governance structure be reconstituted in order to allow for a partly elected Board of Directors with a majority representation of farmers. Immediately after the report was released it became evident that it would not serve as a vehicle to end the conflict. While the Government of Alberta called for the WGMP's recommendations to the implemented immediately, it also intimated that the report's recommendations were not enough.34 Alberta's Minister of Agriculture emphasised that the "marketing choice" given to farmers growing grain designated for human consumption within Canada or export should be equivalent to that given to farmers of 16 grains that fall outside of the Board's jurisdiction. The federal minister responsible for the CWB, meanwhile, was not even willing to accept much of what the WGMP had recommended, particularly concerning any modification of the Board's monopoly powers. The Minister of Agriculture in Saskatchewan also took issue with the report, stating that he was upset by its recommendations.55 The Saskatchewan Government held that the report failed to accurately reflect the majority of submissions to the WGMP, which it contended favoured monopoly marketing.56 Saskatchewan also felt that the report had moved too much in the direction of dual marketing. Rather than being marked by increased harmony, the period following the release of the WGMP's recommendations saw the intergovernmental battle over the wheat monopoly step into the constitutional realm. It was at this point that the Alberta Government became involved in constitutional litigation on three major fronts, which will be covered in their particulars in subsequent chapters. These cases included the barley Charter case mentioned earlier. The Saskatchewan Government threatened to intervene by attempting to block the litigation coming from Alberta. The diverging approaches of the Alberta and Saskatchewan governments were also evident in other actions. The Saskatchewan Government demanded the removal of a sign erected by pro-dual marketing farmers close to the Canada-US border which stated the following: "Welcome to Canada, the only country in the free world that jails it's [sic] farmers for growing and selling their own wheat."58 The Government of Alberta, meanwhile, denied a request by Canada Customs that asked for help from officials in the Alberta legislature to combat the protests of dual marketers.59 In addition, the 17 Saskatchewan Government began to take out newspaper advertisements to make its point, while the Government of Alberta aired radio messages.60 The summer of 1996 marked a further escalation of protest activity across the prairies. The summer protests started with a 100-farmer rally in Regina in support of one of the original smugglers from Manitoba.6 1 Farmers in favour of the continuation of monopoly marketing of wheat responded with rallies of 150, 1500, 600, 200, and 600 farmers held at Regina, Rosetown, Winnipeg, Edmonton (at the provincial legislature), and Oak Bluff respectively.62 The federal government's attempt to stop the illegal export of grain also continued. More than 125 farmers were charged with smuggling grain by the end of July. Incidents and charges continued after the summer. Most convictions involved fines.63 In December of 1996, for example, convictions on the charge of illegally marketing grain in an "act of defiance of the C W B " were handed down on fourteen farmers. The farmers were fined $4000 for failing to surrender their trucks to Canada Customs officers. Four of the farmers were also convicted of the additional charge of failing to provide "proper documents" and fined an additional $6000. In another incident, which occurred in March of 1997, twelve farmers from Alberta were fined $2500 after being convicted of failing to surrender their vehicles. Nine of these fanners were also fined an additional $5000 after being convicted of the additional charge of failing to provide a CWB export license. Fines, however, were not the only punishments handed down. One fanner, again one of the original Manitoban smugglers, was released in December of 1996 after spending five months in ja i l . 6 4 18 Against this summer of sustained intergovernmental conflict and farmer protest, the federal government made public its specific position in the debate by revealing B i l l C-72, an act to amend the Canadian Wheat Board Act, in December of 1996. The federal government had first announced its intentions to introduce changes to the Canadian Wheat Board Act in September. The proposed changes would have increased the Board's accountability to farmers, allowed for minor changes to the Board's methods of selling grains, and preserved the Board's wheat monopoly.63 More specifically, Bi l l C-72, which failed to be passed prior to the 1997 federal election, would have provided for a partly elected Board of Directors and a CEO to replace the commissioners that were in charge of the day-to-day operations of the C W B at the time. The federal minister responsible for the CWB was to appoint the initial Board of Directors and then decide when elections were to begin. Proposed changes to the CWB's marketing methods included the following: C W B price hedging, the cash purchase of grain by the CWB, and the ability to discontinue pool accounts and distribute their respective funds at any time. The legislation was also subsequently amended to allow for the addition of oats, rye, flaxseed, and canola to the CWB's marketing responsibilities on a dual marketing basis. The proposed changes to the CWB's governance were, however, not as potentially far reaching as they might first appear. Under Bi l l C-72, changes to the CWB would only have been allowed after receiving the support of its Board of Directors, being assessed not to "jeopardize quality" by the Canadian Grains Commission, and achieving approval in a farmer plebiscite. Given that the Canadian Grains Commission was appointed by the federal government, Commission approval would have presented Ottawa with a potential veto point. Moreover, the federal government would have set aside for itself the ability 19 to appoint the proposed CWB president. In addition, the legislation specifically forbade the Board of Directors from recommending to the federal government an end to the CWB's monopoly marketing powers. Not surprisingly, the federal government's proposals were not well received by the Government of Alberta. Although the Alberta Government was reluctant to continue with its legal challenges in the face of Bi l l C-72 and the province's Minister of Agriculture would have preferred not to pursue any further legal avenues, the province nonetheless hired eight lawyers and held meetings throughout Alberta in order to discuss the merits of the proposed legislation.66 Alberta's Minister of Agriculture also pointed out his dissatisfaction with the federal government's proposals. The minister claimed that the legislation would not increase Board efficiency, that the marketing of the Board would remain "secretive and monopolistic," and that the Board of Directors under the amendment would not have more actual authority to make governance decisions than did 67 the prior Advisory Committee. In spite of the Alberta Government's hostile reaction to the amendments, the federal minister responsible for the CWB remained adamant that he would reintroduce the legislation, unaltered, after the 1997 federal election.68 An essentially similar amendment was indeed introduced following the election. As a result, the Board came under the control of a partly elected Board of Directors. The details of the changes, as well as the previous Board governance structure, will be covered in the background chapter. While the amendment increased farmer input into Board operations, the federal government remained steadfast in its commitment to monopoly marketing. In fact, Goodale, the 20 backbone of the pro-monopoly forces in Ottawa, was promoted in the federal Cabinet from agriculture to natural resources while retaining jurisdiction over the C W B . 6 9 Globalisation, Federalism and Prairie Wheat Marketing Policy The forthcoming chapters will serve to demonstrate the impact of globalisation on the prairie wheat marketing arena. The changes that have occurred in the field of wheat marketing since the creation of the C W B in the 1930s and the establishment of its monopoly in the 1940s have been significant and wide-ranging. By the 1990s, globalisation had impacted the prairies in a number of ways since the infancy of single-desk selling: the education level of farmers had increased; the availability of information to producers had ballooned; the knowledge base of farmers had been enhanced not only in depth, but also in breadth (many producers had become agricultural experts and business experts); regional and world-wide trade regimes had become increasingly pervasive; regional-international ties and co-operation had developed and become increasingly entrenched; the transportation sector had seen a number of significant and mutually reinforcing changes, including the erosion and re-configuration of rail lines and advances in trucking technology; and transnational corporations had developed, begun to penetrate the Canadian prairies, and challenge the dominance of the prairie wheat pools. A climate of deregulation had developed over the prairies. The growing presence of laissez-faire economics was seen to clear the way for still further deregulation, including in the area of monopoly marketing of wheat. In 1943, when the Board's monopoly over wheat was established, the absence of these forces was seen to readily reinforce the single-desk. The education, information, and 21 r knowledge revolution had not yet started. International trade regimes lay in tatters. International agricultural relations were conducted by the federal government. The movement of grain was effectively accomplished through an extensive web of main and branch rails distributed throughout the prairies. Trucks were beginning to make their appearance for on-farm use. Provincially-based wheat pools provided for the seeding, implement, and collection needs of farmers throughout the region. By the 1990s, however, the wide-reaching changes indicated earlier had radically transformed the economic landscape of the prairies. These persuasive and powerful forces of globalisation had an impact that reached to the roots of prairie life. The returning tide of globalisation was filtered through particular sets of structures, institutions, and processes, largely shaped, constructed, and adjusted during the prior ebb tide era of domestic centralisation. The changes associated with globalisation, such as the presence of anti-monopoly interest groups and transnational corporations, not only served to alter the configuration of entities through which these changes were filtered by presenting a range of new factors and actors, but also served to increase the potential for altered policy outcomes in the agricultural policy arena, which themselves would, in turn, further alter the configuration of structures, institutions, and processes of prairie wheat marketing. Deeply embedded federal-provincial accord in the area of prairie wheat marketing was replaced with deeply embedded discord. These forces of globalisation together presented a significant and unprecedented challenge to the CWB wheat monopoly. This challenge was catapulted into the policy-making arena through changes in farmer opinion and the associated development of an array of agricultural interest groups favouring either dual or open marketing for wheat. 22 As will be seen, a movement away from support for Board-controlled single-desk selling of grains toward dual and open marketing was readily evident throughout the prairies by the mid-1990s. The timing of the trend away from support for monopoly selling was consistent with the increasing presence and impact of the forces associated with globalisation. The examination of farmer opinion data will also indicate substantial inter-provincial differences in line with theoretical expectations. Although significant intra-provincial differences in farmer opinion were evident70 and an overall trend away from monopoly marketing was present throughout the prairies, anti-CWB views were most evident in Alberta while pro-CWB views were relatively more abundant in Saskatchewan and Manitoba. A second opinion trend was also present; support for an end to monopoly marketing proceeded from commodities that are relatively easy to market, such as rapeseed, towards those that are relatively difficult to market, such as wheat. A third opinion trend that finds support in the analysis to follow involved a correlation between farmer support for and the degree of change entailed by any of the various marketing options that were potentially available. An inverse relationship will be seen to exist between the amount of support for a particular non-monopoly market option and the degree of change it represented. Levels of support increased as the consideration of alternative methods moved from the open marketing option towards the continental marketing end of the scale. The presence of these three trends throughout the prairies as well as their mutually reinforcing nature highlighted the burgeoning strength of CWB opposition as the forces of globalisation shifted farmers' views and interests. The consistent long-term direction of these data indicate that calls for an end to the CWB wheat monopoly are not likely to suddenly dissipate. 23 In addition to direct pressure by farmers on federal and provincial governments, the implications of the forces of globalisation were also ushered into the governmental arena through producer interest groups. By the time the full impact of globalisation was making its presence felt on the prairies, the complexion of the interest group environment in the region had changed radically since the establishment of the wheat monopoly. The number of interest groups involved with the marketing of prairie wheat had proliferated in the period leading up to the conflict of the 1990s. Although harmony continued to prevail on the matter of monopoly wheat marketing in this period prior to the 1990s, differences in interest group stances concerning the degree to which governments should be involved in agricultural activity began to develop. The interest group environment of the early years, namely the pre-eminence of a single major interest group which readily supported governmental intervention in the agricultural arena, including the CWB's single desk for wheat, stood in stark contrast to the subsequent substantive and organisational fragmentation of the interest group environment on the Canadian prairies. By the 1990s, divisions within the overall interest group setting, in line with the changes indicated by the opinion trends of prairie farmers, began to include widespread divergent views on the suitability of the continuation of monopoly marketing of wheat through the C W B amidst the eruption of federal-provincial conflict between the Alberta Government and the federal government. Caught in the tide of globalisation washing over the region, a number of interest groups, including the Western Canadian Wheat Growers Association, Wild Rose Agricultural Producers and the Western Barley Growers Association, began to aggressively call for the globalisation of the prairie wheat marketing arena. While the impact of globalisation affected the entire prairie region and each of the prairie provinces had interest group officials within its borders advocating an end to the CWB monopoly over wheat, only the configuration of interest groups in Alberta was able to amplify anti-monopoly demands through a provincial government. Although the Government of Alberta was often reluctant to take action in the matter, interest group pressure pushed the government toward sustained federal-provincial conflict. By contrast, the interest group configuration in Saskatchewan tended to reinforce that province's NDP government in its pro-monopoly stance, while the crosscutting interest group configuration of Manitoba was consistent with the Manitoba Government's non-committal stance in the matter. The federal minister responsible for the CWB, meanwhile, constructed his own interest group configuration by allowing those interest groups with stances consistent with his own to increase in influence relative to other groups, rather than being subject to the influence of a pre-existing configuration or the actual overall Canadian or prairie configuration in its entirety. The overall provincial pattern of interest groups, however, can be further magnified to reveal the finer details underlying the governmental stances taken in the prairies during the 1990s. In each province, the complexion of the interest group configuration faced by the major governing party during the 1990s was consistent with the complexion of that province's overall interest group configuration. When left at this level of detail, the analysis might suggest that, given the general conditions present in the 1990s, any party elected in any one of these provinces would likely have projected the globalisation challenge into the wheat policy arena in the same manner. This was, however, not the case. Non-governing parties in each of the prairie provinces faced, in their geographical regions of partisan support, intra-provincial configurations of interest groups different 25 from those of the governing parties. Moreover, other differentiated factors of partisan support, such as variations in farmer incomes in different regions in each of the provinces under consideration, were also present. An understanding of the partisan environment within each of the jurisdictions under examination is thus also necessary in order to understand the process through which the various forces associated with globalisation were filtered through governmental institutions and structures into the federal-provincial agricultural policy arena. In this regard, the varying stances taken by relevant parties across the prairies on the issue of monopoly marketing of wheat will be seen to be firmly supported in a number of ways. Party stances were, in addition to being historically and systemically supported, also deeply embedded. A range of mutually reinforcing geographically specific variables will be seen to readily correlate with the geographical distribution of partisan support and the stances taken by relevant parties, as vehicles of governmental power. The impact of globalisation on the competitive dynamics of the policy arena pertaining to wheat marketing was thus mediated, in the final stage, through specific sets of partisan structures and institutions within a liberal democratic arena. Given the range of well-supported partisan stances on the issue of the continuation of the CWB single-desk for wheat in each of the prairie provinces, the particular positions taken by prairie governments on the matter of the CWB monopoly for most of the 1990s are not necessarily the only likely future policy-position outcomes, to the extent these other parties are either viable contenders for office or viable vehicles of influence in a minority government situation. The likelihood of partisan change or oppositional influence in a particular jurisdication is thus key to not only understanding the regionally fragmented nature of the policy impact of globalisation on the prairie wheat marketing environment in the 1990s, but also to assessing the future of wheat marketing on the Canadian prairies into the next century. The forthcoming chapters will serve to set the stage for the study to follow. The next chapter will review the literature pertaining to the key variables involved in examining the field of prairie wheat marketing. Globalisation and societal factors, such as farmer opinion and interest groups, will be highlighted in considering how they impact the public policy environment. The subsequent chapter will provide the reader with necessary background information on wheat marketing. The marketing of wheat from the Canadian prairies occurs amidst a complex set of institutions, processes, and structures. This array of institutions, processes, and structures is critical to understanding the issues pertaining to the foundation and content of wheat marketing policy. The chapter will therefore include a detailed presentation of the mechanics of wheat marketing in Canada, including the role of the prairie wheat pools, hopper car allocation, rail rates, the contract system, the role of the Canadian Grain Commission, and the CWB's use of agents. An overview of the structure of CWB governance, the Board's position within the global grain market, and a brief history of wheat growing and selling in Canada, including co-operative elements of grain marketing prior to the creation of the CWB, will be presented in order to place the marketing of prairie wheat in its immediate and historical context. The examination of how the forces of globalisation have impacted monopoly marketing policy is then presented in the chapters that follow. Various implications of the study will be presented in the final chapter. 27 C H A P T E R II LITERATURE REVIEW The impact of globalisation is revolutionising the way in which public policy in the wheat marketing arena is being debated, made, and enforced across the Canadian prairies. This chapter will focus on providing a theoretical and practical framework with which to examine the key factors shaping and channelling public policy in the wheat marketing arena. Pre-eminent among those factors is globalisation. The present review will thus begin by examining a variety of aspects of the literature involving globalisation. The dissertation, however, also contends that the various forces associated with globalisation are, prior to their impact on public policy itself, filtered through differentiated configurations of farmer opinion, interest groups, and political parties. Accordingly, certain aspects of the literature on public opinion, interest group behaviour and organisation, and the role of political parties will also be considered as they apply to the marketing of prairie wheat. A l l of this, moreover, occurs within the setting of Canadian federalism. The review of the literature concerning the various relevant variables will thus also include federal-provincial relations as a mediating variable. Other aspects of the political environment of the field of prairie wheat marketing impinging on and supplemental to understanding these key areas will also briefly be considered. In this regard, the chapter will discuss the impact of the constitutional environment and political culture on the public policy arena involving the marketing of wheat. 