The Canadian Wheat Board expects its contingency fund to balance this year after volatile grain prices caused a $28.9 million deficit last year and fuelled fresh government criticism of the grain marketing agency.
The fund underwrites the risk of non-traditional payment programs that are designed to give farmers flexibility to price some of their crop themselves.
“The management of the (payment programs) is going well and we expect the balance of the contingency fund to be around zero by the end of the financial year,” president and chief executive Ian White told federal legislators May 14.
High grain prices helped the CWB produce higher net sales last year but volatility on futures markets led to the hedging losses.
The board commissioned an independent firm to analyze its risk-management strategies and made changes that White said he’s satisfied with. But he said the report contains commercially sensitive information when asked if he would release it to the federal agriculture committee, which is made up of legislators from all political parties.
The parliamentary committee is hearing presentations on the competitiveness of the Canadian agriculture industry and is expected to make recommendations to the House of Commons as early as June.
The committee hearing on May 14 was dominated by debate about the CWB’s monopoly on sales of wheat and barley from Western Canada.
The minority Conservative government would like to remove the legislated monopoly, but lacks enough votes in the House of Commons. Opposition parties have rejected the idea.
Removing it would hamper the Wheat Board’s ability to deliver top prices to farmers, White said.
“The Wheat Board of today would certainly not easily exist in that deregulated environment,” he said.
The Australian Wheat Board lost its marketing monopoly in June 2008 and has been reduced to “just another trader,” said White, a former Australian sugar executive.
“The ability to extract value out of the marketplace… is arguably diminished in that environment.”
The Western Canadian Wheat Growers, a lobby group opposed to the CWB’s single-desk marketing system, told the parliamentary committee that the board’s prices have at times been lower than those farmers could get on the open market.
“What we don’t accept is being forced to use their services,” said WCWGA president Kevin Bender.