The new CWB says it’s ready to compete in an open market and buoyed by a good crop, high prices and farmer support
The drama over the demise of the Canadian Wheat Board single desk showed no sign of abating last week as the new era of open grain marketing began.
Prime Minister Stephen Harper told several hundred cheering farmers gathered at a farm near Kindersley, Sask. Aug. 1 farmers who ran the border to challenge the board’s monopoly in the 1990s deserve much of the credit for bringing about the change.
“They held firm, their courage of conviction never faltered and it is to them much of this victory is owed because it is to them that the consciousness of the country on this issue was really raised,” Harper said as open-market supporters celebrated their new marketing freedom. “And friends by standing with them and by enabling western farmers to freely market their wheat and barley our government has kept a solemn promise that dates back to the earliest days of our movement.”
Harper used the rarely used “Royal Prerogative of Mercy” to officially pardon farmers who were charged and convicted of illegally selling grain to the U.S. “For these courageous farmers these convictions will no longer tarnish their good names.”
Harper said an open market will encourage new investment and value added in Western Canada.
“Never, never, ever again will western farmers and only western farmers growing their own wheat on their own land be told how they can and can’t market their products,” Harper declared to cheers and applause.
Back in Winnipeg, the Canadian Wheat Board, now known as CWB, announced it is ready to compete in the first open market for wheat in the West since 1943.
“We begin the new era in a position of strength and a climate of optimism,” president and CEO Ian White said as he unveiled the CWB’s new logo July 31.
“We have a brand new look, a strong business model and the support of thousands of farmers who have told us they intend to market grain with the CWB and that makes the future very bright.”
The CWB also has the support of the federal government, he added, noting it has contributed $349 million to provide a “clean balance sheet.”
The government is also guaranteeing the CWB’s borrowings and most of the CWB’s initial payments. “We have an expert sales team comprised of almost the same people as before continuing to sell as much grain as they possibly can,” White said. “And very soon we will be officially launching canola pools that can be entered into by farmers.”
Up for sale?
The CWB has added handling deals with Louis Dreyfus Canada and Richardson International, joining other major handlers, including Viterra and Cargill.
Ottawa’s support for the CWB is only temporary. Within five years the CWB must be privatized, sold or wound down.
“We’ve already had a couple of entities come forward saying they’d love to buy the CWB,” Ritz said during a separate news conference July 31 in Saskatoon. “They have a tremendous Rolodex of marketing around the world and they (potential buyers) want to capture that. We’re not prepared to entertain that takeover that quickly. I think there are some great roles for the CWB to play in the next two to three years and we’ll analyze at that point. There’s no rush.”
White declined comment on how many farmers have signed CWB contracts, but did say it expects to handle 30 to 40 per cent of this year’s wheat crop.
The CWB is also optimistic because western farmers have begun harvesting what’s shaping up to be a bigger-than-average crop, with above-average quality. World grain prices are at near-record levels with wheat trading in futures markets for $9 to $10 a bushel due to the drought in the United States’ Midwest.
Not to be outdone, single desk supporters used street theatre outside the board’s offices to protest the monopoly’s elimination and predict doom for small farmers.
Former board farmer-elected director Kyle Korneychuk said an open market will force western farmers to compete with each other, driving their prices and margins lower.
No going back
Anders Bruun, the lawyer representing the Friends of the Canadian Wheat Board, which has asked the Supreme Court of Canada to rule on whether Ritz broke the law when he introduced the grain-marketing freedom bill in Parliament last October concedes there is no going back.
“Things may have changed so much that the monopoly couldn’t possibly be restored,” Bruun said, adding that is why farmers are working on a $17.5-billion class-action suit for damages.
“We’re already seeing the NDP and the Liberals start to campaign saying as soon as they become government, God forbid, they’ll bring back the single desk,” Ritz said. “That’ll probably keep them out of Western Canada for the foreseeable future and I welcome that.”
Pro-open-market farmers on both sides of the border have set up a website (http://canada-usgrainandseedtrade.info) to answer questions about selling in each other’s markets.