28 The Setting Investigations attempting to explain the making of public policy within Canada have often had to deal with federal-provincial relations as a mediating variable. The current study of the impact of globalisation in a specific area of public policy is no exception. In attempting to take account of the intergovernmental factor, many examinations have, not unexpectedly, trained their spotlights on governmental factors.1 By contrast, a number of non-governmental variables, globalisation most prominent among them, will be key to understanding the emergence of the debate over the continuation of the Canadian Wheat Board's (CWB's) wheat monopoly. To be sure, governmental actors, though not central, are, nevertheless, still present in this public policy arena. Although interest groups reacting to the forces of globalisation were key in driving the Alberta Government toward bilateral conflict with the Government of Canada, the institutions of the Government of Alberta were, for example, nevertheless important in projecting these pressures into the wheat marketing policy arena with sustained strength. In any attempt to account for the emergence of federal-provincial governmental harmony or conflict and changes in governmental policy, the connection to governmental elites must always be made. The recognition of the importance of societal factors, however, is central to understanding the subject matter of the current study. Accordingly, the role of political parties as vehicles of governmental power and governmental action will be considered in the context of pressures on public policy coming from globalisation and being filtered through farmers and their interest groups. By the end of the twentieth century, a number of interconnected forces associated with globalisation had begun to once again powerfully flow across provincial and international 29 borders, reshaping the political and economic landscape. The impact of these various forces of globalisation on the prairie wheat marketing arena has been pervasive. The latest round of globalisation, as it pertains to the prairies, may be seen to include the following elements: trade liberalisation, increased ties between Canadian provinces and US states, increased levels of education and information, improvements in trucking technology, and the increased presence of transnational corporations. The globalisation variable has, however, historically received relatively little attention in studies of Canadian federalism and public policy. Although the lack of attention is a natural consequence of the ebb of globalisation throughout the vast majority of the history of the Dominion of Canada, it now requires attention i f federal-provincial relations and public policy in the area of wheat marketing as well as many other areas of policy-making are to be adequately understood. Accordingly, the current study will attempt to analyse the multifaceted and wide-ranging impact of the various forces associated with globalisation on the emergence of intergovernmental conflict in the area of grain marketing policy. In doing so, the absence of these inter-linked forces will also be recognised for their contribution to the previous era of federal-provincial accord in the area of monopoly wheat marketing. A detailed investigation of the impact of globalisation is particularly pressing given the potentially wide-ranging nature of the forces with which it is associated. This impact has been strikingly felt in the prairie wheat marketing arena. The role of public opinion will also be seen to be central to the examination of the nature of and changes in federal-provincial relations and public policy in the field of wheat marketing. Public opinion, including informed opinion, is linked to its environmental, including social and economic, context. Farmer opinion is connected 30 with the positions articulated by political parties and interest groups. Moreover, public opinion can constrain leaders in areas where the public is knowledgeable and interested.2 As such, public opinion, and in this case producer opinion, is not only useful in explaining change over time, in particular the impact of globalisation in the current analysis, but also differences in the manifestation of these changes on the public policy environment across political jurisdictions. The interest group variable has also traditionally received relatively meagre attention in studies of Canadian public policy involving intergovernmental relations. Even Richard Schultz, who has acknowledged that interest groups can play substantial roles in federal-provincial conflicts, nonetheless still found governmental elites to be central. In the final analysis, Schultz found that interest groups are "caught in the vice of federalism"3 created and controlled by governmental actors. By contrast, this dissertation will argue that interest groups have the ability assume a central position in determining the policy positions of governments and, as a result, the tenor of federal-provincial relations. Moreover, the current examination will also examine the societal factors in which these groups are embedded. The centrality of interest groups, as a mediating variable channelling the impact of the forces of globalisation on federal-provincial relations and the public policy arena, will be reinforced by taking into account the context of the demographic and geographic composition of their membership bases. The final connection between the impact of globalisation and public policy is made through party and party system environments. The party variable is able to account for change in the thrust of public policy and the tenor of federal-provincial relations through dynamics observed in the role of parties, the way in which citizens are linked with 31 parties, how cleavages and issues may rise and fall from political salience, and the context of partisan competition. Political parties, as vehicles of governmental power, are also able to account for variations in responses to change across jurisdictions. Different parties as well as cleavage structures are present across jurisdictions. The globalisation, public opinion, interest group, and political party factors will be central to the analysis of the prairie wheat marketing arena in the dissertation which follows. The discussion of the position of this study will thus begin by exploring the key factors that contributed to the debate in the area of wheat marketing policy in the 1990s. Explanations of the contributions of other variables to an understanding of changes in monopoly marketing policy will then briefly be considered. Globalisation Globalisation is central to understanding the conflict that emerged over the policy allowing for the monopoly marketing of wheat in the 1990s. The phenomenon of globalisation has been found to contain a number of forces. The main concern of the current analysis is how these forces are related to the governments, parties, interest groups, and farmers concerned with wheat marketing. As Mathew Horsman and Andrew Marshall, Vincent Cable, and Thomas Courchene have all pointed out, the locus of decision-making is increasingly shifting from the nation-state to, among others, the private sector and regional governments.4 Although, as John Helliwell points out, international borders continue to provide significant trade and investment barriers, a movement toward cross-border "economic regions," including north-south economic integration is evident.5 The "regional-international interface," meaning, in the case of wheat marketing, direct interaction between Canadian provincial governments and US state governments, has been seen to be growing in importance 6 As a result, provincial trade policies are increasingly reflecting a north-south regional focus as the economic incentives to engage in north-south trade increase. These changes stemming from the latest round of globalisation have made themselves felt in the wheat marketing arena. Producers, and their interest groups and governments, are increasingly looking to north-south trade at the expense of east-west trade in grains. Additionally, provinces have also been seen to increasingly compete with one another in "untraded interdependencies," which include the infrastructure, services, and policy environment of a particular jurisdiction.7 This is consistent with what would be predicted by new growth theory, which holds that productivity and competitiveness may be enhanced through government spending on areas such as education, infrastructure, and research and development. Significantly, private spending can also serve to potentially enhance productivity and competitiveness. Conflict may thus arise from interacting forces relating to the international setting, nationalism, and untraded interdependencies present in the wheat marketing arena. In the field of wheat marketing, levels of farmer education, the condition of transportation arteries, and agricultural research and development, all crucial to farmer survival, will be seen to interact in a number of ways with the other factors that will be examined in the chapters to follow and introduced in the current chapter. While it is evident that distinctions may be made between regionalisation and broader internationalisation, this study will include both of these phenomena under the globalisation heading. Grace Skogstad has, for example, distinguished between the 33 regionalisation of the Canada-US Free Trade Agreement (FT A) and the broader, more widespread, intemationalisation of the General Agreement on Tariffs and Trade (GATT) Uruguay Round.9 Both phenomena are, however, sub-categories of the various processes of globalisation. These regional and international aspects or manifestations of the forces of globalisation, while included under the more encompassing globalisation term, will, of course, also be distinguished in the analysis of the chapters to follow. A number of forces that have been associated with globalisation in the literature will be seen to be partially responsible for the changes that are occurring in the wheat marketing arena. Each aspect of globalisation may be seen to work through other mediating factors that explain the nature of federal-provincial relations and the thrust of public policy in the wheat marketing area. What follows are some of the major aspects of globalisation identified in various studies and present in the prairie wheat marketing environment by the 1990s.10 First, transnational corporations (TNCs) have increased in prominence in the prairies. These enterprises, unlike multinational corporations, can no longer be readily controlled by the "host country". Second, a knowledge revolution has occurred in the farming community. Knowledge is becoming viewed to be increasingly critical for maintaining competitiveness. The function of the government as a source of knowledge has eroded as the knowledge base of non-governmental actors has increased. In this regard, it has been argued that the importance of resources will increasingly be judged by the degree of knowledge they contain. Third, globalisation has also included a revolution in the information arena which is seen to "compress" the time and space of economic activity. This revolution, which in the grain marketing area involves various types of economic and weather information, has, in other areas, been seen to be 34 "inherently decentralizing." Moreover, because individuals increasingly have the capacity to "access, transmit, and transform information" in ways that governments are largely unable to regulate, the information revolution has also been seen to be capable of redefining the scope of public and private sector roles. The combination of changes in information structure and knowledge is consistent with the idea of cognitive mobilisation that Ronald Inglehart and Russell Dalton have theorised and observed in many western democracies. Inglehart and Dalton point out that people increasingly have access to information as well as the ability to know how to use it. 1 1 These changes allow for increased personal involvement in politics whether through individual or interest group effort. For prairie farmers, dependence upon the CWB for information has been significantly eroded within the North American market. Fourth, international economic regimes have been highly successful in removing trade barriers. This again alters the scope of government activity. Agreements such as the FTA and the North American Free Trade Agreement (NAFTA) provide an environment conducive to potentially easier, and thus an increasingly attractive, private north-south wheat trade at the expense of an east-1 2 west governmentally regulated wheat trade. Last, government regulation and taxation have also become increasingly difficult because of the increased mobility of commodities such as wheat, with, for example, improvements in the increasingly widespread private accessibility of truck-based shipping, as well as the increased presence of TNCs whose scope of operations outstrips the scope of governmental regulatory jurisdiction. By contrast to the general contention that globalisation shifts powers from the federal government to the provincial governments and the private sector, Ian Robinson has argued that "free capital agreements," such as the Uruguay Round, tend to centralise political and economic power.13 Robinson thus distinguishes "free capital agreements," which primarily serve to increase capital mobility, from "free trade agreements," which decrease tariff barriers.14 Accordingly, he makes the argument that, with the implementation of free capital agreements, centralisation results from the imposition of "unprecedented legal restrictions" on provincial governments by the federal government as well as the constraints imposed by the market itself.15 The alleged centralisation that results from the imposition of legal restrictions, however, assumes that the federal government is able to ensure provincial government compliance. The ability of the federal government to do this appears to be in some doubt. Legislatively, the treaty power of the federal government is restricted from areas of provincial jurisdiction by the Labour Conventions (1937) case while both "POGG" and "trade and commerce" have been ambiguously defined.16 Moreover, the ambiguity of the constitutional environment, which will be discussed in a forthcoming section, appears to undermine the credibility of a federal government "bluff."1 7 To be sure, the credibility of a bluff may also conceivably be increased by the uncertainty and potential mutability associated with constitutional jurisdiction. Nonetheless, the net constitutional impact appears to diminish the bluff because of the power of provincial governments as well as their ability to circumvent unfavourable judgements. The debate surrounding the effects of market constraints then appears to be less about whether or not shifts in the federal-provincial balance have occurred and more about the normative question of the extent to which government should be constrained by the market. Where Robinson is concerned about and laments the decreased ability and scope of provincial governments to intervene in their respective economies as they increasingly 36 compete with one another for private investment, Courchene embraces this competition as an increase in provincial government freedom and stature. Any varying impact of market forces on the two orders of government is not necessarily self-evident. Moreover, Robinson, like Courchene, expects an increase in federal-provincial conflict in various arenas of public policy as the impact of the forces of globalisation undermine the status 18 quo. Thus, in addition to the relative implausibility of the Robinson position, the relative importance of Robinson's argument concerning the balance of federal and provincial power to the current analysis is also diminished because the potential for globalisation to increase federal-provincial conflict and have an impact on public policy does not appear to have been placed in doubt. A cautionary word is appropriate concerning the nature of the conflict resulting from the changes brought on by globalisation. To the extent that the federal government "voluntarily" moves towards withdrawing from the wheat marketing policy area, conflict may gradually decrease, especially in the long-term. A federal government of different partisan stripe may be willing to withdraw from wheat marketing policy or, at a minimum, from an insistence on a monopoly marketing policy. Alternatively, a new minister may also make significant policy changes. By contrast, the potential for intergovernmental conflict in the short-term is relatively high because the governments involved, as well as other actors such as farmers and their interest groups as well as TNCs, may scramble to "defend themselves" and establish new relationships as the previous status quo is challenged by the various forces of globalisation. Given the decentralisation evident in globalisation, which undermines the centralisation of governmental control of the previous ebb tide era, the private sector has 37 been placed in a position where it is able to enhance its impact on public policy and, thereby, potentially increase its ability to contribute to either conflict or harmony in federal-provincial relations involving the CWB's single-desk. Actors from the private sector, such as agribusiness TNCs, may thereby also reinforce the activities of other decentralised political actors, such as farmer interest groups, which have become increasingly fragmented since the establishment of the CWB's wheat monopoly in the 1940s. Thus, more generally, globalisation in its impact on prairie wheat marketing can be seen to have strengthened new or previously unimportant actors relative to other actors in the wheat marketing policy community. As Helen Milner and Robert Keohane point out, changes in the international arena, including the relative costs of international transactions, can affect the relative political influence of various domestic actors.19 Steven Bernstein and Benjamin Cashore have likewise concluded that changes in the international arena, such as the increased influence of international institutions and actors and the ideas of these institutions and actors, can produce pressure for change in the domestic policy arena.20 Moreover, conflict can be expected between actors who benefit 21 from globalisation, and thus call for increased "openness," and those who do not. Such international forces impact the domestic policy preferences of relevant political actors as well as political institutions.22 The ambiguity of the constitutional environment in the area of wheat marketing may < also provide an avenue for globalisation to exert a decentralising impact. A certain amount of constitutional flexibility may be required to deal with the rapid, largely uncontrollable, and often unpredictable changes associated with the forces of globalisation.23 In other words, constitutional ambiguity may be aggressively and explicitly exploited. Along these lines, Francois Rocher and Richard Nimijean point out that Canadian governments face considerable obstacles when they, in response to the globalisation of the economy, attempt to make formal changes to established institutions.24 The ability to make informal changes within the current formal constitutional environment are thus of great importance. In this regard, Benjamin Barber theorised the potential need for a general movement of de facto, informal change towards confederation as a solution to the pressures of globalisation on governments.25 In sum, the impact of globalisation is pervasive and multifaceted in its relationship to other variables. Globalisation is readily consistent with the appearance of conflict over the monopoly marketing policy as new demands are brought into the wheat marketing policy arena and the relative stature and nature of actors within the policy community is altered. The globalisation variable is readily able to account for change in its ebb and flow. Public Opinion The role of farmer opinion is key to understanding the impact of globalisation on the arena of wheat marketing policy. Kathryn Harrison has demonstrated the public policy impact of the interaction between fluctuations in public opinion and the presence or absence of federal-provincial conflict in the Canadian setting in her study of environmental policy. 