The federal government has taken two more significant steps down the road toward abolishing the Canadian Wheat Board’s single desk marketing powers.
- It released a 30 page report by a government-appointed task force, recommending that the CWB Act be repealed by June 2007, that an agency called CWB II run by government-appointed directors and executives be set up to oversee the transition to an open market and that the board’s export monopoly be ended for barley in February 2008 and wheat in July 2008.
The task force concluded that a new CWB, owned by farmer shareholders, could thrive and create value without monopoly selling powers, a proposition described by single desk supporters as impossible.
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- CWB minister Chuck Strahl took the unprecedented step of firing appointed CWB director Ross Keith, a strong supporter of the single desk. Another appointed director, Bonnie DuPont, resigned in early October, effective Nov. 30, left the board last week at the government’s request, and then accepted an appointment to the Bank of Canada.
These actions provide the minister with an immediate opportunity to appoint two directors who will support the government’s plan to move to an open market.
Depending on the result of the CWB director elections now underway, the board of directors could soon have a majority of open market supporters.
Keith’s Oct. 26 dismissal came following an exchange of letters initiated by Strahl, in which the director vigorously rejected the government’s plans to dismantle the single desk and told Strahl he wished to serve his three-year term, which was to run until the end of 2007.
“I feel strongly that the notion the government is promoting that the wheat board can be a strong agency without the single desk is a misrepresentation of reality and I told the minister so,” said Keith, a CWB director since 1998, in an interview Oct. 30.
As for the task force, Strahl said he will be looking for feedback from producers and other grain industry stakeholders in the coming weeks.
“This is a comprehensive model of how the CWB could thrive in a marketing choice environment,” said the minister.
“I will be examining it carefully and I look forward to hearing what Western Canadian grain producers have to say about the ideas put forward by the task force.”
The task force report is available on the government’s website at www.agr.gc.ca/cwb.
The seven-member task force, which the CWB declined to join, was charged with figuring out how to move from a single desk to an open market.
It proposes a four-stage process lasting some seven years, starting with a bill put before Parliament to repeal the CWB Act, which establishes the board’s monopoly over wheat and barley sales for export or for domestic human consumption. The process would end in July 2013, when various policies and programs designed to ease the transition to an open market, including continued government guarantees of CWB borrowing up to a limit of $200 million, would expire.
At that point the new CWB would look something like this:
- It would have no regulatory powers and would operate as another player in the grain market.
- It would have no ongoing financial support from the government, being completely owned and funded by farmers.
- There would be no restrictions on who could own shares in the company, but the majority of shares are expected to be held by western farmers.
- It would be free to purchase any assets it needed to buy, transport, handle or sell grain.
- It would be free to market any crops grown anywhere in Canada, as well as crops of foreign origin.
- It would set up mechanisms for trading of farmer-owned shares and issuing additional shares to raise new capital.
- The government should also have taken legislative or regulatory steps to protect access to producer cars, force increased competition between the railways and continue CWB funding of research and other grain industry institutions.
The report says it tried to seek a balance among giving CWB II financial and other support during the transition period to help ensure its success, encouraging new private investors in the grain sector and providing farmers with marketing choice.
The report was quickly rejected by single desk supporters including Saskatchewan Agriculture minister Mark Wartman.
“It’s basically what we expected they were going to try and do and that is get rid of the CWB,” he said.
“The design that they’ve put forward is exactly what we anticipated. It is of another grain company and a small grain company with few assets isn’t going to last very long in this competitive environment.”
While the report will generally please groups that support the government’s plans, it may also may disappoint those who had been lobbying for changes to be implemented Aug. 1, 2007.
