A couple of weeks after the federal election, Agriculture Minister Gerry Ritz walked into the office of Canadian Wheat Board chairman Allen Oberg and delivered a blunt message: the board would be dismantled within a year.
The meeting lasted barely 30 minutes. But in that short time, the organization that has marketed all wheat and barley grown in Western Canada for more than 75 years was given an expiry date of Aug. 1, 2012. “This is probably the biggest change to grain trading in 30 years,” said Curt Vossen, president of Richardson International Ltd., a Winnipeg-based grain handler.
The announcement has sparked debate across the Prairies as farmers and grain traders mull ending the board’s monopoly, which will result in producers selling directly to private companies. It has also prompted a backlash from one provincial government.
On Monday, Manitoba launched an advertising campaign and petition to save the board.
“We’re very concerned with the message the federal government is sending to farmers and we won’t just let them pull the plug on the Canadian Wheat Board,” said Premier Gary Selinger. The province is also worried about the loss of jobs, since the Wheat Board supports roughly 2,000 direct and indirect jobs in Winnipeg, and is concerned over the future of the Port of Churchill, used mainly by the Wheat Board to ship grain to Europe.
Mr. Selinger is backing a call by the Wheat Board for a vote by farmers on the future of the organization. The board is controlled by about 50,000 farmers, who elect 10 of the organization’s 15 directors. “This is about allowing farmers a democratic voice in the future of the institution that they control and pay for,” he said.
He and other Wheat Board supporters say the agency plays a critical role for Western Canadian farmers. They say the board’s size gives it the clout internationally to get a premium price for Canadian grain. The board sells to more than 70 countries and last year it reported $5.1-billion in revenue. “When you have a single desk on any commodity, you are the only seller and that has significant advantages,” said Mr. Oberg, who operates a grain and cattle farm in Alberta.
But others say the board has outlived its usefulness and that farmers are in a better position to market their own grain. They point to canola, which rivals wheat in terms of the overall crop size in Canada, and many other crops that are sold privately by farmers. “Unfortunately the [Canadian Wheat Board] has conditioned farmers to be dependent on them,” said Greg Menzies, who runs Wigmore Farms, a Regina-based grower of peas, lentils and other crops. Mr. Menzies refuses to grow wheat because he does not want to be controlled by the Wheat Board.
Mr. Ritz has insisted that the federal government is not scrapping the Wheat Board, just removing its monopoly on wheat and barley. “We have no intention of seeing the Wheat Board cast aside,” Mr. Ritz said after a speech in Regina last week. “We want to see it as a strong, viable option for those farmers that want to use it.”
He has also rejected a vote by farmers, saying Canadians, including farmers, voted for a majority Conservative government in May and the party’s platform has long included ending the Wheat Board’s monopoly.
“It’s disappointing but not surprising that the Manitoba Government would be against an open and competitive market that would attract investment, encourage innovation and create value-added jobs," Mr Ritz said in response to Manitoba's ad campaign.
“The CWB and the Manitoba Government should work constructively to let every farmer decide how they market their grain instead of engaging in gratuitous fear mongering."
It’s not clear if the Wheat Board can survive under the government’s proposal. The agency is essentially a marketing operation and it has no real infrastructure. Instead, it contracts out grain handling to private companies such as Viterra Inc., Cargill Inc. and Richardson. Under the federal government’s proposal, the Wheat Board would likely become a competitor to those companies but without any grain handling capability. Mr. Oberg and others point to Australia where the Australian Wheat Board lost its monopoly in 2008 and ended up being sold to Calgary-based Agrium Inc. (which subsequently sold the marketing arm to Cargill). Mr. Ritz has argued the comparison isn’t valid because the two boards operated differently.
Jerry Klassen, a Winnipeg-based commodity analyst at GAP S.A. Grains & Products, said the Wheat Board might be able to continue in some form. “They have very strong relationships in the international market and they have very strong relationships with a certain amount of the farm population in Western Canada,” he said. “And, I think those are very strong assets besides the physical assets.”