As the Canadian Wheat Board inches towards privatization, the debate has begun whether it will be farmers or the likes of Cargill that ultimately own the assets.
The latter has not even raised the idea with the board, CWB president and CEO Ian White said at a recent producers’ meeting.
“There’s been no discussion of that at all,” said White.
Cargill bought the grain-marketing arm of the Australian Wheat Board several years ago after it lost its grain-selling monopoly and was the first to reach an agreement to handle CWB grain — prompting takeover speculation in some quarters.
The same act that’s killing the CWB’s monopoly Aug. 1, requires the organization to be privatized, sold, or wound down no later than five years from now.
“The act doesn’t contemplate who the owner will be in the future,” said White. “The act really just talks about privatization and it’s really up to ourselves and talking with farmers about how that might work going forward.”
But White was quick to add, “We see that our natural shareholders should be farmers.
“Our mandate at the CWB is to operate for the farmers that deal with us,” he added. “So we won’t be just like any other grain company in that regard, but we’ll be looking as far as we can to be on the farmers’ side with regard to whatever we offer and the way we operate.”
White then went further, suggesting the board is thinking of ways to discourage a takeover in the future.
“One of the things that we’re concerned about is if we just set it up as a certain style of company, which might be easily taken over — we don’t think that’s necessarily the right thing to do,” White said “That’s why we’ve got to take our time and think through the best alternatives here.”
Another major issue facing the board is how to raise capital as the organization “will need lots of it to survive,” White said.
Although CWB’s assets — hopper cars, its office building, lakers under construction, and contingency fund — are technically government property, there have been calls for them to be sold and a payout made to farmers who sold through the board. But White said they should go to the new CWB. (Money for the contingency fund comes from futures and basis trading and is used to offset losses that sometimes occur. It is not connected with the CWB’s pools.)
White said the board has met with Agriculture Minister Gerry Ritz twice in the last three months and has been very clear on what it requires in order to succeed in an open market.
White also said the railways will be in charge of car allocation and he expects it will work much the way it does now. He also said all grain delivered this crop year will be dealt with in the current pool so the CWB won’t have to determine a value for unsold carry-over grain at the end of the crop year.