Federal agriculture and finance department officials have been invited to review the Canadian Wheat Board’s risk management practices relating to losses in its 2007-08 contingency fund.
CWB chairman Larry Hill on Tuesday invited federal Agriculture Minister Gerry Ritz, his officials and officials from the federal finance department to undertake such a review, citing “comments made” by Ritz and his Parliamentary secretary, Saskatchewan MP David Anderson.
The board announced in its 2007-08 annual report last week that market volatility had led to losses in the contingency fund that underwrites the risks associated with CWB producer payment options (PPOs). The fund’s current deficit is $28.9 million, the CWB reported.
During the 2007-08 crop year, Hill said Tuesday, “volatility was so extreme that on some days, the markets moved more in a few hours than they had in the previous year. During these unprecedented months, the CWB remained committed to offering farmers pricing and payment options, even when many other industry players withdrew their programs.”
According to Hill, the CWB’s board of directors in February 2008 asked board management to run a “comprehensive review” of the risks associated with the contingency fund, which in turn led to changes in CWB risk management practices.
The CWB then contracted the Calgary commodity market research firm Gibson Capital to run an external risk management and pricing review of the board’s PPOs, Hill said.
“Comments made by government MPs, however, suggest that we did not take appropriate measures,” although Ritz was kept informed throughout the review process, Hill said.
“Clearly, the board hasn’t learned from its mistakes and continued on with the same risk-management practices,” the Winnipeg Free Press quoted Ritz as saying last week as he tabled the CWB’s annual report in the Commons.
Ritz asked the CWB to explain the fund’s losses and assure that it’s changed its practices, the newspaper reported.
Hill invited ag and finance officials to run a separate review “in order to remove any shadow of doubt” and added that “in the spirit of ensuring the measures we have taken are consistent with corporate accountability best practices, we would also welcome a review of the process by the Office of the Auditor General of Canada.”
The CWB said in a separate release Tuesday that its directors will also be available to farmers to discuss the board’s 2007-08 financial results during a series of Farmer Forums to be held in 20 communities across the Prairies between March 2 and 19. Farmers can pre-register by e-mail or by calling 1-800-275-4292.
Correction from source, Feb. 18: The CWB’s board of directors asked board management to run a “comprehensive review” of the risks associated with the contingency fund in February 2008, not February 2007 as reported in an earlier version of this article.