Federal agriculture minister Gerry Ritz has asked the federal auditor general to investigate Canadian Wheat Board finances in light of contingency fund losses last year.
During a speech to the Canadian Federation of Agriculture Feb. 26, Ritz said farmers are concerned about $130 million in losses recorded in the CWB contingency fund over two years.
As well, he said the board offer to have the auditor general investigate the appropriateness of board efforts over the past two years to improve its risk management practices does not go far enough.
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“It’s good to see that the board has already said it’s open to an investigation by the AG, but there cannot be any half measures,” he said as CWB chair Larry Hill sat in the audience as a CFA delegate. “The board must not limit the scope of the AG’s investigation in any way.”
He said the CWB must “open all its books and fully co-operate with the auditor general to make sure she is able to do a complete and thorough job on behalf of farmers.”
However, Ritz acknowledged that with other audit work ongoing, the office of auditor general Sheila Fraser might not be able to get to the CWB for several years.
Hill said in an interview the CWB board of directors will discuss the minister’s call for a full audit when it meets in late March.
“I don’t know that this is really necessary.”
Hill disagreed with Ritz’s claim that the board has lost “nearly $130 million over the last two years of farmers’ money.”
Ritz arrived at the figure by adding a reported $38.6 million deficit in the board contingency fund for 2007 and $86.4 million in 2008. The contingency underwrites the risk of price hedging for the board’s producer payment options and cash trading.
Hill said it is wrong to call those deficits losses to farm income. The contingency fund is designed to grow and contract depending on market conditions. Last year’s deficit was the result of “bizarre, unpredictable” market swings.
“We have taken steps to strengthen our risk management systems and we agree those steps should be reviewed to assure producers about board operations,” he said.
“I don’t know that it should go farther than that.”
At the University of Saskatchewan, agricultural economist Richard Gray says not, according to a Reuters report. He said the board releases audited financial reports each year.
Gray said the minister’s call for an open-ended audit is “pure politics.”
Ritz said he expects the CWB to quickly confirm “that they will agree and ask the auditor general to conduct a full audit.”
The issue continued to generate debate at the House of Commons agriculture committee meeting Feb. 26, where it was at the centre of a political wrangle.
Conservative MP Randy Hoback from Prince Albert, Sask., tried to propose a motion that committee members travel to Winnipeg “to meet with representatives of the Canadian Wheat Board and other professionals to investigate the CWB’s substantial losses in commodity trades over the last two years despite the windfall in crop prices.”
Liberal Wayne Easter questioned Hoback’s interpretation of the board’s financial report and said he would not let the motion come to a vote until Ritz and his parliamentary secretary, David Anderson, appear before the committee to answer questions about when they learned of the contingency loss.
He moved to table the motion and the opposition majority on the committee supported him.
It left Hoback fuming.
“Who wins here?” he said to Easter. “Farmers or you?”