2 6 Although even during periods of heightened public concern over the environment the federal government continued to give subsidies and offer only "hollow" and "symbolic" commitments, the impact of public opinion on policy and the nature of federal-provincial interaction is clear; only during such periods of high public 39 concern did the federal government readily assert its jurisdiction over the environment and federal-provincial conflict ensue. Moreover, as other areas of concern gained precedence over the environment in the public's eye, the federal government allowed its previous environmental policies to languish. Different subsets of "public" opinion may be distinguished for analysis. For the purposes of the present analysis, which focuses specifically on the opinions of prairie farmers, V.O. Key Jr.'s general assessment that public opinion included "those opinions held by private persons which government finds it prudent to heed"27 serves as a useful starting threshold for separating opinion that is irrelevant in shaping government action from that which is not. In this regard, David Elkins has argued that governmental leaders are constrained by the public on issues where the public is knowledgeable and interested; a de facto specialisation in the task of constraining leaders occurs within the general 28 public on the basis of individual areas of expertise. Although Philip Converse has found that people's opinions tend to lack the organisation of an overarching coherent framework or ideological constraint,29 this does not necessarily imply that individuals are not knowledgeable about specific matters of interest. To be sure, one key theoretical difference that has been observed by Vincent Price is that between actors and spectators (i.e. leaders and followers). Price contends that the public debate occurs mainly between actors, such as interest groups. However, as will be seen, the extent to which Price's distinction holds is debatable given the existence of particular areas of expertise among voters, especially as information and knowledge have become increasingly diffused in recent decades and education levels have increased in a setting of increasing globalisation. Moreover, an informed and interested public may also use interest groups 40 to constrain governments. In the case of the present study, farmers are readily familiar with policy issues dealing with their line of work and are achieving ever higher levels of education and access to information. Farmers have also readily used interest groups to press their views. Although the distinction between actors and spectators is becoming decreasingly relevant as levels of knowledge, information, and farmer participation increase, it nevertheless serves to highlight the changes that have occurred as a result of globalisation by pointing to the potential for the existence of a different impact of opinion on policy during the prior ebb of globalisation when that knowledge and/or participation levels were relatively low. The distinction thus contributes to an understanding of the effects and implications of some of the changes that are occurring as a result of globalisation. Another way of conceptualising the differences between the various levels of expertise in the general public is to distinguish between the general public per se and the portion of that general public involved in a particular industry, such as wheat farming. In this regard, Harrison makes the distinction between the general public's opinions on the environment and the opinions of industrialists. People directly involved in a particular industry, as a systematically differentiated subset of the general attentive public, are likely to have different opinions on matters relating to that industry, from not only self-interest but also knowledge, than people who are more peripheral to it. Along these lines, a further distinction may also be useful to separate the opinion of those who are more or less peripheral to the matter on which the opinion is expressed. Public opinion may also be analysed on a regional basis. Regional variations in opinions on particular matters are often apparent and, as will be seen, readily evident in the wheat marketing arena.31 41 To be relevant for the analysis of federal-provincial governmental relations, public opinion must, as Key points out, be communicated to and have an impact on political parties and governments. Policy makers must care about and be attentive to public opinion i f it is to have analytical importance. The evidence here is overwhelming. Although parties sometimes ignore polls, Alan Frizzell points out that "no political party plans campaign strategy without them [polls], no government is prepared to risk major policy initiatives without gauging public opinion, and for major news organizations they are an indispensable reporting tool, both between and during elections." John Meisel concludes that polls are superior to discussions with party activists in their ability to provide feedback.33 Many public policies have been decided and election dates set on the basis of polling data.34 Accordingly, many political parties have their own polling firms. As Price points out, even perceptions of what the attentive public might do are important 35 to political actors. Similarly, Harrison highlights the importance of opinion within a particular industry in showing the sometimes "symbiotic" relationship between government and developers.36 The present study will provide evidence that parties and governments are indeed attentive to the opinions of farmer constituents. As such, the analysis of farmer opinion contained within the analysis of the study to follow also demonstrates the working of liberal democracy within a globalising context. In a reflection of the divergence of farmer opinion across the prairies on the future of the CWB's monopoly, intergovernmental conflict became a significant feature of the wheat marketing arena by the 1990s. The use of polling is also pervasive. Many forms of polling data are used by parties and governments, including tracking, focus group, and "micro-polling" data.37 Moreover, polling is used for a number of purposes by governments and political parties.38 These include policy development, normally done on a daily basis, and communications, to indicate that governments care about a particular matter and to persuade the public. In addition to these two major uses, polls are also used to ascertain the public mood, or for environmental scanning, and program evaluation. Various governments involved in the monopoly marketing debate have used polls as a basis for directing their policy positions. Public opinion is readily helpful in accounting for change because of the nature of what is being measured. Opinions, as opposed to attitudes and values, which are more long-term, enduring, and encompassing, are relatively issue-specific, situational, and 39 contextual. Thus, even where opinions are well informed and organised, they are still readily susceptible to change as circumstances change over time. The nature of public opinion therefore appears suited to examining the wheat marketing debate by taking into account the changes that have swept across the prairies in the new tide of globalisation. In sum, the public opinion variable is able to aid in explaining the changes in public policy in the area of wheat marketing. The contextual nature of opinion is also able to account for variations across jurisdictions. Attention to demographics and context allows the approach to contribute to understanding the impact of the forces associated with globalisation. Public opinion theory also provides a link between changes resulting from globalisation and the statements and actions of interest groups and governments concerned with the CWB's single-desk for wheat. Interest Groups Depending on the circumstances, the impact of interest groups on the public policy arena as it involves intergovernmental relations has been found to range from being substantial to being virtually non-existent. The present study will argue that interest groups do play a significant role in the wheat marketing policy arena as they channel the forces of globalisation in particular governmental jurisdictions. Particular provincial configurations of interest groups will be seen to at times favour different and conflicting public policy outcomes in the wheat marketing arena. As such, they will also be seen to either promote intergovernmental harmony or create intergovernmental conflict depending upon whether their policy demands are the same or are differentiated across governmental jurisdictions. Some indication of the degree to which this may occur is captured in the categories of various models which will be examined shortly. In the current study, the policy impact of interest groups is filtered through the arena of intergovernmental relations. Accordingly, studies dealing with intergovernmental relations will be used in addition to other studies to consider how the interest group literature may be applicable to wheat marketing policy. A nuanced view of the interest group impact may thus be attained by combining and weighing the insights provided by these models in relation to the specific case of wheat marketing. Richard Simeon has argued that interest groups are largely irrelevant in aggravating or calming federal-provincial disputes. The access of interest groups to the bargaining process of intergovernmental negotiations is viewed to be limited, i f not non-existent.40 Simeon concludes that "at best interest-group concerns form only part of a government's goals." 4 1 Accordingly, Simeon contends that interest groups will be readily "jettisoned" 44 \ when their "status or ideological goals" are not central to the matter at hand.42 He also argues that the secretive nature of these negotiations may also mean that interest groups remain oblivious to developments that could affect the successful pursuit of their demands. Although Simeon's model may be readily applicable to many cases, it should, nonetheless, be approached with caution for a number of reasons. First, case studies and models have logically suggested interest groups may play at least a marginal role in federal-provincial relations in particular policy areas. For instance, Grace Skogstad and Richard Schultz have demonstrated a prominent interest group presence in the agricultural policy and transportation policy arenas respectively.43 Second, Simeon acknowledges that interest groups do form part of the government's policy goals and that their impact may be significantly higher when their ideology and status assumes a central position. Third, Simeon's model also implies that, as the secretive mechanisms of elite accommodation are eroded, the position of interest groups may improve. In this regard, the wheat marketing arena not only encompasses a number of prominent interest groups with ideologically distinct positions, but they are competing within an environment concerned about openness and accountability. One of the formulations suggesting interest groups play a significant role in federal-provincial relations is Morton Grodzins' "multiple-crack hypothesis." Grodzins argues, from a US perspective, that federal states allow more access points for interest group participation than do unitary states because of the presence of two orders of government.44 Groups are viewed to move towards the order of government that is most responsive to their objectives. In so doing, interest groups may "play one [order] off 45 against the other."45 This suggests that interest groups are able to contribute to the federal-provincial public policy arena. Moreover, such circumstances may be reinforced by the uncertainty and mutability of the constitutional setting. The model used by Richard Schultz also takes issue with Simeon while simultaneously modifying the approach of Grodzins. By contrast to Grodzins, Schultz, from the standpoint of the interest groups involved, attempts to also account for the possible costs of a federal system.46 Within an environment of ongoing bargaining, interest groups are seen to risk becoming embroiled in intergovernmental disputes and being used as a governmental resource. Schultz demonstrates his hypothesis by way of a case study of the Canadian Trucking Association, which not only serves to illustrate the role of an interest group in federal-provincial conflict, but also the dangers of playing powerful governments off against one another. The allegiance of a given interest group to one order of government may make it the "enemy" of the other order of government; federal-provincial "hostilities" may be transmitted to the interest groups themselves.47 Thus, a particular group may become dependent upon one order of government which may no longer be either willing or able to meet its demands to the extent it is viewed with suspicion by the other order of government. The interest group factor is thus seen to be more heavily weighted than in the Simeon model, while the power of governmental elites is seen to be more heavily weighted than with the Grodzins hypothesis. The Grodzins and Schultz approaches are each potentially consistent with aspects of the role of interest groups in the wheat marketing debate. A number of interest groups involved have attempted to lobby both provincial governments and the federal government. Nonetheless, these groups also appear to be most closely associated with 46 and concentrate their efforts on governments that are more readily willing to listen to them. The degree to which particular interest groups are connected with particular governments thus varies considerably in the wheat marketing area. William Coleman and Grace Skogstad have referred to three types of connections: pressure pluralism, clientele pluralism, and parentela pluralism.4 8 The term pressure pluralism is used to refer to the networks that emerge where groups mainly carry on "a policy advocacy role" and the autonomy of state agencies is retained.49 Clientele pluralism is present when "state officials are unable to differentiate themselves from organized interests" although the role of policy advocacy remains in place.50 The primacy of policy advocacy is, by contrast, displaced in the situation of parentela pluralism, where interest groups occupy "a dominant place within a governing political party."51 Parentela pluralism is most likely to occur in provinces where the dominance of one party is combined with presence of a small number of industries.52 These distinctions are useful for assessing the actual and potential degree of influence of particular interest groups in particular jurisdictions. As will be seen, different types of pluralism appear to be evident in the wheat marketing arena. These various forms of pluralism may be seen as points on a continuum extending from pressure pluralism to parentela pluralism. In circumstances where the demands of particular provincial or sub-provincial configurations of interest groups are differentiated, forms closer to the pressure pole appear to be less likely to exacerbate federal-provincial conflict than those tending towards the parentela pole. This is because the neutralisation of provincial government stances by cross-cutting pressures 5 3 is more likely to occur in 47 the former situation than in the latter. In fact, governmental stances may, in the parentela case, be clarified by relatively "unidirectional" pressures resulting from the presence of an interest group "monopoly" or "oligopoly." The pressure scenario, in other words, tends towards allowing governments to more readily compromise with one another than the parentela scenario, which may instead clarify any opposition that may be present. The potential for close ties theorised by Coleman and Skogstad, has also been found by Patrick Fafard.54 Fafard, in the area of environmental policy, has found evidence that groups may forge close alliances with particular governments. Farfard argued that the particular tenor of federal-provincial relations is often incidental to the relationships of these alliances. Such relationships will be seen to be evident between some groups and governments in the study to follow. Fafard also makes the observation that larger provinces tend to have governments that are more autonomous in their relations with interest groups than those of smaller provinces. This finding is consistent with Coleman and Skogstad's point that parentela pluralism is most likely to occur in provinces with a small number of industries. Moreover, governmental officials at the federal level, in particular the minister responsible for the CWB, is subjected to a wider range of interest group influence than his provincial counterparts and is consequently, ceteris paribus, less tied to any particular configuration of these groups.55 In the case of the current study of wheat marketing policy, the prairie provinces each have a relatively small number of industries compared with Canada as a whole and wheat is prominent among them. The federal government, in its dealings with interest groups involved with wheat marketing, can thus be expected to be less tied to any particular configuration of groups than are the governments of Alberta, Saskatchewan, and Manitoba. For the purposes of evaluating the influence of particular interest groups concerned with wheat marketing in the relevant jurisdictions, the structure of interest groups may also make a difference. First, a distinction may be made between interest groups operating in "one-province" and those operating in a number of provinces. Coleman contends that interest groups operating in only one province are generally more likely to be effective than those operating across a number of provinces because multiple-province groups are more likely than their single province counterparts to be faced with differing points of view which are difficult to integrate.36 Single-province groups may thus be seen to be more likely than multiple-province groups to be influential in the wheat marketing policy arena and contribute to federal-provincial conflict to the degree that interest groups are provincially differentiated in their demands. Second, Paul Pross argues that a distinction may be made between interest groups tending towards institutionalisation and those tending towards issue-orientation.57 Institutionalised groups are those with, among other things, "continuity and cohesion" in organisation, "stable memberships," "extensive knowledge" of relevant sectors of government, and objectives that are broadly enough defined and resources that are significant enough to permit effective bargaining with governments over policies. Issue-oriented groups, by contrast, lack such characteristics. As with the various types of pluralism of the Coleman and Skogstad model, Pross' categories may also be viewed as a continuum. Moreover, issue-oriented groups have been seen to partly overcome their CO weaknesses in relation to institutionalised groups by appealing to public opinion. This has, in turn, been seen to force institutionalised groups to follow suit by undermining their dominance.59 In line with the Schultz hypothesis, interest groups tending towards institutionalisation would appear to be likely to play a greater role in promoting harmony or conflict in federal-provincial relations than those tending towards issue-orientation. Nonetheless, because of the power of the media, the potential influence of issue-oriented groups should not be entirely discounted, especially in cases where public opinion may be significantly swayed and competitive governments are struggling for support. While most groups involved in the wheat marketing debate in the 1990s tended towards institutionalisation, one issue-oriented group, Farmers for Justice, also figured prominently. The nature of the interests that are represented by groups also make a difference to assessing the strength of interest group stances on the marketing issue as well as the degree to which they are likely to be connected to certain governments. In this regard, Skogstad claims that single commodity interest groups may be distinguished from general farm organisations.60 When compared with the latter, the former groups tend to be more market-oriented and particularly suspicious of the federal government. Single-commodity groups, to the extent that they associate with any government, are thus more likely to associate with provincial governments than with the federal government. These groups are also more likely than their general farm organisation counterparts to question traditional assumptions and institutions. The emergence of commodity groups would thus appear likely to aggravate federal-provincial conflict as they compete with general farm organisations for governmental influence because of the tendency of the two types of groups to articulate opposing sets of demands. Obversely, the presence of only one of 50 the two kinds of interest groups may be seen to promote federal-provincial harmony, given that both orders of government will more likely be subjected to similar demands. Public choice theory can further enhance the analytical impact of the interest group variable by building on some of the distinctions already made as well as contributing further grounds by which to assess interests groups based on their relative influence and the strength of their stances. Public choice theory also serves to lay out some of the more basic underpinnings of the existence of interest groups in their relation to the opinions of prairie farmers. Three interrelated areas will be considered: the relationship of farmers to interest groups; the relationship of interest groups to one another; and the relationship of interest groups to governments. The analysis will consider both interest group theory directly associated with the rational actor approach as well as that developed without explicit reference to the rational actor approach. Olson may be seen to provide the basis for the analysis: to the extent that interest groups produce public goods, shirking is likely to occur.61 In the area of wheat marketing, the costs and the benefits resulting from interest group lobbying would accrue to all farmers whether nor not they participate. Moreover, large groups would be particularly susceptible to this "free-rider" problem. It would thus appear that one theoretical implication of the rational actor analysis is that, ceteris paribus, smaller groups (of affected people) are likely to be more successful than larger groups in their organising efforts. However, the theory suggests that interest group leaders might also be important: a small group of farmers within a larger farm organisation may be "disproportionately interested" in acquiring particular public goods.62 When applied to the wheat area, such a 51 formulation suggests that certain farmers stand to make large gains from dual marketing. Moreover, it provides the theoretical foundation with which to understand why some farmers participate in interest groups when they could be free riders: the benefits might always outweigh the costs for a particular type of farmer.63 Ronald Rogowski sets the foregoing observations within an international context by contending that external trade regimes will stimulate internal conflict by differentially impacting owners of land, labour, and capital.64 In the area of wheat marketing, for example, well-capitalised farmers may become net beneficiaries while farmers with a relative abundance of land may become net losers in a globalised economic environment. In this way, the previously hegemonic coalition in the wheat sector, which supported the C W B monopoly, may be seen to have had its influence eroded by other powerful interests in other sectors and policy areas that favoured the FTA and N A F T A arrangements; the federal government's reaction to these interests may be seen to have, in turn, influenced the relative power of various wheat sector groups at the provincial order of government. Rogowski also contends that the interests that gained from the arrangement will not only strengthen their political power, but will also attempt to "continue and accelerate" the change.65 Thus, a further theoretical implication is that those farmers who are richer, have larger farms, are more educated, and live closest to the Canada-US border 6 6 (i.e. those farmers who have the most to gain) should constitute a disproportionate share of interest group membership in groups that would prefer continued change. Obversely, groups that prefer continued change should also be strongest in areas containing richer and more highly educated farmers, larger farms, and easy access to the Canada-US border. 52 The implications of Skogstad's distinction between single commodity interest groups and general farm organisations as well as Coleman's distinction between the natures of multiple-province and single-province interest groups can thus be further fleshed out with the public choice approach. The rational actor approach supports the idea that multiple-province groups and general farm organisations are more likely to be at a relative disadvantage because of a lack of internal cohesion. Moreover, the public choice analysis also indicates that the benefits of such groups for key supporters would likely be lessened. The disadvantage of general farm organisations is also consistent with and reinforced by Olson's "by-product" theory. In particular, Olson finds that farm organisations tend to get their members "mainly through farm co-operatives and government agencies." 