Wheat board wrangling leaves many producers in confusion

After weeks of rancorous debate regarding the fate of the Canadian Wheat Board and an avalanche of contentious words like “steam-rolling”, “Big Brother” and “court injunction,” western Canadian cereal growers are craving another word to describe Canada’s grain industry: certainty.

Last week, the board’s fate became less certain when a Federal Court of Canada judge ruled in favour of CWB directors and an advocacy group, Friends of the CWB. Judge Douglas Campbell ruled Dec. 6 that agriculture minister Gerry Ritz broke the rule of law by introducing legislation this fall to end the board’s single desk marketing system without consulting the board’s directors or holding a producer plebiscite.

The judge’s decision heartens CWB supporters but the likelihood of several more months of uncertainty, including a government appeal of the ruling, is complicating the lives of producers who have mixed feelings about the board.

“There are those people who believe that life ends after the wheat board is gone…. And then there are people, like me, in the middle who just want things to settle out so we can do business,” said Curtis McRae, who farms 4,500 acres and grows 1,000 to 1,500 acres of wheat annually with his brother Mac north of Winnipeg.

In a normal year, McRae would have already made a decision regarding his acreage intentions for 2012. But without marketing certainty he’ll have to play it safe this spring and stick to his basic rotation.

On the marketing side of his business, if he knew the board’s monopoly would end this summer, McRae could forward sell a portion of his wheat crop.

“I could (right now) lock in profit on wheat for off the combine next year…. Wouldn’t it be nice to put down 20 percent of your wheat crop and know that you’re going to make money on that amount of wheat?” he asked. “I won’t have that ability… until things flow through the courts.”

McRae’s perspective on the CWB conundrum represents the majority of producers in Manitoba, said Doug Chorney, Keystone Agricultural Producers president.

“We need to know what’s going to happen, how it’s going to happen and when it’s going to happen,” he said.

The transition to a new marketing system is already costing farmers money because futures markets have sold off and farmers can’t price grain, he added. “People that already have winter wheat in the ground probably wish they could price some.”

But from another perspective, Chorney said the federal government isn’t being forthright when it claims that Bill C-18, the Marketing Freedom for Grain Farmers Act, will smoothly come into effect in August of 2012.

“If it (the court ruling) doesn’t matter, why are they appealing it? It does matter then. So which is it? It makes you wonder what the real situation is.”

Garth Burns, a producer from Drake, Sask., agreed that the federal government is hastily driving along a timeline that might not be realistic.

“I’m kind of concerned that it’s proceeding too fast. I’m wondering if everything is going to be in place (in time),” said Burns, who farms 6,000 acres and grows 2,000 acres of wheat each year with his son-in-law.

Regardless, Burns remains optimistic that the current chaos won’t have a drastic or detrimental effect on western Canadian farmers in 2012.

“We (prairie producers) grow high quality milling wheat, which is in demand all over the world. I’m very hopeful that we won’t have a problem with selling our grain.”

On the merchandising side of the business, Canadian grain companies also remain optimistic that marketing freedom will come to Western Canada in 2012.

“We’ve got to look at what the decision says and what it doesn’t say,” said Jean-Marc Ruest, vice-president of corporate affairs and legal counsel for Richardson International Ltd.

“What it doesn’t say is that C-18… isn’t valid…. And we’ve got a government that has stated quite clearly that it intends to proceed.”

Assuming court battles over the board drag on for several months, grain companies might have to sign forward contracts with producers that contain precautionary language, Ruest said.

“Parties will have to figure out… how they might word their contracts to cover the possibility… of not being able to execute on their purchase as planned. But I think the trade (industry) is going to be able to position themselves to deal with the matter prior to Aug. 1, 2012.

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