Pundits speak: what happens next?

The Canadian Wheat Board and supporters of its monopoly say the entire Winnipeg and Canadian grain trade would likely be gobbled up by foreign companies if the CWB goes.

Many players in the Canadian grain industry think the board is vastly overrating its importance.

But most agree that within a couple years after the end of the marketing monopolies it will become clear whether an independent Canadian industry will exist or if foreign multinationals will take over.

“I think we’re going to be in for some major, major change here over the next couple of years,” said Adrian Measner, chief executive officer of Mission Terminal, owned by Soumat, and a former chief executive officer of the Canadian Wheat Board.

“I think you’ll find (multinational grain companies) a lot more active and I think we’re going to go through a period of rationalization here over the next two to three years.”

University of Manitoba agricultural economist Ed Tyrchniewicz, a grain industry analyst, said he thinks the changes will be more a form of evolution than devastation.

“It’s not as huge a deal as people are making it out to be,” said Tyrchniewicz.

“There will obviously be adjustments, but I don’t see it on the magnitude of an earthquake.”

The projections of the Canadian industry disappearing have been repeatedly made by CWB chair Allen Oberg and by monopoly supporters.

Oberg repeated those claims the week the government introduced its monopoly-breaking legislation.

“This government’s reckless approach will throw Canada’s grain industry into disarray,” said Oberg.

“Canada is the last country in the world where giant multinational grain companies cannot source wheat. If the wheat board’s single desk is abolished, that will change. We will see a fundamental shift of marketing power and wealth away from prairie farmers and into the hands of huge, foreign-based companies.”

There is a major difference in how different parties in the debate see the impact of the monopoly’s end on the industry. Monopoly supporters generally believe the CWB, with its complexity and regulatory power, is a crucial lynchpin that forces companies to have a large administrative presence in Canada, or for those companies to not be big players in the Canadian grain industry.

They say that is why Canada still has Canadian-owned grain companies such as Richardson International and Viterra, and why Cargill has a big head office in Winnipeg.

Without the board’s unique marketing complications, global giants will swoop in, buy up Canadian companies, shut down the head offices and run their Canadian operations out of their global headquarters in other countries.

Some global businesses involved in Canadian canola, such as Archer Daniels Midland and Bunge, are not now significant players in Canadian wheat and don’t have Canadian head offices to administer their canola operations.

But people in much of Winnipeg’s grain trade say the industry is deeply rooted in Canada, was around for decades before the wheat board was created, and has no interest is selling out or shutting down just because the wheat board goes.

“The Winnipeg grain trade right now, the core of it, is Cargill and the Richardsons. They’re not going anywhere,” said Brian Hayward, former United Grain Growers and Agricore United CEO.

Hayward said if foreign companies decide to get more involved in the Canadian grain trade, they would likely want to have a Canadian subsidiary headquarters.

In recent weeks companies including Cargill have created new jobs to handle marketing roles now done by the CWB, and companies Richardson International have hired high level CWB staff.

And while the CWB has been shrinking in recent years, small companies have been growing in its shadow, hoping to take over the board’s marketing role. The services to farmers and jobs they provide shouldn’t be ignored, they say.

“I started this little company with my husband in our basement and we’ve grown it to a staff of 30 in eight or nine years,” said Brenda Tjaden Lepp, co-owner of FarmLink Marketing Solutions, whose office is only three blocks from the CWB head office in Winnipeg.

“We’re providing quite a lot of value to farmers. The wheat board doesn’t have a monopoly on providing marketing for farmers.”

Paterson GlobalFoods also thinks the basis of the Canadian grain industry won’t disappear along with the CWB’s monopolies.

“We’ve been around 103 years,” said Paterson vice-president Keith Bruch, noting that Parrish and Heimbecker has been around 102 years and the Richardsons for more than 150.

“The grain trade has been here a long time. It has deep roots. The Canadian grain trade has a good asset base and trading ability. There’s certainly life for the grain trade going forward.”

Measner said he thinks the Canadian based grain trade will continue to exist post-monopoly, but that foreign companies will probably come in and either set up offices or try to buy up Canadian companies.

“I think there will be some companies disappearing here in Winnipeg.”

About the author

Ed White's recent articles



Stories from our other publications