Federal Agriculture Minister Gerry Ritz has taken the Canadian Wheat Board up on its invitation last week to have federal Auditor General Sheila Fraser review its risk management practices.
Going one further, however, Ritz also wants Fraser’s office to conduct “a full audit of all operations” at the CWB, the minister said in a release Thursday, having made the announcement while speaking to the Canadian Federation of Agriculture’s annual general meeting in Ottawa.
“Despite record prices in the marketplace, the CWB lost nearly $130 million in farmers’ money over the past two years,” said Ritz. “That’s money that comes directly out of farmers’ pockets.
“The (CWB) must open all of its books and fully co-operate with the Auditor General to make sure she’s able to do a complete and thorough job.”
CWB chairman Larry Hill last week had invited federal ag and finance officials to run a separate review of its risk management practices “in order to remove any shadow of doubt,” even after it contracted Calgary commodity market research firm Gibson Capital to run an external risk management and pricing review of the board’s producer payment options (PPOs) in February 2008.
“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,” Hill said at the time.
Hill had made the invitation Feb. 17 citing “comments made” by Ritz and his parliamentary secretary, Saskatchewan MP David Anderson.
The board had previously announced in its 2007-08 annual report that market volatility had led to losses in the contingency fund that underwrites the risks associated with PPOs. The fund’s current deficit is $28.9 million, the CWB reported.
The losses to which Ritz refers are listed in the CWB’s recent 2007-08 annual report as an $89.51 million loss in fiscal 2008 and a $39.93 million loss in fiscal 2007 on the operations of the CWB’s Fixed Price Contract (FPC) program, for a total of $129.44 million.
The CWB reported that it paid out $1.92 billion during the 2007-08 crop year to PPO participants, up from $1.06 billion the previous year. Pool participants, meanwhile, were paid a total of $5.24 billion from 2007-08 net earnings, up from $3.5 billion in 2006-07.
During the 2007-08 crop year, Hill said Feb. 17, “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.”
Ritz, in his release Thursday, said that while the CWB had indicated “some willingness to co-operate” with Fraser’s office, federal auditors must be given “access to all of the CWB’s books and operations.”
Fraser’s office must receive a formal request from the CWB in order to
conduct an audit, Ritz said, and “there cannot be any half-measures.”
The CWB, he said, “must not limit the scope of the Auditor General’s investigation in any way.”
The Auditor General’s office last released a “special audit” of the CWB in 2002, following a two-year review of CWB operations at the invitation of its board of directors.