In what they described as likely meeting for the "last time before being fired," the Canadian Wheat Board is demanding Ottawa compensate Prairie farmers for assets it’s claimed they’re about to lose.
The CWB’s board, which today consists of eight farmer-elected directors, five federal appointees and two vacancies, passed a resolution Thursday that farmers "must be completely reimbursed and compensated for the loss of their assets caused by removing their single-desk marketing system for wheat and barley."
Those assets, the board said Thursday, include:
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- $80 million in physical assets, including its eight-storey office building on Main Street in Winnipeg and about 3,400 rail hopper cars;
- about $28 million paid on the $65 million bill for two Equinox-class grain-handling laker boats the CWB ordered in February for completion in 2013; and
- a contingency fund of up to $200 million.
The size and capacity of the contingency fund has been a sore spot for the federal government in recent weeks, after it was revealed the federal government has raised the fund’s maximum capacity to $200 million, up from $60 million.
The contingency fund was set up in 2000-01 to manage risk incurred from the Producer Payment Options (PPOs) the CWB introduced that year, and is also now used to backstop other CWB cash-trading programs, the board said.
"The CWB’s assets and fund money belong to Prairie farmers. The government should not use them to finance its ill-conceived plan to destroy the single desk," board chairman Allen Oberg said in a release. "This was not farmers’ idea, they don’t support it, and they shouldn’t be forced to pay for it."
Speaking on background in Thursday’s issue of the Manitoba Co-operator, an unnamed federal official said that after the board is stripped of its single marketing desk for Prairie wheat and barley and moved to the oversight of a smaller board of federal appointees, the "voluntary board’s managers" are to decide how the contingency fund is used.
The fund’s uses and revenue sources will both be "unlimited" following the deregulation of the CWB, scheduled to take effect next August, the official said.
The fund will be "another tool," along with government guarantees on borrowing and initial payments, to help the voluntary board to transition to a private firm, he said.
Another of the CWB’s elected directors, southeastern Saskatchewan producer Stewart Wells, retorted in the same Co-operator article that the official’s remarks confirm the board’s suspicions.
"The government promised it would pay for the board’s transition to an open market," Wells told Co-operator reporter Allan Dawson. "It’s turning out to be a bank account that’s at the complete control of the (federal agriculture) minister."
"No longer needed"
The board reiterated its demand Thursday that Agriculture Minister Gerry Ritz use "federal government money" to pay the costs of winding down the current CWB, as well as the costs associated with transitioning the CWB to a voluntary organization.
"Most of the current CWB infrastructure would no longer be needed by a potential new company with a very different role in marketing a much smaller volume of grain," the CWB said Thursday.
Total wind-up costs for the board are estimated in the hundreds of millions of dollars, including its liability costs related to logistical contracts and obligations, financial assets, debt and derivatives; pension and retiree obligations; staff severance; laker vessel costs; and other costs including those related to building and IT contracts.
Farmers may also be on the hook for "a host of hidden costs during the current crop year as the wind-up progresses," the CWB said, such as those related to transferring cash-advance programs to a different service provider and the costs of planning for and creating a new entity and a new supply-chain environment.
The farmers’ funds used to pay for the laker vessels now under construction will now have no chance to realize "the long-term revenue and cost-savings benefits the ships were to generate," the CWB said.
Related stories:
Suit won’t stop CWB change, Ritz says, Nov. 23, 2011
Tories’ bill maps out endgame for CWB’s single desk, Oct. 18, 2011
CWB to buy two new laker ships for $65M, Feb. 9, 2011
