The Canadian government will gradually end the western Canadian Wheat Board's monopoly on the selling of wheat and barley in the northern American country. The plan, which will be phased in over five years, will allow western Canadian farmers to sell their wheat to the highest bidder, rather than to the government-controlled Canadian Wheat Board, the largest wheat and barley marketer in the world.
As one of Canada's biggest exporters, the Winnipeg-based organization sells grain to over 70 countries and returns all sales revenue, less marketing costs, directly to Prairie farmers.
While Western Canadian farmers are able to choose what crop to plant, when to plant, when to harvest and bear all the risk of operating a farm, they are unable to choose how they sell their wheat and barley.
Unlike Western Canadian wheat and barley farmers, farmers of other Canadian grown grains and oilseeds, as well as farmers in other parts of Canada, are able to choose how they sell their grain.
Farmers have been required to sell through the Canadian Wheat Board marketing monopoly since it was established on Oct. 12, 1943 when Canada was committed to providing inexpensive wheat to Britain as part of the war effort.
The board itself grew out of farmer co-operatives on the Canadian plains during the Great Depression of the 1930s, but in its early years it had to compete with private grain dealers.
There is a growing protest movement on the Canadian prairies, where wheat farmers say the board's monopoly prevents them from making better deals with private wheat brokers in Canada and the United States.
In several highly-publicized cases, the wheat board has had farmers arrested and charged for trying to sell their wheat to private dealers.
"The Canadian Wheat Board monopoly, born in a different time to meet different needs, cast a chill on western Canada and the entire grain sector in that area," Agriculture Minister Gerry Ritz said at a farm on the outskirts of Ottawa on Tuesday.
A few hours earlier, Ritz had tabled the Marketing Freedom for Grain Farmers Act in the House of Commons.
"The fact is, today's entrepreneurial farmers are proving over and over again that they can and will help drive our economy if they have control over their farm and their own bottom line," said Ritz.
"For the grain industry, this means a choice in how they market their grain, a choice in when they sell their crop, a choice in who they sell their crop to, a choice at what price they sell their crop for and ultimately a choice in whether they sell their crop through a new voluntary wheat board or access to an open market."
According to the new act, the wheat board will lose its monopoly in August, 2012. Farmers will be able to sell next fall' s wheat crop on the open market.
The wheat board's annual revenue is 4 billion to 8 billion Canadian dollars (1 U.S. dollar equals 1.01719 Canadian dollar ). Revenue fluctuates with the volume and quality of grain grown in Western Canada, the world price for grain and foreign-exchange rates. In 2009-10, its revenue was 5.2 billion Canadian dollars and its administration costs were 75 million Canadian dollars.
It has 430 employees, mostly headquartered in Winnipeg. It also has staff in Tokyo, Beijing and Vancouver.
Pat Martin, official opposition agricultural critic in the Parliament, said that the government's plan leaves the Canadian grain trade open for take-over by the U.S. agricultural corporations.
"They seem bound and determined to take us back to the 1920s. I mean back in the bad old days it was the robber barons and the railroad barons that were gouging Canadian farmers so they banded together to protect their own interests."
He said that a national marketing agency cannot survive without a legal monopoly.
"It didn't work in Australia and it's not going to happen here. Three years after they removed the single desk in Australia, they went bankrupt and sure enough guess who bought it out? An arm of Cargill, the largest corporation in the world," Martin said.
Canadian farmers are split on the issue of the wheat board. Ritz reminded reporters Tuesday that his Conservative party, which has long advocated ending the wheat board monopoly, swept almost all of the parliamentary districts in Canada's western wheat growing plains. This, he said, shows the government has the support of farmers for its plan to change the system.
The wheat board will still exist to help farmers sell grain, but Ritz said it may be closed down if there is not enough demand for its services.
"It will be up to farmers to make use of that entity or it will not survive," Ritz said.
The board owns much of the western Canadian wheat storage and transportation infrastructure, including grain elevators at collection points and ports, and a fleet of railway cars.
Ritz did not rule out selling the wheat board's assets to one of the large U.S. wheat corporations.
Presently, farmers elect 10 of the 13 directors of the Wheat Board. Under the new law, Ottawa will make all of the appointments to the board.
The proposed law offers help with the transition, including some money for downsizing costs and to maintain some port facilities.
Allen Oberg, chairman of the Canadian Wheat Board, told a news conference on Monday that the legislation would destroy the agency.
"I am here to tell you that the farmers of Western Canada are not rejoicing," Oberg said. "We are, in fact, fearful for the future."
Oberg said that he will go to court to fight the government's plan because, he said, it is "not obeying the laws of the land."
Nycole Turmel, leader of the official opposition in the Parliament, called the plan an "outrage" and said that a majority of farmers had sent in plebiscite ballots supporting the wheat board.
"Prairie farmers have spoken. They want to maintain the Wheat Board," said Turmel. Enditem