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Hard To Sink This Deal

The reaction to last week’s announcement that the Canadian Wheat Board is investing in lake freighters was for the most part predictable.

Some farm groups actually think it’s a wise investment and a practical thing for the board to do. It’s certainly not the first time the board has invested in transportation infrastructure. And in hindsight, its investment in hopper cars has paid off.

But those who want the board disenfranchised had a long list of reasons why investing $65 million in lake freighters that will hit the water in four years, be paid off in eight and contribute an estimated $10 million back into the pool accounts every year thereafter is a bad idea.

“The CWB board of directors should not be taking money from farmers to finance the purchase of ships or any other capital asset,” WCWGA president Kevin Bender said in a release calling on the federal minister to block the deal.

“Farmers on the verge of retirement, needing the money or wanting to invest elsewhere should not be compelled to buy ships.”

Although it’s not clear the federal minister would block the deal even if he could, he did wade in with the view that this is a reckless use of farmers’ money. Then there was the board-bashing blogger, who posted his latest conspiracy theory.

Perhaps the most practical critique came from the Grain Growers of Canada, which opposed the purchase but suggested now is a good time for a discussion on how to best position the board for the future.

“If the CWB is going to accumulate assets in preparation for a new business environment, then it is definitely time to sit down and also discuss the ownership structure of the organization,” it says.

“Let’s talk about who actually owns the CWB and its assets. Does the government own it? Do Canadian farmers own it?”

“It’s time for the government, CWB and progressive farm groups to sit down and map out the future where the CWB will be an effective and active grain marketer for the farmers who wish to use it.”

They are all, of course, entitled to their opinions. And you’ll hear no argument from us about the need for a rational, forward-looking discussion on the future of grain marketing in Western Canada, especially in light of evolving global markets and climate change.

What we take issue with is the suggestion that the board of directors had an obligation to consult with Prairie farmers before making this decision.

Boards of directors exist to guide the strategic interests of an organization. Just as they should not be engaged in its day-to-day operations, they should not be expected to seek the approval of their shareholders or check with the politicians before making decisions, even ones requiring major investments.

Prairie farmers elect 10 directors who can collectively outvote the government appointees at the 15-member board table. If farmers don’t like the decisions their directors make, they can elect new ones the next time those elections come around.

In the meantime, they should trust the CWB’s board of directors make decisions that are in their best interests. We see nothing about this deal to suggest they are not.

The fleet is aging. Farmers (especially in Manitoba) will need new ones to get their grain to market. If the board has to pay the freight, why not own the vessels?

Get On Board

The old adage that “there are some problems you like to have” is appropriate for Manitoba’s sheep industry at the moment.

But they are still problems.

It seems efforts to establish a value chain connecting producers, processors and retailers are being hampered by an unusual problem in the livestock sector of late: high prices. We are told that over the past decade, the price of lamb has never dipped below the cost of production in this province.

Most of the lambs produced by Manitoba’s 500 sheep farmers are going to larger markets either east or west. Demand for lamb and chevon in Canada is growing. And with up to 57 per cent of the lamb consumed in Canada coming in from offshore, it would seem there is a serious potential for growing the domestic industry.

In this environment, it’s difficult to get producers to commit to supplying a value chain, and if producers won’t supply it, abattoirs won’t expand their capacity. And if the processing capacity isn’t available to supply a consistent product, the retailers will stick to the import suppliers on which they can count.

The sheep industry in Manitoba appears to be on the verge of significant growth. Producers have a choice.

They can take a long-term view and build a value chain that generates a consistent supply and attracts investments that offer stability and allows them to take advantage of anticipated market growth.

Or they can cash in on the current high prices, let tomorrow look after itself and watch someone else reap the rewards. [email protected]

About the author

Vice-President of Content

Laura Rance

Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at [email protected]

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