The Canadian Wheat Board’s newest director has no doubt the grain marketing agency – minus its single desk powers – can successfully do business in an open market.
Bruce Johnson was appointed to the board Nov. 1 by CWB minister Chuck Strahl, filling one of two vacancies among the five appointed directors.
A former grain company executive, a member of the government’s task force on getting rid of the CWB’s single desk and an open market proponent, Johnson said in an interview last week the recommendations of the task force would put the board in a good competitive position.
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“The members of the task force really went out of their way to ensure the options outlined gave the board a very good chance of success,” he said.
Johnson said the report offered a number of “concessions” designed to put what it called CWB II in a position to survive and prosper.
Those included a government guarantee of up to $200 million in borrowings for a period of two to five years, transfer of assets worth about $110 million and the opportunity to sell shares to farmers to raise another $100 million in new capital.
“That certainly can’t be considered a pittance,” he said, adding that throughout its deliberations, the task force was focused on providing the board with every opportunity to be viable in the long term.
Critics of the report call that nonsense, saying CWB II would be nothing more than a small grain company, with limited capital and no physical assets, trying to compete for international sales against large multinationals worth billions of dollars.
CWB chair Ken Ritter has said anyone taking a business plan based on that to a financial institution would be laughed out of the office.
Johnson disagreed, saying CWB II would have a large book of present sales and a pool of long-time customers that would enable it to start life in the open market with a significant volume of grain.
“I think it would have the financial capacity to produce a successful business plan,” he said.
The appointment of Johnson generated a mixed response, with support from some like the Western Canadian Wheat Growers Association, and harsh criticism from others, like the National Farmers Union.
Critics said Johnson, along with another recent appointee, Ken Motiuk, was selected solely on the basis of his support for the government’s plan to strip the board of its single desk authority.
Johnson said that while he makes no secret of his support for the government’s proposal, he believes he is well qualified to serve as a CWB director, pointing to nearly 25 years of experience in various sectors of the grain industry, as well as a background in corporate governance.
Critics say that executive experience includes not-so-successful stints at Saskatchewan Wheat Pool, where he was fired from his position as director of the company’s grains group, and as chief executive officer of FarmGro Organics, a Regina mill and processing facility that ran into trouble with the provincial securities commission and went into receivership.
Johnson defended his track record, saying his tenure as head of Ag Pro Grain was highly successful, that SWP suffered its major financial problems after he left and that FarmGro was meeting its performance targets when a number of investors decided to divest.
“I stand by my record, while at the same time acknowledging that one can always do better.”
Johnson said his immediate goal as a director will be to foster discussion of how the board can change in order to offer more “flexibility” to farmers in a new marketing environment.
While the producer payment options introduced in recent years are a good start, farmers need even more choice in how they price and market their barley and wheat in the period leading up to an open market,” he said.