6 7 Because organisations such as farmer co-operatives and governmental agencies in the area of wheat marketing tend to support monopoly marketing and have historically had greater influence than they do now, the competitive advantage of the more recently emerging commodity-based interest groups over general farm organisations is reinforced: commodity groups do not have a ready-made base of large membership. This competitive advantage is reinforced to the extent that the implication stemming from Olson's "free rider" observations examined earlier hold. The Skogstad observation, when viewed within the context of the rational actor approach, indicates that single commodity groups should be at competitive advantage relative to general farm organisations when it comes to maximising governmental influence. In sum, the interest group variable appears capable of explaining one way in which the forces of globalisation are mediated and ushered into the public policy arena. The interest group variable is thus also able to take account of increases and decreases in federal-provincial conflict in a nuanced and detailed manner as changes in public policy are proposed or made. The interest group factor, in light of the models presented, should be recognised for its ability to explain both stability and change in federal-provincial relations as these relations relate to wheat marketing policy, to the degree that the same groups remain pre-eminent or different groups come to and fall from prominence. Although such turnover may be more likely with groups tending towards issue-orientation than institutionalisation, other groups may also rise and decline as the impact of a changing global environment is felt in the wheat marketing public policy network. Similarly, interest groups, like farmer opinion, are also able to explain the presence or absence of variations in provincial policy responses to issues, to the extent that specific provincial configurations of groups involved in the debate are varied in relation to one or more of the models examined. Parties and Party Systems Parties, operating within specific party systems and constituting the primary vehicles for obtaining governmental power, provide the last link between the forces of globalisation and public policy. The differentiated public policy impact of globalisation across governmental jurisdictions concerned with CWB marketing is consistent not only with the divergence of farmer opinion and interest group stances and strength, but also with divergent parties and party systems. The jurisdictions involved in the wheat marketing debate have a broad range of parties and party systems: from one-province parties to national parties and from one-party dominant to three-party systems. The 54 stances of parties on monopoly marketing are also diverse. Although the basic electoral system and overall political context underlying this apparent diversity is essentially the same, provincial party systems nevertheless exhibit persistent differences relating to the main cleavage and ideological divisions present within each jurisdiction, which, as will be seen, tend to reinforce partisan stances taken on the monopoly marketing issue, and how particular leaders manage to interact and manoeuvre within these divisions. These differences appear to function in two ways: the cleavages and ideologies themselves may be different or the balance within similar cleavages and ideological divisions may be significantly different. The party system environment is one of diversity meeting conformity. The conformity is largely seen in the persistence within each province of particular party systems amidst the larger persistence of inter-provincial diversity. Although changes may have occurred, they have generally taken place within the relatively well-defined and less movable confines of the cleavages and ideological divisions of particular jurisdictions. Such a finding would be within the bounds of stability suggested by Johnston et al. in their study of the national electoral system in Letting the People 68 Decide. It is also consistent with the approach taken by Wiseman, who, as we will see, suggests that a unique political culture persists in each province. These cultures, Wiseman argues, rely on the cleavages and ideology of particular, regionally specific, groups of immigrants.69 Both the Johnston and Wiseman approaches acknowledge the possibility of change. Change, however, is theorised to be relatively slow and seen to occur within the limits of, for example, the institutions associated with the initial or founding immigrants. These institutions, including the party system, would be seen to 55 reflect the cleavages and ideological viewpoints of such a founding generation. The founding generation would, in other words, become institutionalised.70 Further, Wiseman points out that leaders are reflectors of their respective political cultures.71 It would thus seem plausible to hypothesise that although leaders might marginally shift the focus of the political culture of the arena within which they find themselves, they would likely do so within the boundaries of the previously established cultural norm. Obversely, leaders are thus also in a unique position to simultaneously guard against any radical movement away from any particular jurisdiction's previously established cultural norms. To be sure, the degree of immovability implied by Wiseman appears too high to explain the rise and fall of specific parties. It appears, for example, to be unable to account for the rise of the Progressive Conservative Party and the fall of the Social Credit Party in Alberta in the early 1970s. The Wiseman approach, however, appears to be significantly more useful when allowance is made for a greater degree of institutional movement. Similar ideological divisions and cleavages may underlie the old and the new parties or other institutions. In other words, the contemporary institutional continuity of more long-standing ideological or cultural strains may be transferred between specific institutions while simultaneously being preserved, yet modified, in each in turn. Thus the institutionalisation of the laissez-faire liberal pole of Saskatchewan's political culture, which is consistent with an anti-monopoly stance, may be seen to have been preserved in its transfer from the Progressive Conservative Party of Saskatchewan to the Saskatchewan Party. To the extent that the basic Wiseman approach is modified by according it a greater allowance for change, it may be brought largely in line with David 56 Elkins' findings that individuals are constrained by institutions, yet still have some room to manoeuvre.72 This theoretical framework is consistent with both E.E. Schattschneider's ideas as well as the limitations of those ideas. The leaders of political parties may exploit and even develop specific political cleavages that will allow their party to attain power.73 For example, otherwise latent cleavages may become salient to electoral competition as a result of the efforts of party leaders. The efforts of party leaders, however, remain restricted to the particular political context in which they reside. A linguistic cleavage, for example, cannot be introduced within a jurisdiction containing only one language group. Moreover, Alan Ware has suggested that where individual citizens are connected with a political party on the basis of a "policy/personality/image link" the role of political leaders is greater than in a situation in which either a "material/individual link" or a "social solidarity link" is most prevalent.74 Harold D. Clarke et al. in Absent Mandate have provided evidence on the basis of national electoral results that the Canadian context is one in which a policy/personality/image link is likely to prevail, at least at the federal level. 7 5 A number of hypothesis may thus be generated. First, leadership matters, but only on the margin. Leadership is unlikely to radically alter the previous party system in the short-term, given its underlying cleavages and ideological divisions. However, leaders are able to drive the system in new directions and procure changes within the norms of a particular system. In line with George Rabinowitz and Stuart Elaine Macdonald, leaders and their parties can only advocate change and be elected i f such changes conform to the "realm of plausibility."76 Second, cleavages and ideology are likely to have a significant 57 impact on determining the shape and the stability of the party system. Third, to the extent that different immigration patterns and a significant degree of institutionalisation in each of the systems under consideration has occurred, inter-provincial diversity in cleavages and ideologies ought to be present. The diversity of party systems is also seen in the scope of parties themselves. Not only do party platforms vary from province to province even with parties of the same name, the parties themselves often differ across jurisdictions. Moreover, Elkins has found that parties of the same name are likely perceived differently relative to one another in their ideological content in different regions of the country.77 In addition, new parties often quickly rise to power, such as the Alberta Progressive Conservative Party, or prominence, such as the Saskatchewan Party, while old parties are sometimes virtually eliminated, such as the Social Credit Parties of Alberta and British Columbia. Also critical to the nature of federal-provincial interaction is the extent to which national and provincial parties are integrated. Donald Smiley has observed that although the extent of the change varies across parties and regions, a general movement away from integrated toward con-federal party structures has occurred in Canada.78 The potential co-operation that may result from integration may also be overcome by the independence of the partisan power bases themselves. As J. Stefan Dupre has pointed out, the real partisan opposition of a party in power in one order of government is that of the party or parties in 70 power at the other order of government. Changes in the roles of parties themselves may also occur. John Meisel has pointed out that many of the functions once performed by 80 parties are now performed by other entities, such as interest groups. To be sure, Meisel does not suggest that parties have become irrelevant. At a most basic level, parties, by 58 forming governments and providing provincial and national leaders, still stand at the critical intersection between voters and interest groups and their policy goals. However, Meisel's observation also indicates that the interconnection between interest groups and parties discussed in the previous section should not be neglected. In sum, the party variable is able to account for change in wheat marketing policy through dynamics observed in the role of parties, the degree of party integration, the way in which farmers are linked with parties, how cleavages and issues may rise and fall from political salience, how governing parties can potentially be replaced by parties with differing stances, how majority governments can be reduced to minority or coalition governments, and the context of partisan competition. The party factor is also able to account for variations in responses to change across jurisdictions and how the public policy debate over monopoly wheat marketing may be projected into the intergovernmental arena. Moreover, governing parties provide the final connection between issues raised by farmers and their interest groups and governmental action. Other Factors Although factors such as the constitution and political culture are not key in themselves to the analysis of the following chapters, each of these areas impinges on the broader examination at least peripherally. Some of the context of the main analysis is also provided by these factors. A brief examination of the constitutional setting and political culture is thus provided with a view to better understand the major factors with which the subsequent analysis will be primarily concerned. The Constitution The constitutional environment within which the debate over monopoly wheat marketing policy developed in the 1990s exhibited a significant degree of controversy and ambiguity concerning both the scope of governmental jurisdiction as well as farmers' rights. Provincial and federal policy-makers have traditionally not been sure of the exact constitutional scope of their powers. This lack of judicial clarity in the arena of agricultural marketing is consistent with a more general lack of clarity observed by Patrick Monahan, David Beatty, and Peter Russell. 8 1 This ambiguity contributed to intergovernmental conflict in the 1990s as governing parties attempted to use the judicial arena to press stances consistent with those of their constituent farmers and farmer interest groups on the issue of monopoly marketing. As will be seen in subsequent chapters, cases involving the marketing of prairie wheat in the 1990s included a proposal for a provincial wheat marketing board as well as arguments based on Charter rights. The ambiguity and uncertainty of intergovernmental jurisdiction that is of particular concern to the wheat monopoly debate involves the jurisdictional areas of "property and civil rights" and "trade and commerce." To be sure, section 95 of the Constitution Act, 1867 authorises both orders of government to legislate matters pertaining to agriculture. However, as Peter Hogg has pointed out, section 95 has been turned into an empty shell by the courts, which have chosen to deal with agricultural matters under other sections of the constitution, such as "property and civil rights" and "trade and commerce".82 Although Parsons (1881) established that intra-provincial trade and commerce is a matter pertaining to property and civil rights, thus falling within provincial jurisdiction, while international trade and commerce and general trade and commerce are matters within 60 federal jurisdiction, the exact scope of these various categories of trade has remained uncertain. A number of groups of decisions demonstrate this uncertainty. In Shannon (1938) and in Home Oil Distributors (1940) the JCPC and the Supreme Court of Canada respectively upheld the mandatory use of a provincial marketing board for products produced outside of the province operating the board on the grounds that such a regime was essentially intra-provincial. In Carnation (1968), the Supreme Court upheld a provincial marketing arrangement that allowed for the sale of a product to a company that sold the majority of its product outside of the province again on the grounds that such a regime was essentially intra-provincial. These precedents, spanning thirty years of jurisprudence, were unexpectedly set aside in Manitoba Egg Reference (1971) when the Supreme Court struck down a provincial law that regulated the sale of a product within the province. To be sure, the court in its decision in Ontario Farm Products Marketing Reference (1958) warned that provincial laws involving activities that were in reality inter-provincial would be struck down. However, this warning was also contained in the Carnation case where it was not regarded as immediately relevant. The decision in Manitoba Egg Reference can also not be explained by the production of some of the regulated product outside of the province of regulation because Justice Laskin stated that his decision was not based on such grounds.84 The court's decision in Manitoba Egg Reference resulted in the negotiation of a new marketing plan between the provincial and federal governments. The Supreme Court approved of the plan in its decision in re Agricultural Products Marketing Act (1978) stating that the place where a product would eventually be sold was not a relevant consideration in determining the constitutionality of provincial production quotas. However, in Central Canada Potash (1978) the Supreme Court struck down a provincial law pro-rationing a product produced in the pro-rationing province. Peter Hogg points out that these decisions contradict one another because the economic and political purposes of both plans were the same.83 Cases explicitly dealing with trade and commerce also exhibit the court's inconsistency. For example, in Canada Standard Trade Mark (1937) the court appeared to hold that federal standards involving the use of a distinctive mark on a voluntary basis were acceptable even when products were bought and sold entirely within a province. In Dominion Stores (1979), the Supreme Court reached the opposite conclusion in an essentially similar case. Hogg has concluded that the reasoning the court attempted to apply in the later decision approximated dispensing with the rule of precedents and "confining a case to its own facts." 8 6 To be sure, the Canadian Wheat Board Act was upheld in Murphy v. C.P.R. (1958) by the Supreme Court of Canada.87 The Murphy case, however, involved a shipment of grain across provincial borders. It thus concerned an inter-provincial, as opposed to intra-provincial, transaction. While R. v. Klassen (1959) saw the Manitoba Court of Appeal uphold the Canadian Wheat Board Act in a case involving a purely intra-provincial transaction, no Supreme Court decision is available for Klassen** Moreover, as Hogg points out, the decision in Klassen represented "a striking departure from the course of Privy Council decisions" which held that the federal jurisdiction over trade and commerce could not include entirely intra-provincial transactions even in cases where the central purpose of a federal regulation was to govern inter-provincial or international 62 trade.89 The cases involving the Canadian Wheat Board directly are, furthermore, also part of the larger ambiguous constitutional environment described earlier. Not only does considerable constitutional ambiguity exist regarding the status of the Canadian Wheat Board Act taken as a whole, but also regarding the applicability of national standards in the wheat marketing arena as well as the constitutional status of a potential provincial marketing board. The ambiguity in the division of responsibilities is, moreover, now potentially combined with the uncertainty central to Charter litigation. As will be seen, Charter litigation has been used in the monopoly marketing policy arena on the grounds of farmers' rights, including, for example, the right to equal treatment, given that not all Canadian wheat farmers fall under CWB jurisdiction. One reason for ambiguity and uncertainty is that the case law associated with the Charter is not firmly established because the Charter has been in place for only a relatively short period of time. As Monahan points out, uncertainty is also increased by the court's denial that it is engaged in making normative, as opposed to positivistic, decisions.90 In this regard, the Supreme Court has refused to consistently follow the normative instructions set forth in the Charter's preamble.91 As a result, decisions are made in an unpredictable normative vacuum. Beatty has similarly found that cases in the Supreme Court are being determined by the "legal and political philosophies of the judges" rather than "any rule or principle of constitutional law." As a result, Beatty concludes, it is "virtually inevitable" we will see "rulings that are themselves unconstitutional." The constitutional background against which the wheat marketing debate of the 1990s was fought was one with a significant degree of ambiguity. The lack of clarity may be seen to have contributed to litigation sponsored by the Government of Alberta as well as judicial actions and threats by the Government of Saskatchewan. The constitutional context thus provided a welcoming environment within which and from which to at least partially wage the governmental battle over wheat marketing policy. Political Culture Nelson Wiseman has argued that inter-provincial differences in political cultures are evident in the Canadian prairies. For the purposes of understanding the inter-provincial and intra-provincial differences in opinion and governmental stances evident in the wheat marketing policy debate, such an approach can potentially provide useful background information. To be sure, a pan-Canadian approach, developed by Gad Horowitz, which draws on the explanatory technique used by Louis Hartz, has emphasised pan-Canadian commonality in political culture.94 Under the Horowitz approach, socialism is hypothesised to result from a "synthesis" of liberalism, retaining its rationalist-egalitarian elements, and Toryism, retaining its corporate-organic-collectivist elements. The presence of Toryism is thus seen to be key to the subsequent development of socialism. Horowitz claims that the Canadian configuration of conservatism, liberal, and socialism has led to a heightened susceptibility to toleration and compromise. Horowitz's primary intention was to explain differences between the political cultures of Canada and the United States. However, the pan-Canadian approach introduces a theoretical problem: Why is presence of socialism relatively weak where Toryism appears to have is greatest strength (namely in Atlantic Canada)? Conversely, why has socialism had its strongest influence where the presence of Toryism has traditionally been relatively weak (namely 64 in Saskatchewan)? The provincial approach appears to be able to overcome this problem.95 Wiseman's approach responds to the problem presented by Horowitz by emphasising variations in immigration patterns. These variations in immigration patterns are taken into account on a provincial basis. Accordingly, Wiseman argues that Alberta, Saskatchewan, and Manitoba were most influenced by the political cultures of the American mid-west, the United Kingdom, and Ontario respectively because of three separate provincial flows of immigration and settlement. The importance of these "waves" of immigration is high because it is the initial political cultures that have the most profound long-term societal impact by forming the base on which future modifications are made.96 In Alberta, the impact of American culture, which brought with it values of liberalism and a laissez-faire attitude towards the operation of the market, was most profound in rural southern and eastern Alberta, areas which represented the "key to political power." 