A government decision to more than triple the amount of money allowed in the Canadian Wheat Board’s contingency fund has opened another front in the CWB war.
Agriculture minister Gerry Ritz issued a directive in mid-November that all CWB profits from non-pool market transactions, including hedging, producer payment options and currency transactions, must go into the contingency fund that will be available for the voluntary successor to the single desk CWB.
He raised the maximum first to $100 million from $60 million, following a CWB request for a $90 million cap, and then to $200 million.
Read Also
Research looks to control flea beetles with RNAi
A Vancouver agri-tech company wants to give canola growers another weapon in the never-ending battle against flea beetles.
There was immediate controversy over how the future government-appointed board of directors can use the fund, whether it will become a way to pay for CWB wind-up costs and whether the money should go into pool accounts.
Ritz insisted in Parliament Nov. 17 it is money that would not traditionally go into pool accounts and the government is being prudent to give the CWB successor a capital base.
“As a government, we took this prudent measure to protect the future of western Canadian farmers, Canadian taxpayers and, of course, the new voluntary wheat board,” he said.
Then he added a partisan twist, arguing that if the money went into the pool accounts, it would simply become more cash for board chair Allen Oberg and other pro-monopol y directors to use in their fight against government plans to change the CWB.
“We want to ensure that Mr. Oberg’s sticky little fingers stay out of that, as they have been dipping into the pool accounts of farmers, spending tens of millions of dollars buying ships, spending like drunken sailors,” he said in the Commons.
Opposition critics replied that the government is building the contingency fund as a way to pay for Ritz’s obsession to kill the CWB.
“When did the government get into highway robbery and when will the minister do the right thing and give farmers back their hard-earned money?” said Liberal Frank Valeriote.
New Democrat Malcolm Allen called it a $200 million “grain tax” that the government has no right to collect.
“Not only is the government hauling out the single desk, it is picking farmers’ pockets in the process,” he said. “This is farmers’ money, not the government’s.”
Behind the heated arguments is a complicated story with two distinctly different versions of the truth, depending on the teller of the tale.
Liberal Ralph Goodale, whose 1998 amendments to the CWB Act created the contingency fund, said when he was CWB minister, the board of directors would decide what revenues to divert to the fund.
Now, the minister is directing the allocation.
“It sounds like they are taking money that was earned on producer pricing contracts and on some of the options and instead of distributing it back to producers, they’re putting it in the contingency fund, which begs the question, ‘what the hell for?’ ” he said in an interview.
“This money was raised selling grain and apart from administrative deductions that are authorized according to law, the money should go back to farmers.”
Oberg agreed with that interpretation.
He said until the directive from Ritz, directors always had been in charge of deciding how much to put into the fund.
“The original intent of the fund was to backstop producer pricing options, but it appears the minister has a different idea as to what this fund might be used for,” he said.
“One of the things the board believes is that we’d like to reimburse farmers for the money they have paid and will pay on purchase of the lakers because that’s an asset they will no longer own or receive any benefit from, but this directive prohibits the board from doing that.”
Oberg said he suspects the fund will be used to offset wind up costs.
Greg Meredith, Agriculture Canada assistant deputy minister, has a distinctly different view of the fund and its history.
He said non-pool earnings always have gone automatically to the fund, so it is not taking money farmers should have in the pool accounts.
He said the government-appointed CWB board will make decisions about how to use the fund but the government has committed to covering wind-up costs.
“Management will do what they think is best to keep that volunteer entity viable.”
Meredith said the fund is meant to be a capital base for the CWB voluntary successor.
“The government is trying to do everything it can to make sure a voluntary wheat board has as many legs to stand on as possible. That money never has gone to the pools.”
The size of the fund July 31, 2011, will be made public this week. It was $22 million July 31, 2010.
