End of an era as Canadian Wheat Board loses monopoly
Published Tuesday, July 31, 2012 6:43AM EDT
Last Updated Tuesday, July 31, 2012 7:52PM EDT
Winds of change are sweeping across the Prairies as the Canadian Wheat Board's decades-long monopoly on western wheat and barley sales ends, but opinions are mixed on whether those breezes will blow good or ill.
The CEO of the board says his agency is facing the future with confidence.
"There are many reasons for confidence as the CWB forges ahead into this new era," Ian White said Tuesday at a news conference in Winnipeg.
"We will add value to farmers. We have streamlined our operations. We have negotiated new business arrangements that will help us succeed. We are ready to face this new marketing era."
The federal government passed a law late last year to allow western farmers to sell their grain to whomever they choose, whenever they choose. That change kicks in Wednesday with the new crop year.
Federal Agriculture Minister Gerry Ritz was in Saskatoon on Tuesday literally counting down the last hours of the wheat board's monopoly. He stood in front of a blue screen that displayed a clock ticking down to midnight.
"Tomorrow the doors to marketing freedom open wide," said Ritz.
The agriculture minister noted that farmers can still market their grain through the board, but now it will be voluntary. Wheat and barley farmers in Western Canada had to sell their grain through the board since the 1940s.
The change has the support of many farm groups which say producers can often get better prices on the open market.
But supporters of the monopoly say the open market will leave farmers at the mercy of railways and big, international grain companies. They argue the monopoly prevented producers from competing against each other for sales.
Kevin Bender, president of the Western Canadian Wheat Growers Association, said there will be little difference between marketing wheat and barley and what farmers have already been doing with other crops including canola, oats, peas and lentils.
"I really don't see much of an issue there with it at all, so many of us are looking forward to this now," he said from his canola field in Bentley, Alta.
Farmers didn't always know under the old system when the board would call for delivery, Bender explained. The change puts farmers "more in the driver's seat."
"We can do what we want with our property, sell it when we want and where we want and for the price we want."
The Western Barley Growers Association called it "an historic day" in a banner year of change in agriculture.
"It's been a long-standing bone in the craw of a lot of farmers and frankly a lot of farmers gave up the hope that it would ever be changed," said president Doug Robertson.
"It's just amazing how difficult it was, especially when it was put in by government in the first place. It should have been easy to be taken out again, but man alive it was not. And every farmer I talk to just feels so optimistic."
But last week the National Farmers Union called it "a year of infamy in Canadian agricultural policy." President Terry Boehm said the Conservative government launched an unprecedented attack on farmers and democratic process.
"Farmers, as well as all Canadians, have seen Gerry Ritz and Stephen Harper use every tactic in the book to ram through (legislation) ... which is one of the most fundamental changes to agricultural policy in three generations," Boehm said in a news release.
The group Friends of the Canadian Wheat Board said the marketing agency got farmers the best bang for their buck. Group chairman Stewart Wells said changing to an open market could take those dollars away from producers.
"In the long run, this will be the single largest transfer of wealth away from farmers and towards the grain trade that this country has seen since Confederation," Wells said from his farm near Swift Current, Sask.
"It's going to take a little while for the major financial effects to be felt and some of those financial effects are going to be masked in the short-term by the drought that is happening in the States and the short-term rise in commodity prices that farmers are seeing right now."
Wells also brushed aside suggestions that the board could survive with a new business model that has seen it sign grain-handling deals with companies such as Viterra. The deals are necessary because the board doesn't have its own elevators or terminals and needs someone to handle its grain.
"The notion that some voluntary entity that doesn't have any facilities, and has to go around begging companies and railways to handle grain for them, is going to be a strong player or a sustainable player is completely false," said Wells.
White announced in Winnipeg that another major grain handler -- Louis Dreyfus Canada -- has agreed to handle deliveries to the board. That means the board now has 130 locations across the West where farmers with contracts can deliver their grain.
Although he refused to give details on how many farmers have signed contracts, White said he still expects as much as 40 per cent of prairie wheat to be marketed through the board.
He said farmers understand the advantages of the board's close relationships with international clients as well as its practice of pooling wheat prices.
"We'll be offering them something other companies aren't offering, and we will be there to service farmers as their business partner rather than just as one of the other grain companies in the space."
Ritz noted that the board has a five-year window during which the federal government will "backstop" it financially. But the board also has to come forward with a plan in the next two to three years on how it will move ahead, he said.
He didn't rule out privatization.
"We've already had a couple of entities come forward saying that they would love to buy up the CWB already. You know they have a tremendous ... marketing around the world and they wanted to capture that," said Ritz.
"We're not prepared to entertain that takeover that quickly. I think there's some great roles for the CWB to play in the next two to three years and we'll analyze it at that point, so there's no rush."
The end of the monopoly has led to several court battles.
Board supporters are asking the Supreme Court for leave to appeal a lower court ruling on the way the Harper government stripped the agency of its marketing monopoly. They argue the federal government didn't follow a law that required it to let grain farmers vote on the future of the wheat board.
A Federal Court judge ruled in favour of those who wanted such a vote.
But that ruling was overturned in the government's favour by the Federal Court of Appeal, which ruled that Ottawa did not break the law. The Appeal Court said there is nothing to prevent the government from changing its own law in Parliament.