Canada: CWB working on converting single-desk in open-market - CMO

The Canadian Wheat Board is already working on a model for converting the single-desk seller of western barley and wheat into an open-market grain company, Alberta Express reported on July, 15.

But for this "new entity" to survive the federal government must make major concessions, including assuming CWB employees' pension liability, CWB’s chair Allen Oberg said.

"It's our view that it's the government's responsibility to pick up that tab and it will be in the hundreds of millions of dollars," said Oberg, ahead of a planning session on the matter next week. "There's no way that farmers should be responsible for that."

“The issue has been raised with Agriculture Minister Gerry Ritz's staff, so the minister himself should be aware of it”, Oberg said.

"Those things need to be dealt with whether the organization is just wound down completely or if it's transitioned into something else because all those costs will come to bear," Oberg said.

"If those costs were transferred to the new organization that would be a recipe for disaster, it would have enough disadvantages as it is."

One of those disadvantages is not owning any country or port grain-handling facilities. The CWB has no retained earnings because all revenue, after expenses, is returned to farmers, therefore the federal government must provide it with working capital or give it regulated access to Canada's grain pipeline, said Oberg.

Grain companies say a revamped CWB will be a new competitor, and shouldn't get special treatment. But the Grain Growers of Canada, an open-market advocate, says the board needs government help to get established if an open market is created. Ritz has said he's willing to provide limited support.

“Fleshing out an open-market model will take up much of the CWB's planning session next week,” Oberg said.

"It will just be advice," he said. "This is a change that they have initiated. They're the ones who have been promising a strong and viable new organization. Clearly that responsibility rests with them. We'd be quite willing to offer our advice and suggestions as to what a new organization would need."

Under the right conditions, he said, a revamped CWB could succeed as a grain company or broker in an open market, but it isn't clear whether such an organization will return any more value to farmers than any other private company.

It's also unclear who would own the CWB. There's talk of turning it into a farmer-owned co-operative, but nobody knows how many farmers want that or the financial risk that will come with it.

20 July, 2011