9 7 By contrast, in Saskatchewan a significant rural British population supported the presence of a social democratic and co-operative element that battled with an Ontario liberal element. This has led to ideological polarisation since the 98 1930s. In Manitoba, immigrants brought with them the cultural "ambiguity and ambivalence" of "tory-touched [sic] liberalism."9 9 Wiseman points out that the differences in political culture have the potential to not only place limits on the type of parties that hold office but also on the types of leaders who are chosen.100 In sum, the provincially-oriented political culture perspective suggests the potential for divergent stances on the issue of monopoly marketing by highlighting deeply rooted inter-provincial, as well as intra-provincial, cultural differences. This perspective will be 65 seen to generally reinforce and be consistent with inter-provincial and intra-provincial differences in farmer opinion and stances taken by interest groups and political parties evident in the debate over monopoly wheat marketing policy in the 1990s. Although the approach does not readily account for change, given its long-term and embedded nature, it does suggest underlying reasons for variations in provincial responses to issues that, for example, may be activated by particular provincial interest group configurations, which are, in part, themselves a reflection of political culture. Globalisation and Wheat Marketing Policy The chapters which follow will systematically analyse the changes that have occurred within the prairie wheat marketing policy environment since the establishment of the CWB's single-desk authority using the variables discussed in the previous section. As seen, the dissertation will argue that forces associated with globalisation, working through regionally differentiated configurations of farmer opinion and interest groups, are key to understanding the changing nature of federal-provincial relations concerning the monopoly marketing of wheat as represented by the political parties and governments involved as well as the changing nature of the policy-making processes, structures, and outcomes in the wheat marketing area. A comprehensive investigation of the changing nature of wheat marketing in the Canadian prairies has the potential to contribute to the literature examined earlier by offering a window on how the new wave of globalisation is reshaping the Canadian public policy environment. In doing so, the examination not only affords the opportunity to explore the reasons for the sudden emergence of conflict in an area of intergovernmental relations normally prone to harmony, but also provides an 66 excellent vehicle with which to examine the impact of the forces of globalisation on a major area of public policy. The wave of globalisation which swept across much of the world at the end of the twentieth century had associated with it a number of trends, including changes to accountability demands, governance structures, and the location of policy-making actors.101 These trends are consistent with the changes or pressures for change apparent in the wheat marketing arena. First, calls for increased citizen participation were accommodated by governmental officials. Within the context of the protracted bilateral dispute between the federal government and the Alberta Government outlined in the introductory chapter, the Canadian Government's minister responsible for the CWB introduced incremental changes to the governance structure of the Board to improve accountability and respond to diverse farmer demands stemming from globalisation. Second, these changes in the Board's institutional structure also reflect a trend towards new models of federal governance. After a long period of stability, the relationships between industry and government and between provincial and central governments are being modified. As such, the changes that are occurring in Canadian wheat marketing are consistent with the world-wide trend toward localised administrative and governmental control, in this instance on the part of primary commodity producers. Third, the conflict that emerged in the area of federal-provincial relations involving the marketing of prairie wheat was closely tied to pressure stemming from the internationalisation of policy making. Forces of globalisation, such as those coming from the World Trade Organization, the North American Free Trade Agreement, the internationalisation of information flows, and international agreements between federal sub-units (such as those 67 between Alberta and Montana), were washing over the Canadian wheat industry, complete with demands for increased local autonomy by individual producers and their interest groups. In the process of analysing the impact of globalisation on prairie wheat marketing, the study will also examine the role of interest groups in promoting federal-provincial harmony or conflict. In doing so, the dissertation will attempt to reconcile institutionalist theories with theories that are more attentive to the role of interest groups and public opinion. Institutions associated with liberal democracy will be seen to transmit societal pressures related to the forces of globalisation into the public policy arena. The examination that follows, which deals with the marketing of prairie wheat as a window to better understand the impact of globalisation on federalism and to address the reconciliation of institutionalist and societalist approaches in a particular area of public policy, also provides an excellent setting from which to reconsider policy network literature: the extent to which the policy community in the area of wheat marketing has expanded to include international and globalised domestic actors, as well as the extent to which important shifts in the nature of the network itself have occurred, is significant to analysing federal-provincial relations and public policy in a global environment. The analysis will demonstrate that approaches to studying and understanding federal-provincial relations in their impact on governmental policy must be updated by taking into account the various forces associated with globalisation and the emerging body of literature dealing with this phenomenon. These forces include increased levels of education and information, increasingly pervasive international regimes, heightened 68 regional-international interaction, and the expanding presence of transnational corporations, all of which have had a significant impact on the wheat marketing area. The study will use a comparative approach to demonstrate relationships between a number of independent variables, including those associated with globalisation, public opinion, and interest groups, and the key dependent variables, namely the nature of federal-provincial relations and public policy outcomes. The study will focus on a detailed comparison of Alberta, Saskatchewan, and Manitoba. The prairie wheat marketing environment offers the advantage of being well suited to intensive comparative study. Broad similarities unite the prairie provinces: they have similar governmental structures, they are subject to precisely the same wheat marketing regime (i.e. that of the CWB), they are subject to the same constitutional environment, and they interact with the same federal government. Differences in other variables, such as farmer income, political culture, party systems, and interest group configurations, can thus be dealt with effectively. This comparative-historical emphasis will also be supplemented by the previously described application of rational choice theory to derive hypotheses for understanding interest group behaviour and comparative survey data to analyse of the actions and opinions of individual producers in the Canadian prairies. As well be seen, farmers, amidst the flood of globalisation, face a number of changing political and economic incentives informing their interests and views in pursuit of particular policy ends. Although the comparison will be both historical and cross-jurisdictional, it will focus on a specific sector. Rather than comparing the wheat marketing sector to another sector not experiencing similar international pressures, the study will compare the wheat 69 marketing sector in its currently internationalising context to its context prior to the latest round of globalisation. This wall have the advantage of holding constant a number of variables which might otherwise contribute unnecessary complications in a cross-sector comparison. Moreover, given the pervasiveness of the forces of international pressure, most sectors have likely been impacted to some degree. It would thus appear optimal to include an historical comparison within and across provinces, given that the international variable (and change in that variable) is key. Developments in the barley marketing sector, which is also under the jurisdiction of the CWB, will , however, also be periodically included to the extent that they contribute to an understanding of wheat marketing. The debate over the future of barley marketing generally ran ahead of and parallel to the debate over the future of wheat marketing. One of the most significant events that occurred in the barley marketing arena was the brief implementation of the continental barley market mentioned earlier, which allowed farmers the choice of selling their barley through the CWB or through other avenues. Although quickly stopped by an injunction, its success demonstrated that farmers were capable of marketing their own grain. Given that the Saskatchewan Government supported the injunction while the Alberta Government did not, the event also served to demonstrate governmental and partisan differentiation on the issue of monopoly marketing across the prairie region. Moreover, interest groups involved in the barley arena have also been a reinforcing influence in the wheat arena because the issues and options being debated are essentially identical. 70 Conclusion This chapter has focused on the literature pertaining to the major factors involved in the debate over the continuation of the CWB's wheat marketing monopoly in the Canadian prairies. As such, its serves to set the stage for the analysis that follows by examining the ways in which a number of key variables can help with understanding the impact of globalisation on the public policy area concerning the marketing of prairie wheat. In doing so, it has pointed out the multifaceted and pervasive nature of globalisation as well as a basis for understanding its ultimate impact on the future of monopoly marketing policy by providing a general framework for examining how mediating variables, such as farmer opinion, interest groups, and political parties, channel the various forces associated with globalisation. The review of the literature includes a basis for evaluating the degree of influence of particular interest groups in particular jurisdictions, shows the connections between the incentives provided by the changes brought on by globalisation and the opinions of farmers, and indicates the potential links between the opinions of farmers and the stances of their interest groups on one hand and the policies of political parties on the other. The precise ways in which these variables functioned in the monopoly wheat marketing policy debate of the 1990s, including their interaction, will be systematically analysed in the chapters to follow. 71 C H A P T E R IE INSTITUTIONS, STRUCTURES, A N D PROCESSES OF WHEAT M A R K E T I N G The marketing of wheat and other grains from the Canadian prairies is a complicated logistical exercise. Also, the vocabulary of the wheat industry and of wheat marketing is in many cases highly technical and specific in usage. The data that will be considered in the dissertation will be examined in order to gain a better understanding of public policy-making in a globalised environment. Nevertheless, since wheat marketing will be central to the analysis, some knowledge of the wheat industry and technical and logistical matters involving wheat marketing is beneficial. Such knowledge is required in order that the issues and debates surrounding various aspects of globalisation, such as the impact of changes in trading environments and the education levels of farmers, transportation routes and cost structures that farmers face, and interest group and political party activity may be properly understood and analysed. The chapter will begin by providing a brief sketch of a typical prairie farmer in other to more fully appreciate the practical significance of the information that follows. The range of marketing options that are potentially available to farmers in the Canadian prairies will then be outlined. Next, a brief sketch of the global market structure for wheat will be presented. This will be followed by descriptions of the statutory authority of the Canadian Wheat Board (CWB), the logistics of marketing prairie wheat, the management or governance structure of the CWB, and a brief history of grain marketing in the Canadian prairies. 72 Sketch of a Prairie Farmer James Brownlee has been growing wheat at his farm in southern Saskatchewan, near Maple Creek, for more than twenty-five years. As he contemplates previous generations of Brownlee farmers, he is stuck by the increased competitiveness of wheat-growing in his region. He is thankful, however, that, unlike may of his older colleagues who have gone bankrupt or left the business, he has been blessed with a university education and a relatively large farm, upwards of 5000 acres, both of which he has found critical to maintaining his operation as a going concern. Nonetheless, Mr Brownlee has felt consistently hobbled in the use of his resources by various regulations concerning the marketing of his crop imposed by the Canadian Wheat Board. Although currently the dead of winter, the next crop year is being carefully planned. Mr Brownlee has two major options: he can sell to the CWB under the normal contracting system or take advantage of the new fixed price or basis price options being offered for a number of classes of wheat, including Canadian Western Spring Wheat. (The details of these options will be discussed later.) With the later option, he would be able to use at least some of his considerable business knowledge and marketing expertise. In addition, he would also be able to take advantage of potential increases in profitability stemming from his excellent cash flow and on-farm storage facilities, both of which allow him to time sales for periods of higher market prices. To be sure, he could also sell directly to a number of buyers known to him in the US who are willing to pay a premium for the high quality of Canadian grain. Although he would be able to obtain a significantly higher price and use his own trucks for transporting his grain to these buyers, he is not willing to break the law by selling outside of the CWB's wheat 73 monopoly. In order to assume the greatest amount of control over his cash flow as well as maximise his return on investment under the current rules (which he would like to have changed), he opts for growing Canadian Western Red Spring wheat rather than the Canadian Western Amber Durum wheat he would rather grow and sell to a pasta manufacturer he knows in North Dakota in order to increase his income for the coming crop year. By late April, closer to planting time, Mr Brownlee buys seed and fertiliser from a local Sask Pool shop and notifies the CWB of his intention to use basis pricing for the grain he will grow in the current crop year. He suspects that the local Sask Pool supplier that served his father as well as his grandfather will soon be taken over by A D M . Toward the end of summer, Mr Brownlee is set to harvest his substantial crop. He, and a number of his neighbours who also grew No. 1 Canadian Western Red Spring wheat with 13.5 per cent protein (i.e. class No. 1 CWRS 13.5), were delighted to find out that the CWB has accepted 100 per cent of the amount contracted for this variety. As he moves his grain to the nearest terminal, he realises the increased amount of time taken to deliver the grain as compared with past years is adding a substantial expense; the nearby branch line and elevator had been abandoned in favour of a high-throughput-facility operated by United Grain Growers (UGG) located further away from his farm. After the grain is weighed and graded on the basis of a sample taken from the delivered grain, U G G , as an agent of the CWB, pays Mr Brownlee the basis price for which he contracted in early May. Potential Marketing Options A number of views on grain marketing are present in the current debate. Aside from the options of monopoly marketing (also known as "single-desk selling" or "agency status") and open marketing, "dual marketing" and "continental marketing" are also advocated by farmers. The dual market essentially refers to a voluntary wheat board. Farmers would theoretically have the option of marketing their grain through the C W B or on their own. The continental market is a variant of dual marketing where the CWB would retain its monopoly in the offshore market (i.e. sales in markets other than the North American market) while sales to the US and in Canada would fall under a voluntary wheat board regime. Dual marketing options could, of course, be restricted to any one of a number of specific geographical ranges within the total operating expanse of a marketing board or be extended to the full range of operation of a board. In effect, a continuum of dual marketing options is available. The CWB could, for example, notwithstanding problems concerning economic feasibility, retain a monopoly for Manitoba and Saskatchewan while implementing dual marketing in Alberta. A more restrictive alternative would be that of "Declared Off Board [sic] Marketing" or "Direct Marketing", proposed by the Ontario Wheat Producers' Marketing Board (OWPMB). 1 Declared off-Board or direct marketing would allow dual marketing only for sales to the US (the domestic monopoly would remain) for a specific quantity of grain. Dual marketing may also be restricted through other means, such as by allowing only a certain number of acres to be eligible2 or by applying the policy only to specific grades or types of wheat. 75 Global Market Structure The global wheat market is highly integrated and thus sensitive to changes in production and demand. Over 85 per cent of the world wheat and wheat flour trade originates from five major exporting jurisdictions: the US, the E U , Canada, Australia, and Argentina (Table 3.1). Although no particular exporter is in a position of predominance, relative market shares vary significantly. The US accounts for approximately 30 per cent of the world trade in wheat, while Canada and the E U each constitute close to 20 per cent. Australia and Argentina are less significant exporters accounting for just over 10 per cent and 5 per cent of world trade respectively. In addition to the five major exporters, a number of new "minor exporters," including Ukraine, Russia, Romania, Bulgaria, India, and Syria have also recently emerged. The global trade also includes older minor exporters, such as Turkey, Hungary, and Kazakhstan. Minor exporters have therefore become collectively, even i f not individually, more significant. The relative reliance of particular jurisdictions on the world wheat trade also varies significantly. Where Canada and Australia export over 70 per cent of their total production, the E U exports less than 25 per cent of its total production. The US and Argentina export approximately 50 to 60 per cent of the wheat they produce. The need for export markets also varies significantly within Canada. The CWB exports approximately 75 per cent of the wheat in its jurisdiction, while approximately 50 per cent of Ontario wheat is used domestically.3 The potential risk exposure, logistical problems, and transportation costs resulting from the need to rely on world markets is therefore higher for Australian and Canadian prairie farmers than it is for Ontario 76 farmers, as well as those in the US, Argentina, and particularly in the E U . As will become apparent, however, one mitigating factor for Canadian prairie farmers is the presence of a substantial relatively localised export market in the US. Although Canadian and US wheat markets cannot absorb the bulk of Canadian wheat production, they are large enough, together constituting a market for 3.26 million tonnes of wheat in 1999-2000 (i.e. 18.1 per cent of total CWB sales), to provide an outlet for the production of a significant number of Canadian farmers. The overall prairie farmer risk exposure, logistical difficulties, and transportation costs, although still significant and high, are lower than what the reliance on foreign markets would by itself indicate. The US market also represents another 30 to 35 per cent of the Ontario market, also mitigating what an already lower Ontario reliance on export markets would otherwise indicate. World grain production has increased 12.5 per cent over the past decade. In addition to incentives produced by market conditions, total global production has also increased because of higher yields in non-first-world countries. Over this period, production has increased faster than consumption; production has increased at 1.31 per cent per annum while consumption has increased by 1.09 per cent per annum. Moreover, per capita wheat consumption (including feed) has decreased by 10kg per person over the same period. Meanwhile, after a decrease in the quantity of wheat traded on global markets in the mid-1990s, global trade has remained relatively stable. The decline in trade was largely attributable to significant decreases in wheat purchases by the former Soviet Union and China, at the time the two largest importers of wheat. The global grain market is also characterised by high price volatility. Consistent with previous decades, the 1990s have had significant price fluctuations. Although various 77 environmental conditions can also play a role, the major force behind the fluctuations is agricultural subsidisation. Particularly significant are the subsidy policies of the US and E U , both of which have offered a large amount of aid to farmers. Marketing Authority The processes and structures associated with the marketing authority of the wheat boards that will be examined in this section aid in understanding the impact and contribution of variables that will be dealt with in subsequent chapters. For example, the jurisdiction of marketing entities and the amount and types of grain covered in legislative monopolies are related to the tone of negotiations and discussions and determination of farmers to change the status quo; i f a large number of wheat varieties are not subject to the single-desk, calls for an end to monopoly marketing are likely to be fewer than in cases where all classes of wheat as well as alternative crops, such as barley, are covered. Likewise, the number of types of contracts and contract options available to producers also influence support for marketing boards. The range of contract options available becomes a particularly acute factor as the level of education and information amongst farmers increases. Generally, support for a marketing board varies directly with the number of contract options available to farmers with adequate business knowledge. The logistics of grain movement to buyers is also important in understanding the amount of satisfaction of farmers with their marketing boards. The degree to which farmers depend upon the expertise of a marketing board for transportation is dependent upon factors such as the complexity of grain movement (for example, the number of railways and the presence or absence of alternative means of transport), the presence or absence of transnational corporations that can aid farmers in lieu of a marketing board, the state of repair of transportation infrastructure, and the relative cost of marketing (including transportation and handling). A farmer who is less dependent upon a marketing board for the transportation of his crop wil l be less likely to defend the need for the presence of a board in the event of board related transportation problems. A number of interest groups as well as political parties represent farmers' views on these various legal-jurisdictional, business, and transportation matters. The following section simply presents the basic details of the marketing authority of the CWB. Information on the marketing authority and processes of the OWPMB and the Australian Wheat Board (AWB) are also presented in order to give some indication of various alternative systems and programs that can be used and are potentially applicable to the Canadian prairies. The implications of the background information given for the CWB will be dealt with in subsequent chapters. The CWB The CWB is currently an agricultural marketing board that, under the authority of federal government legislation (the Canadian Wheat Board Act) acts as the monopoly or "single-desk" seller for wheat and barley grown in Manitoba, Saskatchewan, Alberta, and the Peace River region of British Columbia which is either designated for export or for human consumption in Canada.4 (In the past, the CWB's jurisdiction has also included other crops and uses, such as oats, flax, and grains designated for consumption by domestic livestock and the Board had been a crown corporation.) The Board represents approximately 120 000 farmers, markets