Crow subsidy demise attracts U.S. miller

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Published: October 3, 2002

PORTAGE LA PRAIRIE, Man. – An educated hunch based on private

assurances from government that the Crow Benefit would be abolished was

one reason Can-Oat Milling Inc. located in Manitoba in the early 1990s

rather than in the United States, says the company president.

Karl Gerrand said researchers analyzing the effects of the end of the

Crow rate grain transportation subsidy in 1995 could look at his plant

as a concrete benefit.

“Our understanding that the Crow rate would be abolished was

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fundamental to our decision to invest in Canada,” he said. “If we had

not thought that, we would not have come here.”

Gerrand said when investors were considering where to build an oat

plant in the late 1980s, Canada had two major disadvantages. Oats were

marketed by the Canadian Wheat Board and the Crow Benefit for export

grain meant there was an advantage to shipping Canadian oats to U.S.

plants.

The Progressive Conservative government of the day, with Portage MP

Charlie Mayer as the CWB minister, solved the first problem by taking

oats away from the wheat board.

And company officials were told by politicians and government officials

that it was just a matter of time before the Crow was abolished.

“We were assured privately as we investigated this that the Crow’s days

were numbered,” said Gerrand. “We felt the Crow rate was not going to

last and on that basis, we chose Canada and Portage. It took five years

before it met its demise, but we guessed right and it paid off.”

The Can-Oat plant was opened in 1991 and the Crow Benefit was abolished

in 1995 in then-finance minister Paul Martin’s second budget.

During the intervening years, Can-Oat has expanded into the largest

independent industrial oat miller in the world, purchasing 10 percent

of the prairie oat crop – 250,000 tonnes last year – and employing 150

people at the Portage plant.

The company president said 95 percent of sales are to the U.S.

Gerrand said the Crow subsidy often caused oats from the Prairies to be

shipped east to Thunder Bay to get the subsidy, on a rail line that

passes by the plant, and then returned to Winnipeg for shipment south

to American competitors of Can-Oat.

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