Is proposal for farmer-owned CWB a viable option?
Farmers of North America is presenting a new option in CWB’s journey to be relevant and have impact in its post-single desk life.
FNA has started a campaign to gauge the interest of its membership in a plan to buy a majority interest in the CWB.
FNA already has a plan called ProjectN to build a nitrogen fertilizer plant in Saskatchewan and a fertilizer distribution network.
It sees the opportunity to create synergies if it could put together grain handling and marketing assets and fertilizer supply assets. Basically, it would create a full service elevator and input supply company with farmer equity and guidance.
At first blush, the idea would likely attract producers who want to see a more farmer-oriented elevator company in Western Canada to provide competition in a grain market that is, since the demise of the CWB’s single desk and the prairie pools, dominated by large corporate and multinational companies.
Even some of those who did not like the wheat board’s monopoly were shaken by the inequities of the 2013-14 crop year, feeling powerless as the inability of the railways to meet the enormous demand of a record shattering crop led to wide basis levels that left cash prices trailing far behind prices in the United States.
A strong, farmer-owned grain company might give producers a bigger voice in the industry, but there are many questions yet to be answered before farmers can assess the value of the FNA idea.
CWB is already expanding its footprint, buying existing prairie and port terminals and building several more. It has a plan for farmer involvement in ownership, in which producers would build up equity as they deliver grain to the CWB account.
However, CWB also plans to have a corporate partner or partners. CWB does not rule out American or multinational partners in the future.
Would CWB’s future be more secure and would it be better for prairie farmers if the FNA found the farmer support to carry out its plan?
Or would it be better for farmers if CWB had a multinational partner with greater financial resources and global marketing know-how?
It is early days, and CWB officials have not yet commented on the FNA plan. It would be good to know what they think. It would also be good to know how the federal government views the proposal.
FNA must explain how the new entity would differ from existing grain companies.
On its website, FNA says the new entity would be neither like the single desk Canadian Wheat Board nor the grain company co-ops of old.
There would be professional management and board of directors, it says, tasked to create a highly profitable, competitive, free market enterprise-focused business.
And yet FNA also says it wants this new entity to be a business model much different than the current industry norm.
Can a company be more farmer friendly and survive in the highly competitive grain market? Would it have the size to carve an independent path?
Would the structure of this company allow it to have access to capital markets so that it could compete with multinational corporations?
FNA’s proposal has an urgent tone, noting the CWB could have a privatization plan ahead of the government deadline.
This could be, as FNA says, a one-time opportunity, but farmers will likely need much more information to convince them to make a serious investment.