grains to over 70 countries, has annual revenues of almost $6 billion, and is Canada's largest net earner of foreign currency, making it one of the largest sellers of grain in the world. The returns from these sales are pooled into a number of pool divisions, meaning all farmers receive the same price for any particular grade of grain on the basis of the average net returns of the entire grade, and initial payments to the farmers, which are announced before farmers sign their contracts, are guaranteed by the Board. Four general pool groupings are distinguished by the Board: wheat, durum wheat, feed barley, and designated (i.e. non-feed) barley. Within each of these groupings, a number of type and grade divisions are maintained: 12 for wheat, 5 for durum wheat, 1 for feed barley, and 4 for designated barley. The CWB is financed by the federal government in three ways: the federal government guarantees initial payments (covering any deficit, should one occur), borrowings used by the C W B to finance its business activities, and payments on authorised credit grain sales made by the CWB. The contracted grain has generally been accepted by the CWB four times each year. Accordingly, the CWB's regular procedure has been to announce the percentage of each particular grade of grain it will accept under a given contract series after it assesses the market demand for each grade, the availability of transportation, and the quantity of grain that is offered by the farmers under the contract. The amount of grain that the CWB accepts will thus vary from 0 per cent to 100 per cent of that which is initially offered by farmers. If the CWB does not accept 100 per cent of the grain offered, then farmers who offered that particular grade have two options. First, they can deliver the percentage of their initial offer that the C W B is willing to accept. Any unaccepted grain may then be automatically rolled over for consideration in the next contract series to the extent that 80 this option was chosen by the farmer when the contract was signed. Second, they can cancel their contract with the CWB within 14 days of the announcement. Producers who cancel their contracts or who choose not to opt for the automatic rollover may subsequently offer their grain under the next contract series. The CWB returns all available profits to the farmers. Thus, the guaranteed initial payments to farmers are augmented by adjustment payments, interim payments, and the final payment (includes deductions of CWB operating costs) to the extent that the CWB is able to obtain a higher net return than that indicated by the initial payments. The wheat pools, acting as agents of the CWB, have traditionally been at the heart of the physical handling of prairie grain (the logistics of which is another marketing issue) by virtue of their ownership of a large number of small country elevators.5 Not only have these farmer-owned co-operatives collected a large part of the grain harvest for the CWB, but they have also sold production requirements, such as seed and fertiliser.6 Grain companies, such as the UGG, Cargill, and Pioneer, are also involved in the movement and handling of grain. As of 2000, the C W B has been instructed by the federal government to commercially tender at least 25 per cent of its business through port terminals in 2000-01 and 2001-02 and at least 50 per cent of its business through port terminals in 2002-03, thus increasing market control of the transportation process. The introduction of commercial tendering means that transportation contracts for the movement and handling of prairie grain will be increasingly awarded on the basis of competitive offers from grain handlers. In prior marketing years, commercial tendering had been absent. Although other options are available, farmers are normally paid the "initial price" set by the C W B (net of handling, cleaning, and freight) either when they 81 deliver their grain to an elevator or when the delivered grain arrives at a terminal facility. When payment occurs at the point of elevator delivery, the elevator companies pay the producers and are later reimbursed by the CWB as the grain is unloaded at the terminal. As of March 2000, wheat farmers were given a further two options for the 2000-01 crop year. The first allowed the full price to be received to be locked in before the beginning of the crop year. Alternatively, a basis price could be locked in prior to locking in a futures price at a later date. The fixed price was the midpoint of the Pool Return Outlook (PRO) for the category of wheat involved, namely No. 1 Canada Western Red Spring 13.5 per cent protein, minus a discount for time, risk, and administrative costs. (PROs are estimated crop year returns determined and released by the CWB.) The basis was determined by subtracting the Minneapolis Grain Exchange futures price (in Cdn$) from the fixed price. Both options were initially available only for grades 1, 2, and 3 of Canada Western Red Spring (CWRS) (excluding feed wheat) and farmers were required to specify the tonnage they were to deliver and the specified amounts could not be less than 20 tonnes. For the 2001-02 crop year, additional classes of wheat have been included in the program. For the period of 1 August 2001 to 30 November 2001, the CWB introduced a trial early payment option program.7 The program applies only to deliveries of two types of wheat, namely Canadian Western Winter and Canadian Western Soft White Spring wheat. Under the Early Payment Option, farmers must make a commitment for the delivery of a specific value and tonnage of wheat. When the delivery is made, the farmer receives the initial payment net of the normal freight and elevation expenses. The CWB, after it receives the delivery information, mails the farmer an additional payment. This 82 payment brings the total payment to 90 per cent of the PRO. The early payment is net of a deduction for risk, time value of money, and administration expenses. Producers choosing this option remain in the pooling system and are eligible for adjustment, interim, and final payments when the pool value exceeds the early payment option value. The CWB also periodically offers support to farmers in the form of aid programs. Two such programs have recently been introduced. Both current measures are federal government programs administered by the CWB. One measure is an advance payments program in which farmers may be eligible to receive up to $250 000 per crop year. The advance must be repaid immediately upon the availability of delivery opportunities. The first $50 000 of the advance is interest free to September of the crop year or the point of repayment (whichever occurs first), with the balance subject to interest at the prime rate. The program allows the farmer the option of either signing a delivery contract with the C W B or delivering the grain into the feed grain market in order to repay the advance. However, the advance must nevertheless be repaid even i f an insufficient amount of grain is contracted with the CWB. The second measure is the Spring Credit Advance Program. Under this program, farmers can receive up to $20 000 interest free to December 31 of the crop year to help cover spring seeding expenses. After December 31, any remaining outstanding advance is rolled over into the Fall Cash Advance Program. The cash limit for individual farmers applies to the totality of their operations. In order to qualify, growers must have "all-risk" crop insurance and agree that any insurance payments, other than those to cover reseeding costs, must be delivered to the CWB. The maintenance of quality control and the development of new varieties of wheat for customers are also important aspects of the marketing process. The operations of the 83 Canadian Grain Commission (CGC) are central to the preservation of grain quality. The CGC is controlled by three commissioners (and six assistant commissioners) appointed by the federal government and is responsible for establishing standards for and conducting research on grain quality, regulating grain inspection and weighing, regulating elevators and dealers, and issuing certificates that guarantee grain weight and grade for buyers. Moreover, a number of bodies are also in place to regulate the quality of new varieties of wheat. The approval of new varieties is granted through the Variety Registration Office (VRO) of the Canadian Food Inspection Agency. In order to be considered by the VRO, wheat varieties are first recommended for registration by the Prairie Recommending Committee for Grain, which tests grains for processing quality, disease-resistance, and breeding and agronomic merits over a period normally lasting Q approximately two to three years. Research and development related to wheat is extensive and ongoing and entails significant expense. One of the key organisations providing funding for such research is the Western Grain Research Foundation (WGRF), which is the largest farmer-owned and farmer-operated research funding entity in Western Canada.9 The WGRF, which was founded in 1981, currently includes 18 farmer organisations as members and has a Board of Directors that includes representatives from virtually all of the major agricultural interest groups involved with the wheat marketing debate. The foundation's funds are generated in two major ways. One source is the Wheat and Barley Check-off, currently set at $0.20 per tonne for wheat and $0.40 per tonne for barley, which is deducted from final C W B payments to participating farmers. A l l C W B administered wheat and barley fall under the program except barley and soft white spring wheat grown in Alberta, which fall under other check-offs. Both the Wheat and Barley Check-off as well as the WGRF's responsibility to administer it are authorised by statute from Ottawa. The foundation's second way of generating funds is an endowment fund. The fund was established in 1983 from the surplus of a federal government emergency fund for prairie farmers. Transportation logistics are central to wheat marketing systems. Before 1996, the Grain Transportation Agency 1 0 co-ordinated the transportation of the grain to domestic and foreign markets. In 1996, the CWB, the railways, and the private sector assumed responsibility for the allocation of hopper cars. In 2000, changes were made in the criteria for determining the allocation of hopper cars. Instead of allocating the cars to companies based on past handling, the cars are now awarded to grain companies on the basis of their current amount of business. In their provision of transport infrastructure, transportation companies, including the Canadian railways, also act as de facto agents of the CWB. The CWB sells approximately 70 per cent of its wheat exports directly to buyers. For the remaining exports, the Board establishes port prices while sales are subsequently finished by Accredited Exporters (AEs) and International Exporters (IEs). As of the mid-1990s, 28 AEs and 2 IEs were approved by the CWB. Export grain is transported to port terminal locations in Vancouver, Prince Rupert, Churchill, Thunder Bay, and the St Lawrence Seaway. Most of the grain moving east is initially loaded onto lakers at Thunder Bay and then transferred to ocean freighters through transfer elevators at the St Lawrence Seaway. Some grain is also placed directly on ocean freighters at Thunder Bay while other grain is either further transported by train or directly transported by train to the St Lawrence river. The OWPMB The OWPMB is currently an agricultural marketing board operating under the authority of the Ontario government's Farm Products Marketing Act, which allows marketing authority to be delegated to local marketing boards through the Farm Products Marketing Commission.11 As such, the OWPMB has a marketing monopoly on all wheat grown in Ontario with the exception of wheat used by growers for feed and seed and that sold from one producer to another for his on-farm use for the same purpose. Although it does not have a legislative monopoly in the area, the Board also markets feed and seed. The Board represents approximately 30 000 Ontarian wheat farmers and sells approximately 900 000 tonnes of wheat annually to markets in Ontario, the US, especially Ohio and Michigan, and other countries, especially those in the Middle-East. The market value of the Ontario wheat crop ranges between approximately $165 million to $200 million, making it the third most valuable cash crop after soybeans and corn. About 90 per cent of this crop is marketed through the OWPMB. Ontario wheat farmers have a number of marketing options available to them, namely pooling, direct marketing, basis pricing contracting, minimum pricing contracting, forward pricing contracting, and the receipt of a cash price upon delivery. Under the pooling option, farmers may deliver wheat to either a country elevator or a terminal elevator, thereby receiving an initial payment. The initial payment may be approximately 65 to 70 percent of the total expected revenue. A license fee for Board administration is 86 subtracted from the initial payment. A l l revenue from wheat sales is returned to the producer net of agent handling charges and transportation, storage, and interest expenses. The level of payments received by any one farmer will also depend upon the quality and grade of wheat that is delivered, with wheat of the same quality and grade, ceteris paribus, receiving the same price. As the Board attains sales revenues from a particular pool that exceeds the initial payment, adjustment payments are made. A final payment is made to farmers after the crop year is closed. For example, in 1998, the Board operated six pools A through G for white wheat, red winter wheat, red spring wheat, soft red wheat, common red varieties, and feed grade wheat respectively. Currently only the pooling option is eligible for the OWPMB's on-farm storage program, whereby the Board pays farmers to store wheat on their farms. The direct marketing option, meanwhile, allows up to 150 000 tonnes of wheat to be marketed by farmers outside of the Board monopoly in any class of wheat. Exemptions are granted on a first-come, first-served basis (until the total maximum of 150 000 tonnes for all farmers is reached) and are temporary (valid only for one crop year). Requests made by farmers for exemptions over 200 tonnes must be judged reasonable by the OWPMB in relation to their past level of production and/or their current capacity. Exemption applications must be specific in quantity requests and the type of wheat for which the exemption is sought. Direct marketing is currently reviewed on a yearly basis. Producers are also able to lock in futures prices under basis and forward pricing contracts. In forward pricing, farmers receive the Board's initial payment upon delivery and subsequently receive the remainder of the contracted price (which is fully determined at the time of contracting and may be established prior to delivery) in a second payment. In basis pricing, the farmer again receives the Board's initial payment upon delivery, but a second payment occurs only once the farmer has locked in the futures price, which, by contrast to forward pricing, does not have to be done at the time of contracting. Alternatively, farmers may simply receive the spot price operative at the time of delivery. The farmer again receives the OWPMB's initial payment upon delivery (i.e. cash price upon delivery) and a subsequent second payment for the remainder of the contract. Under minimum price contracting, farmers can also wait to fix a price and yet still receive payment beyond the Board's initial payment in the form of the minimum payment determined by the Board in its choice of a particular futures month. In each of the options of basis pricing, minimum pricing, forward pricing, or cash upon delivery (spot) pricing, farmers must sign a contract with the OWPMB at or prior to the time at which they deliver their wheat. The Board appoints country agents to accept delivered wheat. Aside from branch operations, about 225 agents have been approved across Ontario. Under all OWPMB options except direct marketing, farmers can deliver their wheat to these approved agents at country elevators. When wheat is delivered to approved agents, the agents pay the farmers the initial payment determined by the Board. The Board later compensates the agent when settlement forms for the initial payment are received. Agents receive a handling fee and are eligible for a conditioning fee if the moisture content of the wheat is 14.5 per cent or less. Low moisture content is a component of the value of delivered grain. As such, it represents a potential area for which farmers could ask for individualised Board compensation, as is the case when farmers deliver their grain themselves. An incentive is thus provided by the conditioning fee regulations for direct farmer delivery. Since 1981, farmers have had the choice of direct delivery to OWPMB approved terminals or processors. When direct delivery is exercised, the initial payment is paid directly by the Board to the farmer and farmers receive the handling charge normally paid to the agent. As mentioned, farmers are also eligible to receive a conditioning fee for which the agents are otherwise eligible i f the wheat delivery has a moisture content of 14.5 per cent or less. Storage is secured by the Board at approximately 11 deep water terminal elevators at various points within Ontario and elsewhere including Georgian Bay, Goderich, Sarnia, Windsor, Port Stanley, Port Colborne, Toronto, Prescott, Montreal, Halifax, and West St John. The delivery of wheat to the agents, terminals, or processors is the responsibility of farmers. For wheat delivered to agents, the OWPMB is responsible for its movement to terminal and processor locations. The AWB The A W B is currently a grower-owned private corporation operating within a competitive, open domestic wheat market while retaining a statutory export monopoly on all wheat.12 The jurisdiction of the Board covers all of Australia. The A W B represents approximately 40 000 wheat farmers, sells wheat to over 70 countries, and, with annual export revenues of over US$2.5 billion, is Australia's third largest exporter. A l l revenues on export sales clear of marketing, storage, and transportation are returned to producers. Farmers may choose from a number of options for the marketing of their wheat, including pooling, where revenues are separated by class for specific time periods and markets. For wheat, the A W B makes a number of pool distinctions: Australian Prime 89 Hard, Australian Hard, Australian Standard White Noodle, Australian Premium White, Australian Standard White, Australian Soft, Australian General Purpose, and Feed. Many significant changes leading to the present configuration and responsibilities of the A W B began to be enacted in the late 1980s. Until the Wheat Marketing Act (1989) and other amendments in 1992, 1997, and 1998, the A W B officially (notwithstanding constitutional provisions allowing interstate trading) operated a domestic monopoly in addition to the export single-desk. The domestic monopoly was ended by the 1989 bill. These pieces of legislation also marked a movement towards deregulation in handling and transportation. State-owned Bulk Handling Authorities (BHAs) (now Bulk Handling Companies (BHCs)), which act as official handlers for the A W B , were no longer allowed to impose restrictions on deliveries. Australia has six BHAs, one per state, which provide bulk storage in wheat growing areas, and are collectively known as the "central storage system." Since BHAs no longer enjoy sole handling rights for the A W B , on-farm and private storage are becoming increasingly popular options. Storage is normally along railway tracks and in port terminals. The BHAs operate integrated networks of approximately 900 country delivery points that are connected with 18 grain export terminals. Grain export terminals are located throughout the wheat belt at the following locations: Geraldton, Kwinana, Albany, Esperance, Thevenard, Port Lincoln, Port Pirie, Wallaroo, Port Giles, Port Adelaide, Portland, Geelong, Port Kembla, Newcastle, Brisbane, Gladstone, and Mackay. The handling authorities also provide for mainland distribution. Regulations restricting the use of road transportation services for wheat have been eliminated, government-owned railroads have been commercialised, and port authorities 90 have begun to be privatised throughout Australia. Farmers have thereby been afforded the opportunity to decrease their individual handling and transportation costs by being given choices in the areas of transportation and handling. The transportation logistics of grain movement from the BHAs to ship is co-ordinated by the A W B . The A W B now also has the right to sell feed grain domestically and grains of non-Australian origin. Voluntary pooling and cash trading therefore now occurs with crops such as pulses, tritcale, cottonseed, canola, sorghum, and oats. The Board also now has an increased ability to micropool by, for example, operating greater numbers of pools with different durations and geographical scope, while allowing premiums to be paid for grain quality and protein yields. A financial reserve known as the Wheat Industry Fund (WIF) was created in 1989 in order to underwrite A W B borrowing. Unlike the CWB, the A W B is no longer aided by a government guarantee on either pools or loans or foreign credit sales, which completely ended on 1 July 1999, when the statutory A W B was changed into A W B Limited with the WIF as its capital base (B class shares). A compulsory levy of 2 per cent of the value of the wheat sales funded the WIF until 30 June 1999, at which time the WIF was converted to share capital. In addition to the class B shares, the A W B also raises funds by floating bonds and promissory notes in Australian and international financial markets. The Board's treasury functions are now the responsibility of two subsidiary companies, A W B Finance Limited and A W B (Australia) Limited. A W B Finance Limited has exclusive jurisdiction over the financing of wheat export pooling. A W B (Australia) Limited, meanwhile, provides for the financing of other A W B financing outside of the export 91 wheat pools, including all domestic wheat marketing and non-wheat export marketing. The A W B is currently moving towards stock exchange listing. The A W B allows producers a variety of contract options, namely harvest payment contracts, fixed grade contracts, target price contracts, spot price contracts, and forward price contracts. Under the harvest payment option, producers receive 80 per cent of their share of the estimated pool return within three weeks of delivery during the harvest period, which runs from October to January. This replaces the government's Guaranteed Minimum Payment with an A W B guarantee backed by its capital base. The payment is in the form of a loan that the A W B automatically repays from pool receipts. The harvest payment may be subsequently increased with a further post-harvest payment based on revised forecasts and new information concerning the grain market, thereby pushing the total payment to approximately 90 per cent of the final estimated pool return. Other payments may follow or farmers may cash out of pools at A W B specified times. Cashing out allows the farmer to receive a cash settlement of any remaining pool obligation. For farmers not cashing out, any further pool receipts that are available after the loans and interest have been repaid are then allocated to producers in a final payment. A non-underwritten quarterly pool payment in US or Australian currency is also available. Alternatively, farmers may use fixed grade contracts, where they agree to deliver a specific quantity of a particular grade of grain; target price contracts, where the sale is triggered when a particular agreed upon price level is reached or exceeded; negotiated cash prices on delivery, where farmers agree to receive the spot prices prevailing at the time of delivery; and forward price contracts, where growers are able to lock in a futures price for their delivery. For forward price contracts, farmers can either conclude fixed 92 price or minimum price contracts based on a price announced daily by the A W B reflecting activities on the global wheat and currency markets. These contracts can be concluded on any day between March and harvest each year (for example, January through April the following year) with a minimum contracted delivery of 100 tonnes. Australian farmers thus have a number of options for managing price risk through A W B mechanisms. Management and Governance Structure The management and governance of marketing boards has become a matter of critical importance to ever more educated and information-rich farmers in the 1980s and 1990s. Farmers expect higher levels of accountability and input. The method of selecting Board officials, the equity of the voting structure, the public availability of information on Board transactions, and the ability to question and change Board leadership have all assumed a prominent position in determining farmer support for marketing boards. In fact, problems in the area of governance have served to undermine support for the marketing authority itself. As in the area of marketing authority, matters concerning management and governance are also key to understanding the position of interest groups and political parties. Information on the OWPMB and the A W B is again included in order to show some of the range of practicable alternatives in management and governance that may potentially be applied to the Canadian prairie wheat marketing arena. The implications of management and governance structure will also be dealt with in subsequent chapters. 