The Canadian Wheat Board’s contingency fund will likely be out of the red when final calculations are made.
The final accounting of the board’s 2008-09 results will be completed this fall, but spokesperson Maureen Fitzhenry said the fund should be out of deficit.
“We’re pretty confident it will be in the black,” she said. “If those expectations come to fruition there will be some cash transferred back into the pool accounts, as well as from the fund.”
The fund is designed to underwrite the operations of the board’s producer payment options and cash trading activities.
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After incurring a loss of $89.5 million in 2007-08, the fund ended that crop year with a deficit of $28.9 million.
To minimize the deficit, the board shifted funds from sources other than sales revenue into the fund, including $18 million of non-sales revenue (such as interest) from pool accounts.
“Maybe not the full amount, but a significant amount of that will be transferred back to the pool,” said Fitzhenry.
Critics of the CWB seized on the issue last year to attack the board’s risk management strategy, marketing practices and financial management abilities and demanded a review of the board’s operations.
The CWB attributed the loss to unpredictable grain markets during the year and changed its risk management strategy to prevent similar occurrences in the future.
In 2008-09, markets were generally declining and that, combined with those new risk management practices implemented by the board, are expected to result in a net gain in the fund.
Related to markets
CWB chair Larry Hill, who didn’t want to speculate on the outcome of the 2008-09 fund calculation, said it’s not unusual for the fund to go up and down from year to year, depending on market conditions. What made it a big issue in 2007-08 was the amount of money involved.
He added the board offered last year to meet with federal government officials to explain the changes to its risk management strategy.
There has been no response to that offer and the board hasn’t heard more from the government about the contingency fund.
Hill said as far as the board of directors is concerned, the issue is over.
