Federal taxpayers will be on the hook this winter for more than $17 million to bail the Ontario Wheat Producers’ Marketing Board out of a deficit rung up in the 1996-97 crop year.
Last week, federal auditors were at wheat board offices in Chatham, reviewing the numbers before sending a report to Ottawa.
A board official said not all the deficit accumulated in the crop year ended May 31, 1997 will be covered by the federal guarantee. There is a limit on the amount of marketing costs Ottawa is obligated to cover under legislation.
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“At this point, out of the $18.8 million deficit, there is about $1.4 million that doesn’t fit the rule so it looks like it falls outside the guarantee,” said Ontario board secretary manager William McClounie.
It means the board will have to make up the $1.4 million during the current crop year, either by reducing payments to Ontario wheat growers or by tapping its savings.
“If there is a deficit not covered by the federal guarantee, the board and producers are responsible for that,” he said. “The board only has two sources of money, from producers or reserves.”
The board ran a deficit last year because it set initial prices too high for the market price decline which followed.
Then, the crop was infected by fusarium, increasing the costs of trying to make it market-acceptable and reducing prices available from buyers. Some of the crop wasn’t sold because of toxin levels.
As with the Canadian Wheat Board, the federal government is obligated by legislation to cover any losses on Ontario wheat board sales.
A federal decision to issue a cheque to the board is not expected for a month or more as finance department officials review the auditors’ report and then send the audited numbers to Agriculture Canada for a final decision.
