With a mix of sadness and resignation, the Canadian Wheat Board s farmer-controlled board of directors held what will likely be their last meeting at its Winnipeg headquarters Nov. 24.
It was a bit of a historic occasion I guess, said board chair and Alberta farmer Allen Oberg. Thirteen years ago, control of the organization was turned over to farmers and with the expected passage of Bill C-18 before year s end, that control reverts to the federal government.
Once the bill becomes law, the board s 10 farmer-elected directors will be fired and the wheat board will be run by the incumbent five government-appointed directors, including current board president and CEO Ian White, if they agree to stay on.
Farmers, grain companies and the government-owned and -controlled voluntary board can also start forward contracting wheat and barley for the 2011-12 crop year. However, the board s current monopoly remains until Aug. 1, 2012.
One of the board s final acts was to pass a resolution demanding the federal government reimburse farmers for the loss of assets worth more than $300 million.
Really what s happening here is a government takeover of a producer-controlled organization, Oberg said in an interview Nov. 24. We use the word expropriation of assets in the news release, but this is worse than expropriation. In expropriation you usually get some compensation.
The wheat board s assets belong to the farmers who paid for board operations, Oberg said. Those assets include 3,400 hopper cars, an office building, a contingency fund and $28 million already paid towards the purchase of two lake freighters.
The federal government should return the money to farmers through the board s pool accounts or crop research, Oberg said.
Contingency fund retained
According to Oberg, final payments from the board s 2010-11 pools will be $25 million lower than they should be because of an Oct. 18 directive from Agriculture Minister Gerry Ritz forbidding the board from distributing monies exceeding the contingency fund cap through the pool accounts.
The fund, used to offset board pricing programs, comes from administration fees and trading grains. The cap was $60 million but the government increased it to $100 million and then a few weeks later doubled it to $200 million.
While there s no guarantee the fund will get that high, Oberg is convinced the federal government will use the fund to offset the costs of winding down the board instead of footing the bill itself as Ritz promised.
Ritz says he made the changes to protect the board from the elected directors scorched earth policy.
Winding down the board will cost hundreds of millions of dollars, including hidden costs such as those related to transferring the cash-advance program to the Canadian Canola Growers Association to administer, costs of planning for and creating a new entity and a new supply-chain environment, Oberg said.
Oberg isn t surprised the debate is polarized, because it always has been, he said. What does surprise him is such an important change is being made so quickly and without any analysis.
The sad part has been the name calling the minister (Ritz) has done of late, Oberg added. I just think that s completely uncalled for. I guess it s his way of trying to intimidate the other side.
The single-desk wheat board s demise will see Canada s grain companies further consolidate and farms get bigger to survive, he said.
I hope I m wrong with some of these predictions, but my personal view is they (farmers) will regret it, he said.
Government guaranteed borrowings and initial payments to farmers will help the voluntary wheat board survive in the short term, but Oberg isn t sure it can stand on its own in four years when the supports end.
Oberg said he is undecided as to whether he will use the new board, noting it will depend on how competitive it is, Oberg said.
If you re asking whether there d be some loyalty out there, I don t think there will be that much, he said. Farmers are businessmen and they will go wherever they see the most value.
Oberg said he has no regrets with how the directors fought to let farmers decide the board s fate. The $1.4-million advertising campaign is a small cost compared to the benefits of the single desk, he said.
Some farmers don t believe the board s monopoly generates value for them. But Oberg says just imagine what a private company would pay to have the exclusive right to export Western Canada s wheat.
That s what farmers had, and now it s being taken away, he said.