Bloomberg News

Canada Introducing Bill Tomorrow to End Wheat Board Monopoly

October 17, 2011

(Updates with Wheat Board comment in 10th paragraph.)

Oct. 17 (Bloomberg) -- The Canadian government will introduce legislation tomorrow to end the Canadian Wheat Board’s monopoly on marketing wheat and barley in the country’s biggest growing region, Agriculture Minister Gerry Ritz said today.

Since 1942, western Canadian farmers have been required by law to sell all their grain for human consumption to the board, under a system the government created to stabilize prices. Prime Minister Stephen Harper’s Conservative Party, arguing that an open market will encourage investment and innovation, promised to eliminate the monopoly by August. The government intends to pass the legislation before the end of this year, Ritz said.

“The six-decade-old Canadian Wheat Board monopoly is yesterday’s solution to yesterday’s problems,” Ritz said today from Acme, Alberta, on a conference call with reporters. “Today’s entrepreneurial farmers are proving over and over that they can and will do better if they have control over their farm and over their business.”

The Wheat Board, based in Winnipeg, Manitoba, has argued that farmers’ profit would be better under the current system, because it can negotiate prices from importers and processors using the country’s entire grain supply. The board also returns all its profit to farmers.

‘Freedom, Equality’

A working group of government, university and industry representatives said in a report on Sept. 28 that deregulating wheat and barley marketing may boost efficiency and “provide greater opportunities for producers.”

“This is about freedom and equality for western Canadian farmers,” Douglas McBain, a director at the Western Barley Growers Association, an Airdrie, Alberta-based farm group, said on the conference call with Ritz. “Finally, we’re going to have our marketing freedom.”

In a plebiscite organized by the Wheat Board, 62 percent of wheat farmers and 51 percent of barley growers voted in favor of maintaining the monopoly, according to results released on Sept. 12. Ritz has called the vote “a propaganda stunt” because the board decided who received ballots.

Currently, the Wheat Board doesn’t own assets including grain elevators or port terminals. If the board were to continue working in an open market, it would need C$225 million from the government to conduct business, as well as an additional C$200 million to maintain its price-pooling program for farmers, the grain agency said today in a statement before Ritz’s call.

The board also is asking the government to provide loan guarantees for at least five years and to ensure regulated access to grain handling and export facilities.

Court Challenge

The government’s move will “throw Canada’s grain industry into disarray,” Wheat Board Chairman Allen Oberg said today on a conference call with reporters from Winnipeg. “We will see a fundamental shift of marketing power and wealth away from prairie farmers and into the hands of huge foreign-based corporations.”

The board is considering a legal challenge to the legislation, Oberg said.

“We will fight this in Ottawa, we will fight this in the courts, and we’ll fight it in the court of public opinion,” he said.

The board’s jurisdiction covers the provinces of Manitoba, Saskatchewan, Alberta and parts of British Columbia. Canada is expected to match Russia as the world’s third-largest wheat exporter this year, according to the U.S. Department of Agriculture. The U.S. is the top shipper, followed by Australia.

--Editors: Steve Stroth, Millie Munshi

To contact the reporters on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net; Andrew Mayeda in Ottawa at amayeda@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.


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