The Canadian Wheat Board should not receive ongoing government help after its grain-marketing monopoly ends, but needs to quickly plan for a new role, the head of Richardson International Limited, Canada’s second-largest grain handler, said on July 7.
Canada’s Conservative government, which holds a majority of seats in the House of Commons, plans to pass legislation this autumn to scrap the world’s last major agricultural monopoly as of August 2012.
The wheat board has responded by calling a non-binding vote by farmers to try and change Ottawa’s decision, while also talking with federal officials about a possible new role.
“What they really need to do is get on with it,” said Richardson president Curt Vossen in an interview with Reuters. “I don’t see them grasping their options – they seem to be fighting the same old battle fought for the last 50 years.”
The wheat board, which controls marketing of Western Canada’s wheat, durum and barley, has said that to compete in an open system it needs capital and regulated access to grain-handling facilities. Last week, Agriculture Minister Gerry Ritz said he would consider short-term capital to ease the board’s transition.
“What we’re in favour of is (the CWB becoming) a commercial entity that has the same playing field as we do,” Vossen said. “To create regulations to give it validity, an artificial flow of capital … we would be very clearly against.”
Short-term working capital from Ottawa to finance initial grain purchases may be reasonable, but public funds to acquire grain-handling assets are not necessary, he said, adding that the wheat board could sell its rail cars to raise money.
Sell rail cars
Privately held Richardson, based in Winnipeg, is one of three dominant Canadian grain handlers, along with Viterra Inc. and Cargill Inc., but Vossen said the field may expand after the monopoly.
“I think you’ll see more players, not less. There may be some joint ventures, some alliances, some mergers of new players and existing, but I think you’ll see a proliferation because people will inherently want to get into this market.”
Family-owned Richardson, whose roots on the Canadian Prairies go back 153 years, is not interested in selling out, Vossen said.
“This is our sandbox. And we’re really looking forward to growing our share in this market.”
More wheat acres
That opportunity is there as Western Canada’s farmers will likely plant more wheat and barley once new marketing opportunities arrive with the monopoly’s end, Vossen said.
Grain handlers may invest more in developing new wheat varieties, while new processors may also set up.
Richardson is interested in building mills or maltsters, as ending the monopoly would allow processors to directly buy from farmers, Vossen said.
On the other hand, the Manitoba government has warned that the monopoly’s demise will cost jobs in the CWB’s Winnipeg base and traffic will diminish through the province’s northern Port of Churchill, of which the wheat board is the biggest user.
The seldom-used port lacks a sustainable vision and its infrastructure will remain in place even if the port goes idle for now, Vossen said.
“Is it just a vision that sounds good and has no reality? And we’re kidding ourselves by continuing to say, ‘…Let’s find a way to force grain through it.’”
The CWB could become a private grain handler or a farmer co-operative working with existing players, but Vossen said wheat board officials have not talked with Richardson about a post-monopoly relationship.
“We’re happy to work with you to handle your grain – but first you’ve got to come and talk to us.”