Canadian government to expropriate assets worth more than C$200M from wheat, barley farmers to help fund dismantling of single-desk marketing monopoly, Canadian Wheat Board says
November 25, 2011
– The CWB's farmer-controlled board of directors is alerting farmers that the Government of Canada intends to expropriate assets worth over $200 million that farmers have paid for, financed or generated through activity surrounding their grain sales.
"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," Oberg said, following a board meeting yesterday that may have been its last as a farmer-controlled entity. "This was not farmers' idea, they don't support it, and they shouldn't be forced to pay for it."
The board passed a resolution 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.
Assets include a contingency fund of up to $200 million, as well as assets with an estimated value of approximately $80 million, including the CWB's fleet of 3,400 rail hopper cars and an eight-storey Winnipeg office building. In addition, farmers will have paid $28 million towards the cost of two new laker vessels by August 1, 2012 (when the government plans to close down the current CWB), with no chance for them to realize the long-term revenue and cost-savings benefits the ships were to generate.
Minister Gerry Ritz has stated that the government will use the contingency fund to help finance wind-up costs of the current CWB. Enabling legislation, soon to be tabled in the Senate, would immediately fire all the farmer-elected directors on the CWB's board upon Royal Assent, leaving five government-appointees in charge.
The government this month raised the cap on the contingency fund to $200 million from the previous limit of $60 million. It also issued a directive that prevents the CWB's board of directors from acting to return any surplus program funds to farmers. The fund was set up in 2000-01 to manage risk associated with operation of newly created CWB Producer Payment Options and is also used to backstop more recent cash-trading programs.
The board is demanding the Minister use federal government money to pay all costs of winding down the current organization, as well as the costs associated with transitioning the CWB to a voluntary organization in accordance with government plans. 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.
Total wind-up costs are estimated in the hundreds of millions of dollars, consisting of: 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.
Oberg said farmers are also at risk of bearing a host of hidden costs during the current crop year as the wind-up progresses, such as those related to transferring cash-advance programs to a different service provider, costs of planning for and creating a new entity and new supply-chain environment.
"There has to be a line in the sand," he said. "The government must bear all costs incurred as a result of their unilateral move to strip away the single desk. Farmers have already been silenced and ignored - they cannot be forced to pay on top of it all."
The CWB has launched legal action against the federal government's introduction of Bill C-18. The case will be heard on December 6 at Federal Court in Winnipeg.