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Supporters of the Canadian Wheat Board rally on Parliament Hill in Ottawa on Tuesday.

Sean Kilpatrick/The Canadian Press

The Harper government, which styles itself "farmers first," is being accused of hoarding Canadian Wheat Board gains that should be paid to grain growers before Ottawa dismantles the marketing agency's monopoly.

A contingency fund managed by the board is on track to surpass $60-million in cash, but Ottawa says this is not money it will rebate to farmers.

Instead, the Tories plan to use available cash to underwrite the shift to a free market for the agency, and they're in the process of raising the amount this fund can hold to $200-million.

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Stewart Wells, a farmer-elected wheat board director who opposes the coming changes, says Ottawa has no right to keep money that ultimately came from grain producers.

"They are expropriating money from farmers to use to float the new grain company that Gerry Ritz is creating," he said.

The wheat board is about to undergo controversial and divisive changes – which its dissenting chair warns will eventually doom it – as Agriculture Minister Gerry Ritz strips the agency of its 68-year role as the bulk seller of western Canadian grain.

What's left over will be a shadow of the current board and will no longer be acting for 70,000 farmers but rather for any customers it can attract. Board chair Allen Oberg has predicted it will die after promised federal subsidies run out because it lacks assets to compete.

As the Conservatives prepare to free western farmers from having to sell through the board, a pile of cash is amassing in the agency's contingency fund – an account that contains the proceeds of futures market trading to hedge against risk.

The Harper government has twice in recent weeks moved to raise the fund's ceiling. It gave formal notice Nov. 9 that it was hiking the limit to $100-million from $60-million.

On Wednesday, government officials said Ottawa would raise the cap further to $200-million.

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Mr. Ritz said Ottawa has taken this "prudent action" of raising fund limits to "safeguard the future of a voluntary Canadian Wheat Board."

A government official, speaking on background, said any available cash would go to reorganization costs and guaranteeing initial payments and borrowing for the new entity.

It's not clear how big the fund will grow before the board's monopoly over grain sales ends next summer, and it's possible future hedging losses could erode its value before August, 2012.

In explaining its first hike to the contingency fund limit last week, Ottawa said it had to raise the ceiling to $100-million because a forecasted surplus from "non-pool activities" would make the account "surpass its current limit of $60-million." The government argued it might be "distorting pool returns" if it returned contingency-fund surpluses to accounts ultimately rebated to producers.

Deputy Liberal Leader Ralph Goodale, a former federal agriculture minister, said Ottawa should not be using farmers' money to subsidize what will end up as a private firm.

He said if Ottawa had kept the cap at $60-million, any surplus cash normally destined for it would have to be returned to farmers once the fund hit that limit.

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"They're in the process of trying to drain as much money into this contingency fund as they can," he said, "and they plan to use it as a slush fund to bankroll everything that's necessary to kill the single [grain]desk and create this new creature."

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