The Beginning of Grain Marketing Freedom

Headshot of Trent Klarenbach, founder of Klarenbach Research
Trent Klarenbach
April 11, 2024
A grain field
April 11, 2024

Let me tell you a story about Ray Somerville from Mantario, Saskatchewan.

Ray Somerville was an ambitious entrepreneur with his sons creating and operating successful businesses, including grain farming, an auctioneer business, and a commercial trucking company under the Somerville Farms banner.

Ray and his wife Myrtle’s family of four sons and one daughter are well known in West Central Saskatchewan for their businesses, sports activities, and support of their communities.

Ray also played a significant role in Western Canadian grain marketing and the growth of the Alberta feedlot industry. You may be familiar with the story. If not, I will share my high-level understanding of the storyline.

First, we must become familiar with the Canadian Wheat Board, a mandatory producer marketing board for wheat and barley in Alberta, Saskatchewan, Manitoba and a small part of British Columbia.

The Wikipedia website states, “It was illegal for any farmer in areas under the CWB's, jurisdiction to sell their wheat and barley through any other channel than the CWB. Although often called a monopoly, it was actually a monosony since it was the only buyer of wheat and barley. It was a marketing agency acting on behalf of Western Canadian farmers, passing all profits from its operation back to farmers. Its market power over wheat and barley marketing was referred to as the "Single Desk".

Membership became compulsory in 1941 under the War Measures Act, and violators faced fines and incarceration.

The CWB managed the grain marketing system using a quota system with a series of arbitrary payments severely restricting farmers' ability to cash-flow their operation.

As a result, farmers like Ray Somerville would explore grain marketing opportunities in other provinces, circumventing the CWB and violating the Canadian Wheat Board Act.

Ray invested in an Alberta feedlot to feed his cattle. Often, Ray could sell his barley to the Alberta feedlot at levels higher than the expected CWB price.

The CWB Act required Ray to sell his barley to the CWB and buy it back at prices greater than his sale price reducing, often eliminating the arbitrage opportunity between the Saskatchewan and Alberta markets.

Ray considered the CWB Act to discriminate against grain farmers and proceeded to sell his grain to his feedlot to feed his cattle.

Ray would truck tandem loads of barley to Lethbridge during the week while his eldest son, Bryan, still in high school, would take a load on Saturday.

Eventually, Bryan got stopped by the RCMP after seeing the Saskatchewan plates on the grain truck.

The RCMP visited the Somerville farm, notifying Ray that he is charged under the CWB Act. Myrtle was at home and refused to accept the papers, directing the RCMP to where Ray was conducting fieldwork.

Ray chose to defend himself against the charges. While Ray disputed the charges, Bryan remembers carrying a letter for presentation to the RCMP permitting him to deliver grain.

Ray successfully won a Supreme Court of Canada decision opening up the interprovincial trade of feed wheat and barley.

This legal decision brought marketing freedom to feed wheat and barley growers, increasing their returns while allowing for the growth of the Alberta cattle and feedlot industry.

The growth of the cattle industry witnessed in southern Alberta’s feedlot alley would not be possible without Ray Somerville's determination and perseverance in challenging the CWB Act.

Today, I salute Ray in admiration of his tenacity and thank him for bringing marketing freedom to feed wheat and barley growers.

Take a look at this week’s Saskatchewan Feed Barley chart. What would the price be if the provincial border remained closed?

Feed Barley weekly chart for southern Alberta