The Canadian Wheat Board is dead but CWB, its government-owned, open-market successor, is still a lightning rod for controversy.
CWB is being criticized for not taking delivery of all the grain it contracted this crop year, there are questions about why it issued final adjustment payments from 2011-12, and its 2012-13 financial statements are three months overdue.
CWB is in default of its Early Delivery Pool contracts, according to an unnamed person who emailed a number of news outlets June 20 using the address [email protected]
“Elevator companies have been refusing to accept delivery of board grain but will take it if you sign a contract with them,” the email said. “If you phone the board and ask about your options they will tell you that you can either roll to next year or buy out of your contract. We don’t want to deliver next year and we don’t want to pay because the board can’t meet its obligations. We want our bins empty before harvest and we want to get paid for last year’s crop.”
The email notes that CWB’s contract states: “If CWB cannot accept delivery within the pooling period due to logistical constraints or other reasons, CWB may extend the pooling period by up to thirty (30) days.”
The email writer refused to identify him or herself, but said he or she was not affiliated with Farmers For Justice, a group that protested the wheat board’s monopoly by illegally exporting wheat and barley to the United States.
Like all grain companies this crop year, CWB encountered delays in shipping grain by rail, Gord Flaten, CWB’s vice-president of procurement said in an interview June 20.
The contract farmers signed with CWB says if farmers can’t deliver they can roll over the contract and deliver next crop year or buy out the contract, he said. But there’s another option.
“We can keep trying to take delivery and that’s what most people choose to do,” Flaten said.
“We find that we really don’t get into a bunch of legal discussions. That’s not where most people’s minds are at.”
Flaten confirmed that some companies have sometimes not taken delivery of CWB grain despite being under contract to do so.
“There is something to that, but that varies too, company by company, station by station, so there’s no universal statement you can make how things play out in a year like this,” he said.
Former wheat board director Stewart Wells said he and other monopoly supporters predicted CWB would have trouble getting the grain companies it competes with to handle CWB grain.
CWB has been buying elevators and has also announced it’s building two.
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When the emailer was asked why farmers don’t just haul their CWB grain to the U.S. and sue CWB he or she replied: “We aren’t in default, the board (CWB) is. Why should we be forced to buy out?”
Pool returns are better than the cash market now too.
Annual report past due
Meanwhile, the pro-monopoly Canadian Wheat Board Alliance (CWBA) has written Agriculture Minister Gerry Ritz asking why CWB has yet to file its 2012-13 annual report, including an audited financial statement. Stewart Wells says CWB is required under the CWB Act to file its annual report with the minister of agriculture by March 31. The minister is obliged to table it in Parliament no more than 15 days later.
“The CWB continues to prepare its report in this new era,” Ritz said in an email June 18. “When it is received by government it will be tabled in Parliament.”
Former wheat board director and CWBA member Kyle Korneychuk says the delay is suspicious. Perhaps CWB is on the verge of being sold, he speculated. Perhaps the books look bad, he said. Or it could just be CWB incompetence, he added.
“This new conspiracy theory of a small few is just the latest example of their unwillingness to recognize the positive impact marketing freedom is having across the Prairies,” Ritz said.
Either way CWBA is anxious to see CWB’s financial statements as it builds its lawsuit alleging the federal government cost farmers more than $17 billion when it ended the board’s monopoly Aug. 1, 2012.
Final, final payment
Wells also speculates final adjusted payments issued by CWB from the 2011-12 wheat and durum pools might have something to do with the lawsuit.
CWB issued $26.3 million in what it called final adjustment payments in May — $11.7 million and $14.6 million for wheat and durum, respectively.
“As far as I know what they’ve done is totally unprecedented,” Wells said, noting until now wheat board final payments were just that — final.
Flaten said the explanation is straightforward.
“It’s from discovering the (wheat board’s) costs were a bit lower than originally calculated,” he said. “There was some money there that could and should be paid out (to farmers in the pools) so we followed through on that.”
The final payment under the wheat board’s single desk on wheat and durum was 86 cents and $3.61 a tonne, respectively.
The reason the final adjusted payments came almost two years later is because it took time to do the audit and then get federal government permission to approve the payments, Flaten said.
According to Wells, CWB, knowing the lawsuit will scrutinize the cost of converting the monopoly board to open-market CWB, is being extra careful.
“The whole thing doesn’t pass the smell test for no other reason than they haven’t properly explained themselves,” Wells said. “Combined now without putting out their audited financial statement the way they’re supposed to, it makes you wonder what’s going on over there.”