The Canadian Wheat Board says its employees are tightening their belts
to help control the costs facing prairie grain farmers.
The board has pared back its 2002-03 administrative budget by eight
percent from a year earlier, and most of those savings are coming out
of programs and payments for the people who work there.
“Basically we’re taking our cost reductions on the backs of employees,”
said Gordon Menzie, the board’s executive vice-president for finance.
Spending on staff training and development has been curtailed, and
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travel expenses are being cut.
Merit-based salary increases slated to go into effect Aug. 1 have been
delayed for three months, hiring for 27 vacant positions has been
deferred until next year and some jobs are being eliminated.
In addition, all departments at the board have been asked to look for
ways to save money in their day-to-say operations.
Menzie said the board is “very, very sensitive” to the issue of
controlling costs, given the disastrous situation faced by many prairie
grain growers.
But he added that there’s only so much the board can do, given the
complex and demanding work that it has to do on behalf of growers.
“To cut back much more we would have to look at programs which impact
our ability to deliver services to producers,” he said.
The agency has to be somewhat cautious in those areas that it has been
cutting.
For example, the board can’t eliminate travel while competitors are
travelling the world meeting with customers. Similarly, if it doesn’t
pay decent salaries it won’t attract or keep good people.
The board’s administrative expenses have become a target for criticism
from some groups.
Expenses have risen steadily in recent years, climbing from $46.4
million in 1996-97 to $66.4 million in 2000-01.
Menzie declined to attach a dollar figure to the board’s administrative
spending for 2001-02, but said it came in under budget.
The 2002-03 budget set this May was two percent below the budget set
one year earlier for 2001-02. Then, in August, the board of directors
approved a further six percent rollback.
The Western Barley Growers Association recently sent an open letter to
CWB chair Ken Ritter noting that spending on administration had
increased sharply in recent years.
Association president Albert Wagner (who has declared his intention to
be a candidate in the CWB board of directors election this fall) called
on the agency to do more to control costs and tie spending more closely
to the volume of grain handled.
“This increase in spending with no correlation to volumes is not
responsible action,” he said. “Continually taking more money out of the
pool accounts directly reduces returns to farmers and is harming the
general economy of Western Canada.”
Menzie said the increase in administration expenses in the last few
years can be attributed to a necessary but expensive new accounting and
software package and computer changes related to the year 2000. Both
have resulted in significant ongoing depreciation charges.
He also said it’s simplistic to suggest that the board’s spending
should be tied directly to its sales.
While operating costs do fluctuate with grain volumes, many of the
board’s costs are unrelated to grain volumes, including internal audit,
legal operations, policy and planning, market development,
communications, financial operations, market analysis and building and
service costs.
“If you have half a crop or twice a crop, those areas still have to do
the same work,” he said.