93 The CWB Until recently, the C W B was a Crown corporation controlled by three to five commissioners appointed for an indefinite period (to age 70) by the federal government. The Board also had an eleven member Advisory Committee that was elected to four-year terms by producers. Although the Advisory Committee had no direct decision-making role, it was nevertheless mandated to advise the CWB on policy and operational matters and to serve as a conduit for communication between producers and the CWB. Ultimate authority over the CWB rests with the Crown administered through the federal minister responsible for the CWB. Major changes in CWB governance were made in the June 1998 amendments to the Canadian Wheat Board Act}1 The CWB is now run by a board of 15 directors, 10 of whom are elected directly by farmers. The remaining 5 directors as well as the president and CEO are appointed by the federal government. The directors elect the chairman of the CWB. Under the amendments, grain may be removed from the CWB's monopoly when the following conditions are present: the Board of Directors must recommend it; the Canadian Grain Commission must give its approval to an "identity preservation" system in order that the grain quality may be upheld; and, where the potential removal is deemed significant, farmers must approve of it through a referendum. Although farmers have a greater ability to control various aspects of wheat marketing and hold the Board accountable, the federal government can potentially maintain substantial control over the monopoly provisions not only by choosing 5 directors and the president and CEO, but also by controlling appointments to the Canadian Grain Commission. The 1998 amendments also serve to potentially enhance the business flexibility of farmers by 94 allowing for the implementation of an increased number of payment options, including fixed price contracts, early cash contract settlements, and the ability to borrow against projected future pool deliveries.14 The OWPMB The OWPMB is controlled by 10 elected directors, one for each wheat growing district the Board serves. Each wheat growing district over which the Board has jurisdiction lies entirely within Ontario. A l l directors are wheat producers and are elected to single-year terms of office. The directors are elected by provincial county delegates (i.e. members of the district wheat producers committee), who are, in turn, elected by the general population of wheat farmers. The provincial county delegates elect only the director of the district they represent. Similarly, farmers vote only for the delegates from their district. The number of delegates assigned to a district is determined by a weighted combination of representation by population (i.e. number of wheat farmers in the district) (60 per cent weight) and the percentage of total wheat production originating from the district (40 per cent weight). The delegates also serve to advise the OWPMB on marketing and policy matters. The directors of the OWPMB are responsible to the Ontario Farm Products Marketing Commission, which is in turn responsible to the Government of Ontario (Minister of Agriculture and Food as well as the cabinet's Management Board). The Farm Products Marketing Commission must approve any new marketing powers. Moreover, interested parties, such as wheat millers, processors, and food product manufacturers can appeal the marketing responsibilities granted to the OWPMB at the Farm Products Appeal Tribunal. 95 Debates concerning the marketing authority of the OWPMB are thus open to the input and influence of a broad array of interest groups and corporations. The AWB Prior to 1 July 1999, at which time the statutory wheat board ceased operation, a minister of the Commonwealth Government had control over the A W B , including appointments. The A W B was corporatised on 1 June 1998. At this point, the A W B become A W B Limited, with two subsidiaries, A W B (International) Limited, which is primarily concerned with the operation of the sale of wheat internationally within the Board's trading monopoly, and A W B (Australia) Limited, which is primarily concerned with domestic wheat trading and the international sale of other grains. Upon privatisation in July of 1999, the A W B became a private corporation controlled by Australia's wheat growers. The A W B retains a statutory monopoly for the international sale of wheat. The Board is currently run by a 12-member Board of Directors. A majority of the Board of Directors is elected by farmers holding class A shares and a minority of the Board of Directors is elected by class B shareholders. Both classes of shares were issued on 1 July 1999. Only qualified wheat growers may obtain class A shares, which may not be transferred and must be returned if the farmer leaves the wheat industry or is no longer able to meet share ownership requirements. These shares confer voting only, with no participation in dividends. The number of votes a farmer receives is dependent upon the form of the vote: for show of hands votes, growers each receive one vote; for poll votes, growers receive one vote plus one extra vote i f their wheat deliveries to the Board 96 average more than 33 and one-third tonnes per year over the previous three years plus one extra vote for each 500 tonnes of wheat, or portion thereof over 500 tonnes, per year averaged over three years. WIF equity holders were initially able to obtain class B shares in proportion to the equity that was held. The A W B is currently preparing to list class B shares on the Australian Stock Exchange. As with class A shares, the number of votes allocated to a particular shareholder varies according to the type of vote: for show of hands votes, each shareholder receives one vote regardless of the number of shares held; for poll votes, shareholders receive one vote per share held. History of the Canadian Wheat Board Setting the CWB in its historical context serves to provide background information for understanding the changes that have occurred in the area of wheat marketing since it was established. Some of the incentives present at the time when single-desk selling authority was implemented, such as the threats stemming from the First World War and the Second World War and the general lack of marketing and business expertise of farmers, are no longer present. The tone of federal-provincial relations and the degree of consensus present at the time the Board was established is also conveyed and can serve as a contrast to the present era of division to be dealt with in upcoming chapters. The period immediately preceding the formation of the CWB lays the context for not only its formation, but also its monopoly powers.15 In the 1917-18 and 1918-19 crop years, Canadian wheat was marketed under monopoly regulations by the Board of Grain Supervisors, which was abolished following the First World War as uncertainty in the grain market decreased and inflation was less of a concern. With the knowledge of the 97 precedent established by the previous existence of the Board of Grain Supervisors, which demonstrated the ability of monopoly marketing to achieve higher rates of return for farmers, a national wheat board was established for the 1919-20 crop year in response to grower pressure emanating from the Canadian Council of Agriculture. This board, which also ran on the basis of pooling and monopoly selling, was eliminated in August of 1920 against the wishes of a vast majority of farmers. Accordingly, futures trading on the Winnipeg Grain Exchange was also immediately reinstated. The ongoing oscillation between the establishment and abolition of marketing boards reflected the opposed demands of farmers and the business community set within a context of constitutional ambiguity. In 1922, the federal government was again forced to respond to farmer demands, which were now articulated through not only agricultural interest groups, but also provincial governments. Although legislation to create a wheat board was drafted, the federal government displayed its reluctance by failing to enact this legislation. As a result, farmers began to organise Voluntary Contract Pools, which marketed 50 per cent of all wheat delivered between 1923 and 1930. However, governments were soon again central to farmer demands when these pools went bankrupt during the depression after 1930. Accordingly, the CWB was reluctantly created by the federal government in 1935. At this time, the Board operated as a voluntary wheat agency for the Canadian west. The failure of the federal government to grant the CWB monopoly status at that time was indicative of the government's reluctance, which may be attributed to pressure emanating from business interests, such as the "grain trade" and the Council of the Winnipeg Grain Exchange.16 The CWB was thus perhaps initially conceptualised as a temporary replacement of the Voluntary Contract Pools, which also did not have monopoly status. The Board's selling status has undergone a number of changes during the time of its existence. The CWB was given its monopoly status in September of 1943. Initially, the single-desk authority extended only to all wheat grown in western Canada. In 1949, the Board's monopoly powers were enlarged to include all western barley and oats. Until 1967, the CWB's existence had to be renewed every 5 years by the federal Parliament. The Board's single-desk selling mandate for feed-grains was ended in 1974. The remaining export and human consumption monopoly over oats was subsequently abolished in 1989. The Board briefly also lost its monopoly over barley for export and human consumption within North America in August of 1993. However, as seen, the monopoly was reinstated in the following month because of a legal challenge. Conclusion This chapter has outlined the current logistics of wheat marketing, marketing authority, governmental involvement, marketing options, and Board organisation of the CWB. The origins of the C W B have also been briefly reviewed. Further historical developments that have occurred between the foundational era and the marketing debate of the 1990s will be covered elsewhere within the analysis itself. This background chapter thus serves to provide the contextual basis for the analysis of various factors, such as trade regimes, education and information, transnational corporations, farmer opinion, interest groups, and political parties, that have an impact on the state of wheat marketing policy. 99 C H A P T E R IV THE R O L E OF POLITICAL PARTIES A N D E L E C T O R A L SYSTEMS Federal-provincial conflict is ultimately conducted by governments of particular partisan stripes. In the 1990s, the main axis of intergovernmental conflict over the future of the Canadian Wheat Board's (CWB's) wheat monopoly pitted a Progressive Conservative government in Edmonton against a Liberal government in Ottawa. Moreover, an NDP government in Saskatchewan periodically also entered the fray, often with great effectiveness. By contrast to the Progressive Conservative government in power in Alberta, the Government of Manitoba, though of the same partisan stripe as that of Alberta, remained steadfastly noncommittal at the outermost margins of the conflict. Although party label may give some indication of governmental policy across different political jurisdictions, it is not necessarily a sufficient indicator of the content of governmental stances on any given issue. Accordingly, this chapter will examine the particular political settings in which individual parties operate, including their specific bases of political support, both geographically and demographically. Correlations between geographic and demographic partisan support and the stances taken by both governing and non-governing parties will be evaluated within a set of theoretical expectations. The chapter will thus serve to indicate the degree of embeddedness of the various stances taken in the wheat debate. In doing so, it will not only show the underpinnings of the conflict by examining the partisan and governmental impact of some of the variables through which the impact of globalisation was filtered, but also the depth and the range of the conflict. In addition, the possible future dynamics of the 100 debate and the direction of its probable resolution will be analysed. In this regard, the chapter will argue that the conflict of the 1990s was deeply embedded throughout the prairies. In line with this evaluation, the chapter will set forth an extensive set of theoretically consistent correlations between the bases and contexts of partisan support and operation on one hand and the various stances taken by the parties on the issue of the future of the CWB's single-desk for wheat on the other. In addition, the chapter will indicate that the pressure that emanates from each of the prairie provincial governments will not likely always follow the general 1990s pattern (namely opposition from Alberta, support from Saskatchewan, and a noncommittal stance from Manitoba) regardless of which party assumes power in any particular province or set of provinces. This assumes that the underlying geographical distribution of farmer demographics is likely to remain relatively unchanged in the short and medium term. Parties have the potential to make a difference in the federal-provincial dimension of the wheat marketing debate. The potential impact of partisan change across jurisdictions, however, is not equal. The governments under consideration may be ranked by the extent to which partisan change has an impact. Using longer-term historical data, the ranking (from most to least) would be as follows: the federal government is followed by the Saskatchewan Government, the Manitoba Government, and the Alberta Government. If the most recent data is given greater weight, then the order may be revised to place the federal government between the governments of Manitoba and Alberta. Also, to the extent that partisan change is felt, it is likely not to favour the continuation of single-desk wheat marketing. Thus, the chapter will also argue that the partisan structure indicates 101 that any resolution to the dispute is likely to follow dual marketing lines rather than monopoly lines. The theoretical framework of the current analysis will first be briefly outlined. Next, the stances of the relevant parties on the wheat marketing issue will be examined. A number of factors, including the location of wheat farmers, geographical distribution of farmer income, proximity to the Canada-US border, location of cattle ranches, location of interest groups, political culture, party leadership, the constitution, the bureaucracy, federal-provincial party relations, overall party ideology, overall party programme, core areas of partisan support, and the likelihood of single party government will then be analysed to determine the foundations of party stances and the extent to which the relevant parties are likely to follow through on those stances. A consideration of the chances of each of the parties forming or supporting a government will follow. Throughout the chapter, the wheat marketing arena will, in various ways, be compared with and set within the general partisan arena in order to evaluate the degree to which a particular party's wheat marketing stance is consistent with its general policy thrust, thus further establishing the foundations, depth, embeddedness, and likely durability of the stance and, in turn, that party's likely continued contribution to the conflict. The conclusions and implications of the examination will then be presented. A detailed historical analysis of the impact of interest groups on the debate and the ways in which farmer opinion relates to the stances taken by the prairie governments on the wheat marketing issue in the 1990s wil l be examined in subsequent chapters. 102 Theoretical Notes The current analysis w i l l link the stances taken by parties, especially parties in office, with their political context, including pressure emanating from the views and interests of supporters. Accordingly, the chapter w i l l examine the geographical characteristics of partisan support of both governing and opposition parties.^ The geographical location of partisan support by rural riding w i l l be compared with the geographical location of wheat farms (as the threshold variable), the geographical distribution of farmer wealth (on the assumption that richer farmers may be more likely to favour dual marketing because of, for example, the flexibility stemming from a lack of cash flow problems) 1, its proximity to the U S border (border area farmers have more o f an incentive to favour dual marketing because of relatively low cross-border transportation costs as trucking technology improves and railway efficiency declines), 2 the geographical distribution of cattle ranches (farmers located close to cattle farms have the option of selling wheat into the feed grain market without incurring significant transportation costs, thereby reducing the risk o f a severe financial loss by having a viable alternative market available to the human consumption market should the need arise), and the geographical location of interest group strength. Given the centrality of the wheat marketing debate to rural political support across the prairies, parties that depend on rural support must be careful to adjust their stances on the matter to reflect those o f their core rural constituents i f they are to prevent erosion of core rural support. This adjustment, moreover, reflects a black and white, either/or choice -either the party is for or against a continuation of the C W B ' s wheat monopoly. Thus, rather than adjusting their stance toward the middle, marginal ridings, in line with the 103 Harold Hotelling and Anthony Downs models, parties have an incentive to move away from the middle towards clear stances in line with the model of Rabinowitz and Macdonald.3 The core of Saskatchewan Party and Alberta PC support was in favour of ending the monopoly, while the Saskatchewan NDP core support was in favour of a continuation of the CWB wheat monopoly. In Manitoba, meanwhile, core PC support is mixed, as reflected in the party's lack of commitment on the matter. The centrality and extent of core partisan support, with its voting and seat delivering power, and the inability of parties to take a compromise stance - i f they take a stance, then they must be either for or against the monopoly - undermines any race to the middle to increase support in marginal ridings. As indicated, the analysis of these intra-provincial distinctions will then be complemented by an examination of inter-provincial distinctions. The analysis will be applied to the federal government only where it is warranted, given that the stance of the federal government has been neither assumed nor found to be intimately connected with the demographic complexion of partisan support from the prairies; the federal Liberal government did not rely on the support of rural prairie voters during the 1990s. Because the nature of the demographic variables used in the current analysis are relatively stable over the short-term and the focus of the analysis is the conflict of the 1990s, any census data used will be taken from the mid-point of the period, namely the 1996 Canadian census. Maps outlining the agricultural census regions for each province are included after the electoral maps (Maps 4.10, 4.11, and 4.12). 104 Stances of Relevant Parties A prima facie examination of the provincial and federal configurations of stances of relevant parties (namely those in office, those with the potential to assume office, and those in a position to bargain in a minority government situation) on the issue of wheat marketing indicates significant partisan variation was present and that partisan change was likely to have an impact on the nature of policy-making in this area. With the exception of Manitoba, the dual marketing position was supported in each jurisdiction by at least one party. In Alberta, two of three parties favoured dual marketing. The governing PCs had consistently demonstrated their preference for ending the CWB monopoly. In fact, the Alberta Government was the key player in the bilateral federal-provincial conflict over the future of the Board. In 1994, the Government of Alberta presented a proposal to the federal government that would have seen the CWB retain its monopoly for sales to offshore markets and lose its monopoly for wheat sales to the US and Mexico. 