The Canadian Wheat Board’s single desk for wheat and barley will end in one week, on August 1. A bill passed by the federal Conservative government on Nov. 28, 2011, will remove the single disk, but not actually dismantle the CWB.
For many farmers, businesses and other organizations, the big question is what kind of role the new CWB board will play, if any, in a deregulated grain market.
The changes to the CWB will bring some “learning curves” for the farmer-owned and operated Weyburn Inland Terminal.
“Certainly there are changes for farmers and our business on August 1, and getting clarity on the new business environment is one issue,” said Rob Davies, CEO of WIT.
“We would like clearer price discovery for some crops, especially durum. Previously, the CWB provided those values in the absence of a visible futures market,” said Davies.
Foreign exchange rates on the open market will have to be navigated and clearly defined by and for farmers. The difference between the Canadian and U.S. dollar will create price risks when dealing with U.S. dollar based futures contracts, especially with a shifting exchange rate.
The WIT is also hoping for direction on how freight for farmers that have Wheat Board contracts will be handled. “We are the ones who have to charge the farmers freight,” said Davies. “Certainty about freight on CWB grains is not there currently.
At the Weyburn Inland Terminal, “we will try to give producers the best indication of what we can see (for the markets),” said Davies.
“Our objective is to keep our customers as well informed as we can. There are opportunities for both our business and our customers to be very successful in the new marketing environment,” added Davies.
Just like freight costs, there is uncertainty for the short lines. “We definitely feel a concern because we don’t know a lot yet,” said Ed Howse, president of the Red Coat and Rail. “It is a work in progress and we hope that the structure works for it.”
“We don’t know how we will charge, or how customers will pay for it. The grain has to be purchased by someone and we are waiting to see what is happening,” added Howse. “It will take time, we will have to reinvent the wheel.”
Dale Mainil is looking forward to having an open market for his durum and spring wheat. “I already sell my oilseeds and pulse crops on an open market and I enjoy that part of my business. I can see the opportunity to add value to my business.”
His uncle, Art Mainil, also had an active hand in fighting for an open market, and died before the third and final reading of Bill C-18, which reorganized the Canadian Wheat Board.
“His goal was to have the freedom of choice — that was what it was all about,” said Dale. “Art believed in our industry, in agriculture and was instrumental in getting enough support for these changes.”
Dale added that Art was one of the driving forces behind the creation of the Weyburn Inland Terminal.
“There are so many innovations at WIT that we forget about today, that he had fought for. Someday, I believe our children will compare this fight for an open market system as something similar.”
“There will be bumps on the road, but that comes with any change and I believe that at the end of the day, farmers will learn how to market their crops,” added Dale. “For those who are intimated by the markets, the CWB will still be there, and there are other private broker firms too.”
“I am not intimated, nor should be any other farmer, big operation or small operation,” said Dale. “There will be many doors that will open for us, and a new marketing industry will evolve across the prairies.”
“There will always be competition out there, but I think it will keep the industry honest, the sky isn’t falling.”
Mainil was in Parliament for the third and final reading of the bill. He called it a “historical night for farmers who fought for, who went to jail for, and who believed and worked for the freedom to sell their grains to the highest bidder.”
Dale hopes that an open market system encourages more youth to choose a career out of farming. “There is a lot of promise, and I encourage our youth to get involved. If they work hard and believe, they will be successful, it is a good career.”
The passing of the CWB bill was also called “historic” by Ed Komarnicki, MP of Souris-Moose Mountain. “This bill signalled that farmers can market their grain as they see fit.”
“There are a lot of questions on how this will affect farmers and how it will work,” said Komarnicki. “Many handlers and elevator agents are still working things through, and it will be a fast learning curve for them come August 1.”
Komarnicki said that the new CWB is stepping up to the plate to offer a competitive business.
Offering a different view on the changes, Rod Flaman called the new CWB “a shadow of itself. We won’t have a wheat board anymore as of August 1. It will have no accountability to the farming community.”
Flaman is a former director with the Canadian Wheat Board who was fired from his position last December, after the federal bill was passed in November.
“The new CWB looks like, talks like and acts like a Crown Corporation, but in the bill itself the new CWB is not called a Crown Corporation. Nobody gets to look at the books and there will be no scrutiny.”
Flaman also pointed out that in the legislation, the new CWB is required to be sold in five years. “The law says it will be shut down, so the job that the directors have left is pure and simple — sell this thing. That will be a function of how well it will perform.”
“How can the new CWB exist in a competitive market?” Flaman asked, pointing out that the new company has signed handling agreements with Viterra. “If they have to give Viterra a share of what they make, and are going through the same terminals as Viterra is, how will they give farmers more money?”
For his own operation, Flaman refuses to do any business with the new CWB. Another part of the issue is that “the old Canadian Wheat Board had my money invested in it. They had a few hundred million of assets, invested assets from farmers, that were transferred into the new CWB. They stole it.”
Grain companies, end users, and the Canadian Wheat Board, will all be able to offer farmers contracts for delivery after August 1. Farmers can still forward contract wheat and barley sales they have with the CWB.