Bloomberg News

Canadian Wheat Board Filing Lawsuit to Retain Monopoly

October 26, 2011

(Updates with agriculture minister’s comment in fifth paragraph.)

Oct. 26 (Bloomberg) -- The Canadian Wheat Board is filing a federal lawsuit today against the government to stop legislation aimed at stripping the agency of its marketing monopoly, said Allen Oberg, the board chairman.

The suit contends that the government broke the law because it didn’t first conduct a vote among farmers before introducing the bill on Oct. 18, Oberg said today on a conference call. On Sept. 12, the board released results of its own plebiscite, which showed 62 percent of wheat farmers and 51 percent of barley growers were in favor of retaining the current marketing system.

Farmers’ “rights are being stripped away as the federal government presses forward with its own vision,” Oberg said on the call from Headingley, Manitoba. The government “acted illegally and unethically in its attacks on the Canadian Wheat Board, and it must be stopped,” he said.

Since 1942, wheat and barley farmers in western Canada have been required by law to sell grain for human consumption to the board under a system that the government created to stabilize prices. Prime Minister Stephen Harper’s Conservative Party, saying that an open market will encourage investment and innovation, plans to eliminate the monopoly by August.

‘Reckless, Baseless’

Agriculture Minster Gerry Ritz said that the lawsuit is a “reckless and baseless legal challenge,” and that the government has the right to remove the monopoly without a vote by farmers. The lawsuit will not delay the plan to end the monopoly by Aug. 1, he said.

“The government maintains its view that the parliament of Canada alone has the supremacy to enact, amend or repeal any piece of legislation, including the Wheat Board Act,” Ritz said on a conference call with reporters. “This is an essential feature of Canadian democracy.”

Henry Vos, who was elected by farmers as a director on the board of the wheat agency, announced his resignation today in a letter to the media. He called the decision to file the lawsuit “simply wrong” and “not about doing what is best for commercial farmers.”

The suit follows a similar federal court challenge filed in June by the Friends of the Canadian Wheat Board, a farm group. A judge is scheduled to hear arguments in that case on Dec. 6 in Winnipeg, said Anders Bruun, a lawyer representing the group, which is seeking to bar the government from abolishing the monopoly without the approval of farmers.

‘Valid Basis’

“Our argument is that there is a valid basis for a court to declare that a plebiscite among producers should have been held,” he said. “Whether a court would go any further than that remains to be seen, but normally one would expect the government to either appeal that decision, or take a step back and comply.”

The board’s case is “somewhat similar” to the existing lawsuit, Oberg, the agency’s chairman, said today.

“Our point of view was we wanted to be in a position to put our own argument forward by making our own application, and this gives us the ability to do that,” Oberg said.

The board’s jurisdiction in western Canada covers the provinces of Manitoba, Saskatchewan, Alberta and parts of British Columbia. The region produces the majority of the nation’s wheat.

Canada is expected to be the world’s third-largest wheat exporter this year, according to the International Grains Council. The U.S. is forecast to be the biggest, followed by Australia.

--Editors: Patrick McKiernan, Steve Stroth

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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