Tories’ bill maps out endgame for CWB’s single desk

Prairie wheat and barley growers can expect to be able to commit to forward contracts for deliveries beyond August 2012 as soon as a federal government bill is passed to wind down their single marketing desk.

Agriculture Minister Gerry Ritz’s bill, introduced Tuesday in the House of Commons, has been redubbed the Marketing Freedom for Grain Farmers Act.

The bill also calls for the establishment of an interim board of directors for the Canadian Wheat Board, a new checkoff to fund grain research and development agencies, and further federal support for the Hudson Bay port of Churchill, Man.

The bill — which in its absence until now was seen to be clouding the future for the CWB and bodies such as the Western Grains Research Foundation, Canadian International Grains Institute and Canadian Malting Barley Technical Centre — calls for a process to begin as soon as the legislation can get royal assent, to move the CWB to “full private ownership.”

Between the day the legislation passes and before August next year, Prairie grain growers will be able to forward-contract wheat and barley sales for delivery after Aug. 1, 2012, according to the government’s statement Tuesday. The CWB, grain companies and end-users will all be able to offer such contracts for delivery after Aug. 1, 2012.

The legislation also allows buying and selling of futures contracts for Prairie wheat and barley, with delivery dates after Aug. 1, 2012. Winnipeg’s commodity exchange, ICE Futures Canada, has already announced plans to introduce Canadian wheat and durum contracts if the legislation is passed.

Until Aug. 1, 2012, however, the government continues to prohibit deliveries of Board wheat or barley for export or human consumption to anyone other than the CWB. Only the CWB, or those with CWB export licenses, may export Board wheat or barley until then.

After Aug. 1, 2012, however, export licenses will no longer be required and Prairie growers will be able to directly arrange deliveries with, and deliver wheat or barley to, any domestic or export buyer, the government said.

After that date, the CWB will still have the ability to buy wheat and barley in pooling arrangements. However, details including the terms of delivery or any requirement for prior contracting “will be communicated by the CWB as they develop their plan for voluntary operations.”

The CWB’s pool accounts for the 2011-12 crop year will be “closed in the usual way” with final payments expected to be issued by the end of 2012, the government said.

The current 2011-12 checkoffs for the WGRF, and CWB funding for the CIGI and CMBTC, are to be “deducted from the pool accounts, as usual.” After Aug. 1, 2012, however, a “new voluntary checkoff” will be put in place to support research and market development, to be collected at point of sale.

For those organizations, the government said, “the intent is to provide a similar level of funding to the amount collected from farmers by the CWB over the transition period to allow the grain value chain to develop a long-term plan for ongoing funding.”

Board out, appointees in

As for the CWB itself, Ritz’s bill, when passed, would see the CWB Act amended and the CWB’s board of directors “streamlined” down to five government appointees plus a government-appointed CEO, ousting the board’s 10 other farmer-elected directors.

This appointed board, the government said, will be tasked with preparing to “operate the voluntary CWB and develop a business plan for privatization.”

CWB 2.0, so to speak, would operate under “a new interim act” establishing a voluntary CWB offering pooling options to “farmers who wish to market in this manner.”

The voluntary CWB could last “up to five years,” during which time the federal government would continue to provide borrowing and initial payment guarantees and “assist with funding for reorganizing costs related to the removal of the monopoly.”

The interim CWB is to be given until Aug. 1, 2016 at the latest to submit a commercialization plan to the federal ag minister for consideration. As of Aug. 1, 2017, the interim body would be “either privatized or dissolved” and by then, its interim legislation and the CWB Act would be repealed.

“Market forces”

The government on Tuesday acknowledged concerns from farmers and members of the “grain value chain” about the “overall grain handling and transportation system in a marketing freedom environment,” including, for example, access to port terminals for farmers and a voluntary CWB, as well as farmers’ access to producer cars.

The government said it “intends to give market forces every opportunity to work,” noting contractual arrangements between terminal operators and non-terminal companies “have worked successfully for other crops” and that terminal owners “are expected to actively seek arrangements for additional grain volume and profitability.”

A “range of options” is being considered to monitor any “anti-competitive behaviour or systematic issues, should they arise,” the government said, noting the “grain value chain” will also still be able to seek recourse through the Competition Act and the federal Competition Bureau if need be.

Access to producer cars “will continue to be protected,” the government said, noting the right to producer cars is laid out in the Canada Grain Act and the Canadian Grain Commission allocates the cars to producers. The government on Tuesday pledged that it “will monitor (producer cars’) use and availability.”

The CGC, as the federal agency responsible for Canada’s grain quality standards, “will continue to play a vital role in quality assurance” and will continue to regulate the grain industry “to protect farmers’ rights and ensure the integrity of grain transactions.” The Canadian Food Inspection Agency, meanwhile, will continue to register crop varieties.

Related stories:

Post-CWB ‘adjustment’ funding pledged for Churchill, Oct. 18, 2011

ICE planning spring wheat, durum futures contracts, May 20, 2011

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