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Ritz’s panel urges grain system access for CWB 2.0

Allowing a voluntary Canadian Wheat Board and other Prairie grain marketers the ability to negotiate agreements for elevator, rail and port access is “the single most important issue” for government to consider going forward, an industry working group says.

Federal Ag Minister Gerry Ritz on Wednesday published the report from a working group he struck in July on “marketing freedom” for Prairie wheat and barley growers, including representation from the public sector and farmer and industry groups.

The group’s recommendations, he said, “will be considered” as the government moves toward deregulation of Prairie wheat and barley marketing for August 2012.

Given that the change to voluntary marketing of wheat and barley is meant to allow industry players “greater freedom to make new types of business arrangements,” that process should be allowed to work as system access is negotiated, the group said.

“That being said, given shifting power relationships in the grain trade, the government needs to monitor developments, as well as system performance, and be prepared to use suasion and intervene if necessary to address anti-competitive behaviour.”

The group also suggested the bar for federal intervention “should be set high, as commercial agreements need to be given a significant opportunity to be negotiated.”

Members of the working group noted they had “some differences” as to whether Ottawa needs to set up regulations as soon as possible to ensure access for a voluntary CWB and other players, or to intervene only when or if there is “clear evidence of anti-competitive behaviour.”

Producer cars

The working group also urged Ritz to make sure Prairie farmers’ right to ship grain using producer cars remains in the Canada Grain Act, as long as those shipments are tied into a grain sales program “rather than in response to a wish by producers to push grain into the system.”

The group also recommends shortline railways and producer car shippers ask Canada’s two major railways to change their multi-car rate incentive rate requirements, to allow groups of shippers on short lines to qualify for those rates when they interchange a block of cars to the mainline carrier.

The group also wants federal Transport Minister Denis Lebel to keep moving on initiatives that would create template service agreements between railways and shippers — as well as fallback legislation where such agreements can’t be reached.

Checkoff funding

The working group also calls for Ritz to set up a short-term (five-year) refundable checkoff to replace funding the CWB now provides to the Western Grains Research Foundation, Canadian International Grains Institute and Canadian Malting Barley Technical Centre.

The grain industry should get talks started toward a multi-commodity organization, the group said. The five-year checkoff, in the meantime, “will encourage the industry to move forward with the development and implementation of a longer-term multi-commodity approach.”

“Predictability”

Drafting and enactment of a “legislated backstop” for service level agreements between shippers and railways “will facilitate the implementation of marketing choice,” the group wrote. Any roadblocks to quick access of rail data now collected, or to “additional metrics of system performance” identified by industry, should be removed, the group said.

The group also urged a number of measures to provide “maximum predictability and certainty” about the change to voluntary wheat and barley marketing, so private-sector risk management tools can be arranged.

For that reason, any details of the government’s plans and proposed changes to the system should be communicated “as soon as possible,” the group said. “For example, farmers need to know when they can start forward contracting for the 2012-13 crop year.”

The group also urged the CWB itself “to get on with preparing for implementation.” If it doesn’t, the group said, Ritz should “consider measures to facilitate the development of a business model for a voluntary CWB that will be available to farmers” next August.

Among other members, the working group included representatives from the federal ag and transport departments, Grain Growers of Canada, Pulse Canada, Canola Council of Canada, Canadian Grain Commission and CIGI.

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