Cereals sold through the Canadian Wheat Board last year fetched prices ranging from $7.48 to $15.30 a tonne more than U.S. prices, the board’s final annual report under the single-desk era shows.
The Canadian Wheat Board earned $7.2 billion in revenue, distributing $4.85 billion to farmers — the third highest for both on record — in 2011-12.
“We are actually very proud of those results in that final year given the change (ending the monopoly)… while the whole sales process was going on,” CWB president and CEO Ian White said in an interview May 14.
The annual report was tabled in the House of Commons Feb. 15 and posted on the CWB’s website early last month without any public announcement or followup meetings with farmers.
The wheat board sold 19.98 million tonnes of wheat, durum and barley in the crop year that ended July 31, 2012, up almost 500,000 tonnes from the year previous.
To measure its marketing performance early in the crop year the wheat board sets what it hopes to earn above American grain prices. In 2011-12 it exceeded its targets. The board wanted to earn an average of $6.50 a tonne more for wheat but beat it by $7.48 a tonne or 20 cents a bushel.
The target for durum and designated (malting) barley was $4.50 and $10 a tonne above the U.S., respectively, but came in $7.70 and $15.30 a tonne higher.
The results feed the ongoing dispute between former wheat board directors and the federal government over whether farmers should be compensated for the loss of the single desk as well as over the board’s assets.
“It’s a real tragedy that farmers in Western Canada are losing that money,” said Stewart Wells, a Swift Current, Sask. farmer who was a farmer-elected director. “That’s part of the class-action (lawsuit) case and makes up the majority of that $17 billion that we say farmers have lost because of the loss of the single desk.”
The Friends of the Canadian Wheat Board launched the suit in February. It also wants compensation for the assets and the contingency fund the new CWB kept.
The government successfully argued in court it didn’t need farmers’ approval through a vote to end the single desk because it was forming a completely new organization, Wells said. “If that’s the case those assets that farmers had in that old organization should be paid out to the farmers,” he said.
The CWB sees its differently.
“The contingency fund is something built up out of CWB trading activities over a period of years,” White said. “That’s not farmers’ money. That’s not part of the pool.”
The same goes for assets such as the wheat board’s 3,375 hopper cars, which are currently not for sale, White said, and its Winnipeg office building, which is.
The contingency fund was set up to even out surpluses and losses from farmer pricing programs outside of the traditional pools. Oct. 18, 2011 the federal government ordered all profits from non-pool programs moved to the contingency fund.
As of Aug. 1 money from the fund could be used for anything set out in the CWB’s annual corporate plan or for anything approved by the agriculture minister with the concurrence of the finance minister, the 2011-12 annual report says.
Money from uncashed farmers’ cheques used to go into a “Special Account,” which then funded bursaries and grain-related research. That money was also transferred to the contingency fund.
The report says $22 million in wheat board pension expenses from previous years was charged to the contingency fund in 2011-12.
“It was deemed to be one of those things that should rightly go to the contingency fund because we hadn’t charged pool accounts previously for it and we didn’t want to lump the last pool account with a large bill,” White said.
In the future, the federal government will keep the old wheat board’s pension fund solvent and pay for its administration, he added.
The new CWB started the current crop year with a clean balance sheet thanks to $349 million from the federal government to cover the cost of converting to a commercial grain company.
The wheat board paid $5.9 million from its pool accounts for restructuring to cover what was deemed to be normal costs, White said.
With the 2011-12 crop year being the last with the single desk, pool accounts were also vetted and audited by Agriculture and Agri-Food Canada. That’s why final payments and the tabling of the annual report were slightly delayed.
“We actually had to clean up the past as well as this last year’s accounts because we had to account for everything that might have been outstanding and rolled forward from previous years,” White said.
Unlike past annual reports, the latest doesn’t break out compensation paid to the CEO, individual senior executives or directors because of changes in accounting practices, White said.
Total “key management personnel compensation” was $9 million in 2011-12 compared to $3.5 million the year previous, the report says.
Most of the money — $5 million — was for “termination benefits.”
Many senior staff were sacked as the wheat board downsized for the open market.
“They were paid their full severance costs… salary adjustments… pension adjustments… and various other things,” he said.
Total board remuneration in 2011-12 was $420,400 compared to $626,482 the year before largely because the number of directors, excluding the president, dropped to four from 14 after legislation ending the single desk passed in December 2011.