Canada’s malting barley industry says it could face losses of as much as $42 million because of the government decision to end the Canadian Wheat Board barley single desk Aug. 1.
The president of the Malting Industry Association of Canada has told at least one MP privately that the industry will sue the CWB if the government does not compensate for the losses.
Officially, president Philip de Kemp is asking for an emergency meeting with members of the House of Commons agriculture committee to lay out the grievance.
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“The situation at present is critical,” he said in a letter to MPs on the committee. “The malting companies affected cannot be expected to pay the costs that may occur as a result of the timing of the proposed regulatory change.”
He said companies expect to lose $30 million on up to 600,000 tonnes of 2007 barley contracted and up to $12 million on sales of last year’s crop.
The problem is that months before the government began moving to end the monopoly and before barley prices started their summer rise, maltsters contracted with the board for more than half a million tonnes of malting barley at prevailing prices, and then made sales contracts with their brewing customers based on those prices.
After Aug. 1, the board likely will not be able to supply the grain at the contracted price and market purchases would cost more, leaving the malting companies selling at a loss.
However, the maltsters’ president said it is not, as critics charge, because the wheat board was underpricing barley at the expense of farmers.
“It should be made clear that the risks and potential losses that could accrue to the industry are not due to these sales having been made at prices that were too high or too low relative to the market at that time,” he wrote. “These sales were made at competitive values.”
De Kemp could not be reached for clarification.
He complained in the letter that the Conservative government has not responded to maltsters’ questions about compensation.
But in answers filed with the agriculture committee May 8 in response to questions from Liberal Wayne Easter, Agriculture Canada said there will be no compensation.
“The contractual obligations of the CWB are a commercial matter,” said the response. “The government will not assume the commercial liabilities of the CWB that arise as the result of farmers’ decision to maximize their revenue and not deliver to the CWB.”
