Wheat and barley growers might as well take a crisp $20 bill out of their wallets, tear it in half and fling it in the air.
According to a Canadian Wheat board spokesperson, the latest trade challenge by the United States amounts to just that – throwing money away.
Justin Kohlman said the U.S. challenge could cost the average permit book holder about $20.
Even if the wheat board is victorious, as it has been in the previous eight American challenges, there is no way to recover those defence costs.
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“It doesn’t matter that they could be blowing smoke and there’s no relevance whatsoever, we still have to pay the money,” said Kohlman.
“We’ve budgeted about $2 million for this one.”
Those costs will be taken directly from pool accounts, which means they will be shared by approximately 100,000 permit book holders.
Farmers who sell more grain to the board will pay a higher percentage of the bill, but the average works out to $20 per wheat or barley grower.
Kohlman said $2 million in legal fees is the worst case scenario. The actual costs could be as low as $300,000.
The previous eight challenges combined have cost the CWB approximately $2 million, but this will be one of the more expensive challenges because it involves a “quasi-judicial process.” Six of the last eight have been more like studies than court cases.
Kohlman said costs associated with trade challenges are unavoidable. Critics of the board disagree.
“If we didn’t have that monopoly in place, maybe we wouldn’t have to spend this extra $2 million that we can ill afford right now,” said Ted Menzies, president of the Western Canadian Wheat Growers Association.
The board says the repeated attacks are unfounded because they have failed eight times, but Menzies said there must be something to them because they keep resurfacing.
He said there are a number of multinational grain companies operating on both sides of the border that never seem to raise the ire of the Americans, but the board with its export monopoly is a continual target.
“There has to be some foundation for these complaints.”
Menzies said he isn’t defending the North Dakota Wheat Commission, which launched the latest challenge, but he agrees that the board’s monopoly has to be removed.
The cost of the latest investigation depends on how aggressive the Americans are and how willing the Canadian government is to help the board mount its defence.
The challenge is based on Section 301 of the United States Trade Act, which allows groups to seek relief from foreign trade practices that burden or restrict U.S. commerce.
If it remains a straight Section 301 challenge, the board’s defence bill should be about $300,000. If the Americans raise other challenges or appeals, costs will rise.
Kohlman said the board will retain outside council.
“You need the expertise of specialized trade lawyers for this kind of thing.”
