Whether you agree with last year’s elimination of CWB’s single desk powers or not, the real situation facing the reorganized CWB today is that it must compete or die.
A privatized CWB has great potential to provide additional competition in an industry in which competition is sorely needed. To do that, it must have its own facilities and logistical control over the grain it buys.
The CWB announced Nov. 26 that it has an agreement to buy Mission Terminal in Thunder Bay, Ont., Les Elevateurs des Trois-Rivieres and Services Maritimes Laviolette in Quebec and producer car loading sites in Manitoba and Saskatchewan.
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It has also expressed its intent to seek an ownership stake in west coast loading facilities and a network of grain handling facilities on the Prairies.
Combined with its recent announcement that farmers would be able to buy equity in the CWB in exchange for delivered grain, a picture of an aggressive building phase emerges.
The plan is not without its detractors. Just as the debate surrounding the elimination of the single desk splintered into two sharply divided camps, so too has the debate surrounding the CWB’s acquisition of assets.
This time the debate swirls around whether the CWB’s business expansions are being funded by farmer money.
Many farmers, such as Keystone Agricultural Producers’ Doug Chorney (although the farmer group itself has no official position) say it is.
They argue that farmers should have been consulted before CWB signed an agreement to buy the handling facilities because the CWB’s financial assets today were built up over decades through farmer loyalty.
On the other side, CWB and supporters of the expansion plans maintain that farmers’ money was paid out every year through the pool accounts. The new deals are paid for through debt financing and surpluses from non-pooling activities.
It ultimately comes down to a discussion between those who think the old CWB was a farmer-controlled organization that marketed grain on behalf of farmers who ran it through a farmer elected board and those who view the old CWB as a government agency that existed according the legislative wishes of Ottawa.
In an odd twist, many of those who fought fervently to save the single desk CWB now find themselves arguing against the new entity.
Conversely, many former opponents, such as the Western Canadian Wheat Growers Association, have thrown their support behind CWB’s expansion plans.
Which side is right is perhaps a matter best left to the courts. There is presently a possible class action lawsuit, which has signed about 1,000 farmers. It centres around this very question.
If certified as a class action suit, the case will seek $17 billion in alleged confiscated assets and other losses that farmers were allegedly forced to absorb when the single desk was ended.
A judge’s decision is pending on the certification, and if granted, it will likely be years after that before we hear any decision as to the validity of the case.
But CWB is facing a critical point in its evolution right now. It doesn’t have years to feel its way forward. It must break its reliance on other grain companies if it is to have any hopes for long-term survival.
The western Canadian grain handling industry is highly concentrated. One more competitor, if even a small one, can only help.
Eventually, with enough competition, it should mean better prices and more favourable contracts for farmers.
