The Canadian Wheat Board will no longer be run by farmers in elected roles, as the federal government proceeds with plans to phase out the board's monopoly this year in favour of an open market for Prairie grain farmers.
Legislation tabled in the House of Commons Tuesday will let farmers start selling their own wheat, durum and barley in 2012, but not until the bill has worked its way through the House and Senate and their committees. And it means they can't sell for next fall before the bill becomes law.
The proposed law would eliminate the 10 farmer-elected positions from the board of directors, leaving the five existing government appointees on the board. Those five appointees will be in charge of producing a business plan to privatize a restructured, voluntary board by 2016, and the minister of agriculture will decide whether it's viable and can proceed.
Officials suggested the government wanted a smaller board, suitable for overseeing a smaller organization and willing to collaborate on the transition to a voluntary system. Eight of the 10 elected farmer representatives on the current board oppose dismantling the current "single desk" system.
If the agriculture minister decides the plan isn't viable, the government can permanently shut down the wheat board.
Agriculture Minister Gerry Ritz says the wheat board's monopoly cast a chill over western farmers.
"The Harper government intends to pass this legislation by the end of the calendar year," he said, promising "marketing freedom" by Aug. 1, 2012.
"Let me be clear: every single western Canadian farmer will finally have the right to choose how they market their own grain."
The current chair of the wheat board, farmer Allen Oberg, said the changes mean that the board will "cease to be a farmers' organization" and will be "taking us all back in time" to the days before farmers controlled their own marketing.
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"It's not about giving farmers choice, but ignoring choices they've already made," Oberg said, referring to the current wheat board, where farmer-elected directors hold the majority. A wheat board-run plebiscite this summer also suggested a majority of farmers support the existing marketing system.
"This is not about putting farmers in the driver's seat, it's about removing us altogether," Oberg said, suggesting multinational corporations would now be at the wheel.
Asked whether a major agribusiness like Viterra or Cargill could purchase the board, Ritz would not rule it out.
"It will be the new entity wheat board that will work on the transition plan to move to privatization, owned by farmers, whether it's a co-operative model, or a trust, however they want to set it up," he said. "Certainly at the end of the day, with the government taxpayers backstopping that transition we have to have the ability to assess the validity of that move forward.
"It will be up to farmers to make use of that entity or it will not survive."
Opposition MPs vow to fight
Liberal MPs promised to use whatever procedural manoeuvres they could to slow the bill's passage and hear from more farmers.
"The government is now taking away the democracy, taking away the producer control … instead we have the government super-imposing its political view," said Liberal MP Ralph Goodale.
NDP MP Pat Martin said a voluntary board in Australia failed, with an arm of Cargill eventually taking over.
"It's just some notion that Gerry Ritz has that everything will be better in the free market economy. They're so against collective action for farmers to protect their own interests that they're on this ideological crusade to smash the Canadian Wheat Board," he said.
Wheat Board director Bill Woods, who was with three Liberal MPs to address the media, disputes the Conservatives' argument that their May 2 election win gives them a mandate to make the board voluntary.
"When it comes to an important farmer issue like this, the reason I don't consider the federal election a mandate is because I don't think that schoolteachers, cab drivers and plumbers should be deciding the future of the Canadian Wheat Board. Farmers should be," he said.
Money for Churchill
Ritz also promised up to $5 million a year to encourage farmers to ship grain through the port of Churchill, Man., plus $4 million in port improvements, to give the region time to adjust to potentially losing business from the board.
Opponents to the wheat board changes have said they risk losing jobs in Churchill, as well as at the board's head office in Winnipeg.
Oberg noted Tuesday that at the moment the port is paying its own way thanks to the wheat board's business, and said it's unfortunate that the government now has to invest more taxpayers' money to keep it viable.
On Monday, the wheat board released a list of six conditions it requires to continue to be a viable player in a new, open market. Tuesday's legislation appeared to address only two of these conditions: the need for government loan guarantees, and the need for financial assistance to deliver advance payments to producers.