4 After the federal government failed to respond,5 the Alberta PCs demonstrated their determination by organising a "Market Choices Implementation Committee" in December 1995 to determine whether or not the Alberta Government could take unilateral actions to help Alberta's producers circumvent the CWB monopoly.6 The Alberta Government also quickly became involved in a number of avenues of litigation concerning the CWB's wheat and barley monopolies. In the first, Alberta challenged the legality of the CWB's delivery contract program, claiming that it was invalid under the Canadian Wheat Board Act1 The province argued that the process by which farmers contract with the Board did not allow them to properly manage their risk and cash flow by providing for arbitrary C W B action and, more generally, by allowing the Board to act in a manner biased toward itself. On a second front, Alberta began to pursue a reference case involving its proposed "Marketing Choice Program", which would have seen the Alberta Government purchase Albertan grain grown by resident farmers in order to sell it within the US. Accordingly, the key to the Alberta Marketing Choice Program Reference Case was the Alberta Government's claim that, given the Canadian Wheat Board Act did not state that it applied to any government, it could export Albertan grain without first acquiring a CWB export license. Finally, a third piece of litigation saw the Alberta Government participate with a number of other litigants in a suit that contended that the CWB's monopoly violated a number of Charter rights by not applying to all Canadian wheat and barley farmers.8 Although the Alberta Liberals claimed to have no position in the debate and advocated consultations with the agricultural community, which included the possibility of a plebiscite,9 such a stance might be seen to have amounted to a de facto dual marketing position given the nature of farmer opinion in the province. Nevertheless some caution is in order given that the demographic profile of the Liberal constituency does not, as will be seen, necessarily fit with the dual marketing position. Nonetheless, as will be seen in a subsequent chapter, farm opinion data indicated broad support for dual marketing in the province; a 1995 plebiscite of Alberta producers, for example, indicated that the freedom to sell wheat to any buyer was supported by 62 per cent of wheat farmers.10 The Alberta NDP, by contrast, provided the only partisan base of support for monopoly marketing.11 The strong endorsement of single-desk selling by the NDP in Alberta was a reflection of the position and strength of the party's national 106 organisation.12 This ideological default position remained unmitigated by pro-dual marketing rural support, given the party's limited success in the province has been centred in urban seats in Edmonton. In Saskatchewan, meanwhile, the parties were split on the issue. In line with the NDP's overall national stance, the governing NDP in Saskatchewan supported the continuation of the CWB's monopoly. Like the Alberta PCs, the Saskatchewan NDP had also been consistent and ready to act on its view. For example, in 1993, the Government of Saskatchewan intervened to help obtain an indefinite injunction to stop the onshore dual marketing of barley after the federal government had lifted the Board's continental barley monopoly.13 The Saskatchewan Government also initially threatened to block Alberta's court challenges to the CWB's monopoly with legal intervention of its own. 1 4 By contrast, the partisan opposition in Saskatchewan would generally appear to have favoured some form of dual marketing. Although some Liberals remained outside, the relatively small and fragmented PC and Liberal opposition partly coalesced by mid to late decade to form the Saskatchewan Party, which favoured dual marketing. In its founding convention in November 1997, the party passed a resolution stating that it "favours giving Saskatchewan farmers the right to choose selling the grain they grow independent of the Canadian Wheat Board or to continue selling through the Wheat Board voluntarily."15 In Manitoba, two of three parties did not take a clear stance on the future of the CWB wheat monopoly. The governing PCs remained noncommittal.16 The Manitoba Minister of Agriculture, for example, stated that "Manitoba Agriculture cannot recommend changes until stakeholders have had an opportunity to state their views" in the Manitoba 107 Government's submission to the Western Grain Marketing Panel study.17 The Manitoba Liberals exhibited similar ambiguity. For instance, the three Liberal M L A s in the legislature after the 1995 election each appeared to have a different stance. One appeared to support the monopoly, one appeared to advocate privatisation, and one appeared not to have assumed a stance on the issue.18 Not surprisingly, the NDP, as elsewhere, advocated the continuation of single-desk selling. 1 9 As in Saskatchewan, the federal parties were also split on the issue. The federal Liberals consistently favoured monopoly selling after they assumed power in 1993.20 The federal NDP also endorsed single-desk marketing. By contrast, the Reform Party endorsed the "development of a modern and market-oriented CWB in which participation 21 is voluntary." Similarly, the federal PCs appeared to favour dual marketing by pointing out that the problem that farmers have is a "lack of selling options."22 By themselves, these jurisdictional configurations of partisan stances would appear to indicate the significant presence of both pro-monopoly and pro-dual marketing stances, that intergovernmental conflict may continue even with partisan change, the possibility of a geographical differentiation of party demography, and that parties have the potential to play a significant role in establishing the axis or axes of conflictual or harmonious federal-provincial relations in the area of wheat marketing. Ceteris paribus, it would appear that the Saskatchewan and federal arenas, with their partisan splits, would have the most potential to make an impact on the future of wheat marketing policy as well as the tenor of federal-provincial relations with partisan change. By contrast, Manitoban emphasis on non-commitment and Alberta's 2 to 1 partisan endorsement of dual 108 marketing, suggest that partisan change may be of lesser potential importance in these jurisdictions. The stances of the governing parties on the issue are expressly demonstrated by their actions or lack of actions: the question of whether they will or will not endorse a particular stance once in office is not an issue. Three lines of questions, however, present themselves: first, is there an underlying base for the stances taken by the governing as well as relevant opposition parties? Second, how embedded or deep are these stances? Are they largely arbitrary or are they consistent with various characteristics of partisan support? Thus the following may also be asked: to what extent are opposition parties likely to follow through on their stances and to what extent are governing parties likely to hold to their stances? Third, which parties are likely to either assume office or have the opportunity to influence the stance of a minority government? Bases of Partisan Stances The extent to which party stances are indeed as varied as the initial analysis of their positions would suggest may be tested on the basis of a number of factors which may support these positions. Simultaneously, any inter-jurisdictional variation in the bases of partisan influence may be highlighted. Such variation will be seen to be present and reinforced by a number of factors. The Geographical Base of Support for Partisan Stances One way in which the durability or strength of a party's stance on wheat marketing may be discerned is through an examination of the geographical basis of partisan support. 109 For clarity, the federal government, which may be seen to constitute somewhat of a special case, will be dealt with separately after the provincial analysis. In each provincial case, the provincial elections that set the tone for the federal-provincial conflict of the 1990s will be used to establish general patterns of party support in the decade. The riding-level partisan distribution of M L A s in rural areas will be the basis for the examination. While the distribution of M L A s in the first two elections of the 1990s in each of the provinces under consideration will be used in the analysis to follow, the results of the elections of the mid-1990s in each of Manitoba, Saskatchewan, and Alberta are provided on a popular vote basis by agricultural region in Tables 4.2, 4.3, and 4.4 respectively. The popular vote basis of support is also included on Maps 4.7, 4.8, and 4.9. Rural ridings are used as the basis for the analysis because it is in these constituencies, rather than in the urban ridings, that agricultural concerns, including the marketing of wheat, are likely to assume pivotal importance. Provincial political parties will be seen to generally articulate positions in line with the views of their rural constituents. During elections in the early to middle 1990s, the regional distribution of ridings with members affiliated with the governing party remained virtually unchanged in both Alberta and Manitoba (Maps 4.1,4.2,4.5, and 4.6). In Alberta, the PCs clearly dominated the rural landscape. The only exceptions occurred around the Edmonton region and the central-west part of the province. Manitoba was the model of consistency; no changes occurred in the distribution of rural ridings over the two provincial elections under consideration. Moreover, Manitoba displayed a clear north-south divide in the partisan complexion of ridings. PC ridings were concentrated in the southern part of the 110 province while the N D P captured ridings in the north. B y contrast, the situation in Saskatchewan was less clear and more variable (Maps 4.3 and 4.4). While the north generally supported the N D P , N D P support in the central-eastern and southern regions of the province was eroded by a rejuvenated Liberal Party. Aside from a core of N D P ridings running down the centre of the province, the Saskatchewan Party, as an approximate combination of old P C and Liberal ridings was to find a significant base of support in the southern part of the province. The threshold correlation that wi l l be considered is that of the partisan complexion of ridings and the geographical location of wheat farmers. The location of wheat farmers is important because parties without a strong constituency of wheat farmers are not only more likely to discount the importance of the marketing issue, but are also less l ikely to be tied to any particular stance. A comparison of the total amount of wheat grown in each of the prairie provinces, as well as inter-provincial aggregate comparisons of other characteristics which follow, are presented in Table 4.1. O f the regions with the greatest amount of wheat farming in Manitoba, the western middle region bordering Manitoba corresponded with a region of N D P support, while the south-central and south-west portion of the province corresponded with areas containing P C ridings (Table 4.2). The southern central and western regions in general, including the Canada-US border area within these regions, have the highest percentage of farm acres dedicated to wheat in Manitoba. The wheat acre data also indicate that this southern region was the bedrock of Manitoba's wheat industry. Similarly, with the exception of the south-east, the remaining areas containing P C rural ridings also contained a significant amount of wheat farming. Although the amount of land used for wheat was, aside from the mid-western portion of I l l the province, lower in areas of NDP strength than in areas of PC strength, wheat farming was nonetheless still present. The Liberals, meanwhile, relied on urban support. In Saskatchewan, the regional bases of support for both the NDP and its Liberal/Progressive Conservative/Saskatchewan Party opposition were in areas of heavy wheat production (Table 4.3). Data for Saskatchewan show high levels of wheat production virtually throughout the province with the exception of the non-agricultural northern half. In Alberta, support for the PCs came from a number of areas of heavy wheat production (Table 4.4). In particular, the bedrock region of PC support in the southern portion of the province correlates well with areas of heavy wheat production and large-sized farms. The Liberals and NDP relied mainly on urban support. However, to the extent that the Liberals managed to win rural seats they generally did so in areas of moderate wheat production in the central region of the province. Within this context, the distribution of farmer income in the prairies provides a striking correlation with the stances of parties that captured rural seats. In Manitoba, the areas containing PC ridings were fairly evenly divided on the income scale with farmers positioned towards the low end, centre, and high end of the income continuum (Table 4.2). Areas of PC ridings contained net incomes that ranged from those approaching the $30 000 level, in the south central and west of the province, to those failing to reach the $15 000 level, in the south-eastern region. The percentage return on capital showed a similar broad range within the PC region. This broad range of support corresponds well with the noncommittal stance of the Manitoba Government, to the extent that different income groups indeed have different marketing preferences. By contrast, Manitoba NDP ridings were concentrated in areas containing the poorest wheat farmers. A l l areas of 112 NDP ridings had average net incomes of under $15 000, which tend toward the lowest portion of the income scale. The return on capital tended uniformly towards the lower end of the range present in the province. The party's pro-monopoly stance thus appears to be supported. In Saskatchewan, a general partisan division between richer and poorer farmers was apparent. A correlation between areas of NDP ridings and areas containing wheat farmers that tended towards the lower end to the income and return on capital scale was evident (Table 4.3). Likewise, areas containing farmers with higher net incomes and returns on investment tended to more readily support the PCs and the Liberals. Using PC and Liberal ridings as an approximation of future Saskatchewan Party ridings, the income distribution in Saskatchewan thus readily reflected the pro-monopoly and pro-dual market positions of the NDP and the Saskatchewan Party. In Alberta, the pro-dual market stance of the PC party readily reflected its rural constituency. Although the party also retained support amongst poorer farmers in the north, its southern bastion of support contained the wealthiest farmers in all of the prairies and the highest returns on capital in the province (Table 4.4). Liberal ridings, meanwhile, tended to be in the central portion of the province which contained lower income farmers. At first glance, the noncommittal stance of the Liberals would appear to be at odds with their base of support of relatively poor farmers. Upon closer examination, however, the opposite appears to be the case. Because the Liberals would have likely required rural support beyond their core rural constituency around Edmonton in order to form the government, their core rural constituency actually may be seen to have pulled them away from an otherwise clearly articulated pro-dual marketing stance (consistent with majority opinion in the province) towards a de facto pro-dual marketing plebiscitarian view. This is consistent with the 113 likelihood that, should the Liberals be elected to govern the province, their expanded "core" rural constituency would then probably have a pro-dual marketing complexion. Income effects also tend to be reinforced by the proximity of producers to the Canada-US border. The richest farmers in each of the three provinces generally tended to be located in the southern portion of their respective provinces. Although both poorer and richer border area farmers potentially had lower transportation costs, wealthier farmers were more likely able to take advantage of the cost advantage. The greater ability of wealthier farmers to purchase vehicles, such as grain trucks, would more readily allow them to potentially take advantage of lower transportation costs in the event of an open border than poorer farmers. During the period under consideration, the average market value of farm trucks in general and of farm trucks other than pick-ups and cargo vans in particular tended to be higher in areas with higher farmer income levels in each of the prairie provinces (Tables 4.2, 4.3, and 4.4). Aside from the potential to buy trucks, many farmers, as the figures would indicate, already owned trucks that could have been used to transport grain across the Canada-US border. A powerful additional incentive for higher income farmers was therefore provided by both locational and infrastructure advantages and the analysis of the previous income section is reinforced. The geographical support of party stances can also be reinforced by the presence or absence of feed grain markets. Farmers located in regions with significant numbers of cattle farms are able to reduce the risk of financial loss associated with independent grain marketing by having a viable alternative feed grain market available, without incurring prohibitive transportation costs, should difficulties arise in the primary human consumption market. In Manitoba, the southern region of PC ridings contained regions 114 of both medium and high average numbers of cattle and proportions of farms with cattle (Table 4.2). While some regions of N D P support in Manitoba tended to have high numbers of cattle and a high percentage of farms with cattle, these regions were not major centres of wheat production. The areas with the highest proportions of farms with cattle and calves in Saskatchewan tended to be areas with relatively lower levels of provincial wheat production (Table 4.3). Nonetheless, aside from these areas, regions with relatively low percentages of farms with cattle and calves tended to be those that contained N D P ridings. Meanwhile, regions with higher percentages of farms with cattle and calves tended to be those supporting the Liberal, P C , and eventually Saskatchewan parties. Wi th the exception of the south-west and north-west portions of the province, the average number of cattle and calves throughout Saskatchewan tended to be uniformly low. In Alberta, the farms with the highest average number of cattle were located in the southern region of the province (Table 4.4). The percentage of farms with cattle were also high in the southern region and in Alberta in general. The location of cattle farms thus accorded well with the location of P C support, wealthier farmers, and proximity to the Canada-US border. Throughout the prairies, the geographical distribution of cattle farms located in wheat producing areas tended to correspond well with the stances taken by the relevant parties on the future of the C W B ' s single-desk; higher and lower measures of cattle correlated well with pro-dual marketing and pro-monopoly stances respectively. The geographical context to party stances analysed to this point is also generally reinforced by the interest group configurations that were present in each of the provinces. The major groups involved in the dispute, their major geographical areas of influence, 115 23 and their positions are outlined in the following chapter. For the purposes of the present chapter, Table 4.5 indicates the stances taken by relevant interest groups on the monopoly marketing issue. In all cases, the geographical distribution of interest group strength was also a reflection of the income variable, given that rich farmers tended to be attracted to groups favouring dual marketing and poor farmers tended to be attracted to groups favouring monopoly marketing. In Manitoba, the configuration of interest groups corresponded with the stance taken by the governing PCs. The areas in which the National Farmers Union (NFU), the Western Canadian Wheat Growers Association (WCWGA), and Keystone Agricultural Producers (KAP) had their strongest influence in Manitoba accorded well with the southern belt of PC ridings. The fairly strong influence of the W C W G A was offset by the moderate influence of the N F U and the presence of K A P . Although the overall prairie-wide influence of the W C W G A was greater than that of K A P , the influence attributed to K A P within Manitoba should be elevated by virtue of its single-province structure and the multiple-province structure of the WCWGA. Because the WCWGA's influence was concentrated in the south, the area of NDP support in the northern area of the province was thus also a region of relatively unchecked K A P and N F U support. The interest group configuration therefore also supported the stance of the NDP in Manitoba. In Saskatchewan, the interest group configuration may be seen to have had the potential to reinforce the stance of the NDP more than that of the Saskatchewan Party. Although members of both the N F U and the W C W G A were distributed fairly evenly throughout the southern portion of the province, the W C W G A had traditionally been weakest in influence within Saskatchewan, regardless of which party assumed power, 116 while the N F U attained its greatest degree of influence in the province. In addition, the N F U had the largest portion of its prairie membership located in Saskatchewan, while the membership roster of the W C W G A was moderate in the province. The strength of the N F U was thus consistent with that of the stance of the NDP government. Although this overall interest group configuration would not appear to support the stance of the Saskatchewan Party, its dual marketing policy may nevertheless have still been somewhat supported, especially when the income distribution is included in the analysis. While members of both the N F U and the W C W G A may be fairly evenly distributed across the southern portion of the province as a whole, some regional differentiation may nevertheless be present.24 Moreover, 35 per cent of W C W G A members were located in the province. The stance of both the PCs and the Liberals in Alberta reflected the interest group configuration in that province. The southern stronghold of PC ridings corresponded well with the areas in which the W C W G A and Wild Rose Agricultural Producers (WRAP) were strong. Moreover, while WRAP was a general farm organisation, it may nevertheless have bolstered the dual marketing side by operating in only one province. Also, the N F U was weakest in Alberta as a whole, and the W C W G A was strongest. The stance of the PC Party was thus well supported. Likewise, the Liberal stance also found support. The area of strongest N F U influence within Alberta corresponded well with the area of core Liberal support in the centre of the province. In addition to these institutionalised groups, one issue-oriented group, namely the Farmers for Justice (FFJ), also had an impact. Its support, likely concentrated in the Canada-US border area, largely appeared to serve to reinforce the southern support of 117 parties favouring dual marketing. The group had also been a catalystin driving the controversy by attracting significant media attention. The federal government constitutes a special case in the geographical analysis because of the traditionally key role played by the federal minister responsible for the CWB. To be sure, suc