The Binkley Report


One good sign in the Canadian Wheat Board debate

By Alex Binkley
True North Perspective

Alex Binkley is a foremost political and economic analyst. Readers will be aware that his columns in True North Perspective have foreseen political and economic developments in Canada.

18 November 2011 — By the time you read this, the Harper government will be using its majority to push the bill to end the Canadian Wheat Board’s (CWB) marketing monopoly through final approval in the Commons. It will do the same in the Senate before the end of November.

Throughout an acrimonious debate about the government’s motives, Agriculture Minister Gerry Ritz has said plenty about marketing freedom for western farmers and how the end of the CWB’s dominance will lead to new food processing jobs on the Prairies.

Meanwhile, the opposition parties and farm groups that oppose the government’s plan have gone on and on about the legitimacy of the government’s action and the trampling of democracy.

However, we’ve heard virtually nothing about how the new look CWB is supposed to survive. The government will appoint five directors to oversee the Board’s transition to an undetermined status and provide some financial support. Ritz says farmers should be able to start forward contracting in January for their 2012 crop, but it’s done nothing to give farmers who want to use the Board to sell all or part of their crops any confidence the CWB will be in any position to do so.

The only group focused on the Board’s future seems to be The Farmers of North America (FNA). It’s a relative newcomer to the Canadian farm scene, but has 10,000 members attracted by its efforts to lower their production costs and improve their profitability.

Bob Friesen, FNA Vice-President of Government Affairs and a long time former president of the Canadian Federation of Agriculture (CFA), says his organization has a task force hard at work trying to find ways to make sure the new CWB will have enough substance to work to the benefit of the farmers who want to keep using its export services. When the bill becomes law, “we want to help be the architects of a system that’s going to help farmers with cost competitiveness and help farmers maximize their profits.” It’s prepared to work in partnership with the CWB.

While it’s too early to say when the task force will conclude its work, it’s comprised of people with experience in grain handling, rail service, marketing and producer car shipments, he told the Commons committee that reviewed the bill.

While the government has promised financing guarantees for the new CWB and arranged for cash advances, “farmers will need tools and assistance to successfully navigate the transition process. They will need ways to raise capital, make equity investments, market intelligence and business and market management to name a few.

“There also has to be assurance of viable port position access and inland terminal access and we need to create and maintain a system within which we enable farmers to fit their individual marketing goals and producer car shipments into an already challenged and somewhat congested port handling system,” he adds. “We need to ensure that railways will continue to deliver and service producer cars in a way that is economically viable for farmers.”

Friesen says it’s vital the new directors appointed by the government “have experience in grain production and handling and in raising equity capital.” They also need a clear mandate. “It’s important the directors feel the weight of responsibility for making the new operation successful.

“We need to also assist those farmers who want to take a greater role in the management and ownership of a new CWB to allow them to create a cost-effective new grain company that will build and maintain competition in the system. And we need to ensure that a new board will have the incentive to transition the new CWB into a viable company in the interest of all those producers who value it as an empowering market tool.”

When the CWB debate began, the FNA leadership knew it had members on both sides of the fence and had to make the best of the situation, he says. It chose to become “an architect in a system that will facilitate optimizing farmers' revenue, reducing their costs, making sure they’re cost competitive, and empowering them in whatever grain handling, transportation, and marketing environment we have.”

Friesen is too polite to note that no one else is taking this approach although some farm groups had offered to discuss future arrangements with the CWB before the government finished drafting the legislation.

The government should start paying attention to what FNA is offering. It’s the best way out of a messy situation.

Add new comment