Countering court actions | Federal ag minister digs in for any fights looming over Canada’s changing grain marketing system
MOOSE JAW, Sask. — Federal agriculture minister Gerry Ritz reassured farmers and grain companies last week that they have nothing to fear from lawsuits aimed at delaying Western Canada’s transition to an open grain marketing system.
Speaking to a supportive audience at the Western Canadian Wheat Growers Association convention in Moose Jaw, Sask., Ritz said Ottawa is prepared to fight every legal challenge that single-desk supporters launch.
He said legal attempts to derail Ottawa’s legislative agenda would be overcome.
He also encouraged the industry to base its business decisions on the premise that single-desk marketing will be eliminated, as expected, Aug.1.
Read Also
Petition launched over grazing lease controversy
Battle continues between the need for generation of tax revenue from irrigation and the preservation of native grasslands in southern Alberta rural municipality.
“At the end of the day, this is a done deal folks,” Ritz said.
“We know that there will be more (lawsuits) and we know that there will be challenges going forward … but we look forward to addressing each and every one of those challenges, again, with your help.
“We will be there to challenge (our opponents) in court and to appeal every decision should they be against (open marketing).”
Despite Ottawa’s assurances, there are lingering concerns within the industry that outstanding legal challenges to the Marketing Freedom for Grain Farmers Act could complicate the transition to an open market environment.
The next court ruling pertaining to the legality of the act is scheduled to take place later this month.
Beginning Jan. 17, former Canadian Wheat Board chair Allen Oberg and seven other ousted CWB directors will appear at the Court of Queen’s Bench in Winnipeg to argue for a court injunction delaying implementation of the act until the legality of the bill has been determined.
In a separate but related lawsuit, Ottawa is appealing a Federal Court of Canada ruling that Ritz broke the law when he ignored provisions in the former CWB Act.
That act stipulated that western Canadian farmers must be consulted before any legislative changes are made to the CWB.
A date for that appeal has yet to be announced.
Ritz told producers and industry stakeholders that the best way to disarm litigants is to continue signing delivery contracts with private grain companies and negotiating deliveries with the new CWB, which is now operated by five government-appointed directors.
Significant contract activity with private industry will serve as evidence that the transition to an open market has producer support.
“I know that hundreds of contracts have been signed to this point (with private grain handlers),” said Ritz.
“Anybody who has signed a contract, get me a copy of that because we want to have those contracts sitting there on the table when we go into that court room.
“We want to go in there with a stack of contracts for the hundreds of million of dollars of business that we have done in the last less-than-a-month, just to show that the ball is rolling and that farmers are starting to take up the challenge on this.”
Paul Orsak, a grain farmer from Binscarth, Man., said wheat producers are pleased with the way private sector grain companies have responded to the passage of the Marketing Freedom for Grain Farmers Act.
He said several companies began offering contracts within days of the act receiving royal assent.
In some cases, those contracts offered prices that were $1 per bushel or more above the CWB’s Pool Return Outlook for top quality, high-protein milling wheat.
“I was pleased to see some of the companies step right up to the plate in spite of the fact that there are still some legal risks out there,” said Orsak.
“I haven’t done any contracting yet myself with the trade. They (the grain companies) weren’t all in the market right off the bat so I’m sort of waiting until they’re all in there, competing with one another.
“I think there are quite a few farmers who are waiting for the smoke to clear, so to speak. In the early stages, I think a lot of guys are still a little bit uncertain as to where things are at.”
Orsak said many farmers expect prices to improve as the industry becomes more accustomed to the new market environment.
Kevin Bender, a grain farmer from Bentley, Alta., and WCWGA president, agreed that his members are happy with the way the market is evolving.
At the same time, there is lingering uncertainty about how the new CWB intends to compete for grain that is in storage on prairie farms, he said.
Bender said the differential between current PROs and industry prices being offered after Aug. 1 are significant.
As a result, the industry is expecting that some farmers will postpone deliveries of old crop wheat over the next seven months in anticipation of higher returns this fall.
“Personally, I haven’t signed any contracts (for fall delivery) yet, but I’ve heard from other people that (fall) prices are quite a bit more attractive than what the current PRO is suggesting,” Bender said.
“I think that one of the questions that the wheat board has to address is how can we ensure that there’s not going to be a hiccup (in deliveries) between now and August and how do we ensure that grain keeps on moving through the system.”
Bender said the CWB’s newly appointed board members may have to come up with a short-term mechanism that ensures more equitable pricing between old crop that was harvested last fall and new crop that is delivered after Aug. 1.
The board should also clarify its intentions on Series B and C contracts, added Henry Vos, a WCWGA member and former farmer-elected CWB director.
Vos said some producers made a business decision last year not to sign any of their 2011 production to a Series A contract. In lieu of Series B and C delivery, those producers may be forced to store grain until the busy fall season.
When asked if the CWB was looking at ways to draw more of the 2011 crop into the market, Ritz said he was scheduled to meet with wheat board directors Jan. 9 to discuss outstanding issues.
Some WCWGA members suggested that the CWB should implement a no-cost buy-back for 2011 grain.
Ritz rejected that idea but reminded farmers that the timely movement of grain is critical to the industry’s well being.
Significant hold backs could lead to costly logistical problems in the new crop year, he added.
“It’s certainly your right to retain your product … but we want to ensure there is timely movement of product all the way through,” he said.
“You have the right to hold (grain) … but no-cost buy-backs, at this point for the existing … (crop), are not on the table.”
