ASSINIBOIA, Sask. – Compensation for the loss of the federal government’s guarantee of Canadian Wheat Board initial payments and loans should be worth at least $1 billion, a director told farmers at a meeting here.
Rod Flaman, who represents District 8, said Canadian negotiators didn’t have “the foggiest notion” how much that guarantee was worth before trading it away during World Trade Organization talks.
“I find that to be inexcusable,” he said.
Because the board has few capital assets, it needs to be able to backstop its borrowings, Flaman said, and a trust fund is the only way to accomplish that. He wasn’t sure if banks would even lend the agency money with no assets for collateral.
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Cherilyn Jolly-Nagel, president of the Western Canadian Wheat Growers Association, disagreed that the board should receive money.
“The compensation would have to go back to the farmers, with the farmer’s choice to reinvest in the Canadian Wheat Board in a share structure,” she told the meeting.
Bill Nicholson, wheat board director for District 9, said last week that $1 to $1.5 billion is a ballpark number for the compensation needed to offset the expected loss of the government guarantee.
At a meeting with producers in Roblin, Man., he said the money could do more than backstop CWB initial payments and loans. He said there might also be an opportunity for value-added investments, offshore joint ventures with wheat board customers, bulk buying of farm inputs, investments in grain handling and transportatio, and possibly the marketing of crops beyond wheat and barley.
Such endeavours would require a new vision and structure for the wheat board, in addition to extra money.
When interviewed later, Nicholson described the ideas as blue sky thinking and he acknowledged potential difficulties with some.
“I guess we recognize the perceived conflicts or allegations of conflict that might immediately come forward if we were direct owners in a grain handling facility or even a milling or malting facility where we’re a single desk marketer to other players in those same processing businesses.
“If it was done, it would certainly have to be a clear separation of ownership in those facilities and the wheat board’s marketing role.”
He said none of the ideas would be pursued if they threatened the wheat board’s single desk powers.
“None of the possible new directions for the wheat board make any sense if there’s no single desk,” Nicholson said. “That’s the wheat board’s key asset. That’s the strength we bring to the table.”
The guarantee on wheat board payments and loans likely won’t be lost before 2013, said Larry Hill, wheat board director for District 3. That’s when the European Union has agreed to eliminate its export subsidies.
Hill said a different date could be negotiated with regard to the end of the CWB guarantee.
He said there is evidence to suggest that compensation should be paid because, similar to the Crow Benefit transportation subsidy, the guarantee is a historic right that may be traded away.
Hill said if producers are going to benefit from compensation, the board must use it as a lever against high interest rates.
“If it’s paid out (to producers) and gone, it won’t be useful,” he said.
Federal compensation was one of two main ideas mentioned last year as ways to make up for the loss of a federal credit guarantee on CWB loans.
A checkoff was also mentioned, but it would be a tough sell in a time when many farmers are suffering negative net incomes, said Nicholson.
