The Canadian Wheat Board’s decision to buy two lakers to shuttle grain from Thunder Bay, Ont., to the St. Lawrence Seaway continues to rankle farmers.
In Taber, Alta., new District 3 director Stewart Wells said the $65 million purchase announced in mid-February, one of the first issues he had to deal with as a board member, is expected to contribute $10 million to general revenue and contribute to more efficient grain movement.
But the board’s failure to inform farmers of the deal beforehand was a problem for several farmers at the meeting, among them Brian Otto of Warner, Alta.
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“You took $65 million for this laker purchase. What’s next? You use our money but you don’t ask us, you don’t consult us. That’s a problem,” said Otto, who ran unsuccessfully against Wells in last fall’s election.
At a farmer forum in Weyburn, Sask., similar sentiments were expressed to board member Rod Flaman.
“You have a responsibility to consult,” said one man. “You were afraid and you darn well knew that it will come with some objection and it probably wouldn’t have been approved.”
He called the move irresponsible and underhanded.
“You’re leaving a very bad sense and taste in our mouths. I do believe I’m speaking for the majority.”
Frank Groeneweg, who farms near Edgeley, Sask., also asked why farmers were not consulted.
“There is the perception out there that the wheat board tried to pull a fast one on us,” he said.
Flaman said he wasn’t surprised some are still angry about the decision.
“I hear what their issues are in terms of compensation and using their money,” he said in an interview. “Those are not issues that we didn’t take into account when we made this decision.”
In Taber, Wells acknowledged the opinion and expressed his own initial discomfort.
“As counterintuitive as it seems, and it’s something I’m not real comfortable with, but it seems like the more important some of these decisions are, the fewer people you can talk to.”
Wells noted confidentiality agree-m ents, the wishes of partners involved and the proprietary nature of business information affected the board’s ability to reveal details. That explanation did not satisfy Otto.
“They couldn’t reveal the exact details of what they were trying to do but they certainly could have come out to producers and said, ‘look, we’re looking at taking some of your money out of the pool account and investing it in transportation.’ That’s all they had to say. They didn’t have to identify what the deal was,” said Otto after the meeting.
Wells told the crowd that the business case for buying the lakers wasn’t feasible until this fall, when specific duties were lifted.
“It was actually right in the middle of the election, sometime in October, when the federal government changed its policy on duties for ship building and that meant a 25 percent difference in the purchase price of these lakers,” said Wells.
“All of a sudden the issue was much more real and practical.”
He said he looked to the board’s purchase of rail hopper cars as the closest precedent to the laker deal to assess its merits. In today’s dollars, the wheat board hopper cars would cost $253 million, and they put about $7 million annually into the revenue stream.
In Weyburn, Flaman noted farmers don’t complain about the revenue they gain from the 3,400 hopper cars the board owns, even though that money is from leases and not grain production. He said that amount is about $30 million.
“That was money that the wheat board earned and because we don’t have any kind of an asset base or share structure, we had no choice but to put that money into the pool account,” he said.
“I would argue that we’re taking some of those unearned revenues and putting them towards our next capital acquisition, which in turn will generate another positive cash flow that will flow into the pool account.”
