They’ll have bricks and mortar, but CWB still needs to build connection with farmers

The CWB will suddenly become viable-seeming as soon as it gets possession of Mission Terminal, Les Elevateurs Des Trois-Rivieres and a collection of producer car loading facilities and an elevator on the Prairies.

As long as the non-monopoly CWB has the ability to both source and export crops without relying on competitors to move it, the organization can function as a real (if small) integrated grain company. (This is assuming the CWB hasn’t taken on so much debt to buy the assets that it is permanently hobbled the way the three Prairie pools when they expanded. CWB hasn’t revealed what it’s paying, so there will be question marks hanging over this.)

But it’s clear that the CWB also wants to have some sort of ownership of west coast terminal capacity and a network of grain handling facilities on the Prairies, which if it all comes together will provide a very healthy addition of competition to the Prairie grain handling system, upon which farmers rely so completely. Farmers now rely upon an oligopoly of huge grain companies, so any additional competition is a benefit.

However, getting there won’t be easy, both financially and in terms of farmer support. The CWB has very little money. It has dribs and drabs of funds from non-pooling activities during its last years as a monopoly and profits from recent activities, but the CWB isn’t a cash-rich organization. Any money from its pooling activities, which dominated its entire existence, was paid-out to farmers each year, so it doesn’t have a lot just lying around waiting to be invested.

Lots of farmers don’t believe this, and that’s where the CWB’s biggest challenge comes from, I think. Monday and last week, when I was writing a couple of stories about the CWB asset purchases, I was surprised by the depth of farmer ire about the CWB spending “farmer money” from various farmers I communicated with. Many farmers, Doug Chorney of Keystone Agricultural Producers told me, feel that any money the CWB has is money morally belonging to farmers, so the CWB shouldn’t be doing anything with it before consulting with farmers. Like we in the media, farm organizations and many farmers having been waiting for the CWB to reveal exactly what it’s planning to do to complete its transformation from a government entity to a free market entity.

What has upset quite a few farmers is the way the CWB has announced a major asset purchase before either sketching out a vision of its future, or publicly bringing in farmers to help form that vision. That’s a serious problem for the CWB, because far more than a so-far small collection of bricks-and-mortar facilities, the CWB’s main asset is going to be farmer attachment and loyalty to the organization, and it doesn’t really have that yet. There’s residual support for a memory of a farmer-controlled organization from many farmers, but no one really knows how to feel about the new CWB and what kind of a beast it’s going to be.

Without that kind of farmer support, a small new grain company is going to have trouble pushing out beyond a tiny base.

It sounds to me like the new CWB is going to be exactly the sort of thing that a wide swath of Prairie farmers will want to see and will support. I spoke with Ian White, the CWB CEO and president, on Monday, and he told me that the CWB’s most important unique characteristic will be that it will be partly-owned by farmers. “It will be a Canadian, farmer-focused company,” he told me. Quietly, a few weeks ago, the CWB announced that farmers could receive small amounts of equity as part of their crop payments. That equity stake will be “significant,” White told me.

“It’s not getting back to exactly the same model as they might have had in Prairie pool days, (but) they will still have the opportunity to be a significant ownership part of this company,” White said.

For thousands of farmers, that would be a good thing. The loss of the cooperative elevator system saddened many, and the loss of a major farmer-controlled organization like the monopoly CWB furthered that pain. Building a new farmer-influenced grain company to operate at the heart of the system would be exactly what a lot of farmers would want to see.

But the CWB needs to get out there and sell that vision, methinks, because it was clear to me from some of the farmer reaction to the asset purchase announcement that farmers, by and large, have little sense of what the CWB’s hopes and plans are. And they feel they have a right to be involved and consulted as the CWB moves forward. The kind of farmers the CWB will need to rely upon most seem the most peeved by this.

We’re already well into the annual “meeting season,” which stretches from late October to mid-March, so the CWB doesn’t actually have that much time to get out to conferences, conventions and farm shows and get farmers on-side. It’s a vision and a plan that I think would win the support of a lot of farmers, but one that could fizzle if the CWB doesn’t do a better job of connecting with the farmers who crave what it is apparently trying to build.

About the author

Ed White — Ed White has specialized in markets coverage since 2001 and has achieved the Derivatives Market Specialist (DMS) designation with the Canadian Securities Institute.

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