Agriculture officials said the exact amount of assistance is subject to negotiation. Officials also suggested government funds would be available to help the board with transition or downsizing costs.
The current management of the wheat board believes it needs government assistance to help raise capital and acquire assets to continue operations in a competitive environment. On Tuesday, the government suggested it would take no equity stake in a reorganized wheat board and no such capital was forthcoming.
The government also did not meet wheat board demands for regulations or assurances on the board's access to grain terminals or ports.
The legislation also includes provisions for maintaining funding for grain research and marketing programs previously overseen by the wheat board. A voluntary "check-off" amount will be collected from producers' sales revenues and the proceeds would be administered by an as-yet unspecified commodity organization.
The legislation does not alter any existing arrangements for shipping grain by rail. However, the government is still working on implementing changes in response to a rail freight service review completed last spring and further legislation may be forthcoming.
Oberg said the wheat board will be meeting next week to review the legislation and decide on its next steps. He did acknowledge the government's financing "increases the chances of survival."
Major change for industry
Some farmers have blamed the wheat board's marketing monopoly for wheat and barley lagging behind other Prairie commodities like canola in areas like crop innovation and economic investments in domestic processing facilities.
Stephen Vandervalk, an Alberta grain farmer who's the current president of the Grain Growers of Canada, served on a working group that advised the agriculture minister on how to implement the changes to the grain marketing system promised in the Conservative election platform.
"Wheat is probably the lowest returning crop on my farm," he told reporters at Ritz's news conference on Tuesday. "The more competition, the better off farmers will be."
Brian Otto, the president of the Western Barley Growers Association, was equally enthusiastic. He ran for one of the director positions in the most recent wheat board elections and lost. Today he spoke eagerly of a potential end to the monopoly in time for barley processors to lock down their supplies in January or February.
"Farmers are looking for transparent market signals," he said, expressing frustration with the inflexibility of the current system which he believes contributes to the cash flow problems on many Prairie farms because farmers aren't free to make good business decisions about when to deliver their crops.
Hopes high for new investments
An Oct. 7 announcement of a new $50-million wheat milling facility in Regina was cited again and again Tuesday as an example of the economic development opportunities possible once the current wheat board system is dismantled.
The Canadian Wheat Board Alliance, which advocates in defence of its sales monopoly, dismissed that announcement as a "political stunt" in front of a "phantom pasta plant," suggesting the real reason such a processing facility wouldn't exist already is that this company is counting on a cheaper price once the board is gone, something that will hurt farmers.
Al Mussell, a senior research associate with the George Morris Centre, an independent agri-products think-tank based in Guelph, Ont., says "it's hard to sort out the materiality from the posturing" with these claims. But he notes that across the Prairies, the private sector investment in facilities to process canola, which is outside board jurisdiction, far outstrips the development of facilities to process wheat or barley.
Manitoba farmer Owen McAuley agrees with Mussell's assessment of how the monopoly might be holding back local economic development.
"If you were the president of Cargill and you were going to build a plant, would you do it in the U.S., where you were free of regulations and could contract with farmers directly, or in Canada, where you could only buy from one person [the wheat board]?" McAuley said, noting seven pasta plants he's aware of within a reasonable drive of the Canada-U.S. border.
McAuley thinks that for the most part the CWB's "pricing has been fair" but as far as private sector players are concerned "it's the mentality of it" that holds them back.
Wheat board vows to fight plan
In recent days, the wheat board has hinted that a major legal fight will be mounted to oppose the reforms. Oberg said Tuesday the board would commit "whatever resources are necessary" to "ensure farmers' rights are upheld."
Asked Tuesday whether there was any point to having a voluntary wheat board without a single-desk marketing system, Oberg said, "I don't think so."
Oberg cited the examples of Australia, where a voluntary pool lasted only two years before it was bought out, and Ontario, where a voluntary board still exists but now markets only a small fraction of the province's total wheat crop.
"It would be of limited value to farmers," Oberg said.