Fulton and Gray are professors of agricultural economics at the University of Saskatchewan.
The announcement last week that the federal government will fire Adrian Measner, the president and chief executive officer of the Canadian Wheat Board, should be of the utmost concern to farmers. The federal government is effectively stripping farmers in Western Canada of their legislated right to manage the CWB.
Measner’s mid-crop year dismissal will also be disruptive to CWB operations and will almost certainly damage the CWB’s ability to market grain this year, thus lowering returns to producers.
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The CWB is a unique institution with a distinctive governance structure. As a result of legislation enacted originally in 1943, all prairie farmers are required to sell their wheat and barley (with the exception of grain sold for feed purposes within Canada) through the so-called single desk of the CWB. This feature of the CWB has led, appropriately, to a distinctive governance structure.
Since farmers are required to sell their grain through the CWB, they are provided with considerable power over how the CWB operates; amendments to the CWB Act in 1998 were designed specifically to provide farmers with this power.
Farmers elect 10 out of the 15 seats on the board of directors and any major change to the operation of the CWB requires consultation with the board and a vote of producers.
These provisions of the act appropriately give grain producers, who rely on the CWB for effective marketing, control over its operations. Since 1998, the federal government has used its five appointments to the board to provide additional business and management expertise.
Recent actions by the government, including a gag order given to the CWB earlier this fall and the announcement last week, signal a fundamental change in this practice.
Over the past few months, the government has appointed three new directors (one was removed in the same fashion as Measner is being removed); all three are supporters of marketing choice. The firing of Measner would allow an additional board member to be appointed with a similar view.
Clearly, the aim of these new appointments is to provide additional support to a minority of farmer representatives that have been elected on a marketing choice platform.
Simply put, although the majority of farmer elected board members support the direction the CWB is taking, they could well be overruled with the help of the government’s appointments. While this strategy may advance the government’s ability to meet its campaign promise of providing farmers with marketing choice, it fundamentally undermines the farmers’ control of the CWB and the intent of the Act.
No longer will farmers be setting important policies of the CWB.
It is critical that the CWB operate with producer control of management to ensure that it obtains the best value possible for farmers. Instead, the government will effectively set the policies of the CWB.
It is somewhat ironic that a party that has long advocated that the CWB should operate at arms length from government would take these measures.
This attempt to wrest control of the CWB from farmers, while permissible under the act, signals the government is willing to override farmer control of the CWB in order to meet its political needs.
The changes undertaken by the government over the past few months are likely to result in less than maximum returns. Already there is talk of other senior managers potentially leaving the organization.
Customers, worried about the service they will receive, will look elsewhere for grain. The divisions that will exist on the board and between the board and the new president/CEO will divert valuable time and thought away from the task of marketing grain.
The result will be lower returns for farmers.
The government needs to separate the political question of marketing choice from the day-to-day governance and operations of the CWB.
If farmers vote to remove the single-desk selling powers of the CWB and if this decision is backed up with legislation, then the CWB will accept this new mandate. Until this point is reached, however, the federal government must resist interfering in CWB operations. To do otherwise is to disregard the intent of the act and the manner in which farmers expect government to operate.
