The Canadian Wheat Board’s harvest of rumours
‘Mr. Speaker,” asked NDP MP Pat Martin in the House of Commons on Wednesday, “has the minister lost his freaking mind?” It wasn’t an entirely rhetorical question. The target was Agriculture Minister Gerry Ritz; the cause of the alleged diminishment of ministerial sanity was the Canadian Wheat Board. Mr. Martin’s language may have been over the top, but he has at least helped to bring some national attention to an issue badly in need of it.
Three years ago, the Harper government took away the Canadian Wheat Board’s monopoly. That was the right move. The company was renamed CWB, and its board and management were told to compete in the free market, and make ready for privatization by 2017. Also the right move.
But recently, rumours have been flying that the government is not so much trying to sell the company, but more like planning on giving it away to an American competitor for free. These are only rumours, but the government isn’t doing enough to put the lie to them. Which only feeds the suspicions. And when your main order of business is re-election, suspicions and accusations of secrecy are things you probably want to avoid.
Since the end of the monopoly, CWB has allegedly been prospering. We say “allegedly” because no one other than insiders knows for sure. The last substantial annual report on the company’s website, one containing a comprehensive income statement and balance sheet, dates from 2011-12.
Given that CWB is a company owned by Canadians, a creature of Parliament with its board and management appointed by the government, this can’t be justified. It’s CWB, not CSIS. It’s a business that markets grains. As long as it’s a public company, make its financials public. That way, if and when it is sold, Canadians will be able to judge whether they got value for money. This shouldn’t be hard for the government to understand.
CWB may not have updated its public financial statements in years, but over the past few months it has been announcing a steady stream of projects and acquisitions. It now owns grain elevators, rail cars, ships and even a railroad. These assets are surely worth something. Yet a bid by Farmers of North America, a Saskatchewan-based company which reportedly valued CWB at $250-$300 million, was rejected in October. Why? Is the government working on an even better bid? Again, a little transparency and communication would go a long way.
The company’s website says that “CWB is excited to begin transitioning toward a private operating model independent of government that includes a network of strategic grain-handling assets and farmer ownership.” CWB’s plan is to have farmers take part in privatization by becoming shareholders. As of 2013-14, the company says that for every tonne of grain delivered, growers will “be eligible to receive a $5.00 equity interest in CWB after privatization.”
It sounds promising. It might even be the right idea: Turn the old Wheat Board into a farmer-owned company, but one operating in the free market instead of benefitting from a government-enforced monopoly. However, in the absence of a transparent accounting of CWB’s business – through public, timely, audited financial statements – how exactly are the company’s new farmer-owners supposed to value their “shares”? If CWB is sold or otherwise disposed of, what will those shares be worth? How are those shares currently valued and accounted for?
CWB’s website also says that, post-privatization, “CWB will continue to have a Canadian focus, and farmer ownership of CWB will allow farmers to have an equity stake across the value chain.” Is that also the Harper government’s position? And if so, how’s that going to work? What’s the plan?
Maybe CWB really is worth little or nothing. Maybe it will be sold for $1, and maybe that will be the right price. Maybe CWB is carrying significant debts, and any buyer will have to assume those. Maybe its business is in free fall. And maybe the moon is made of high-quality, Canadian durum wheat. Who knows? Given the lack of transparency, it’s hard for the company’s owners, the people of Canada, to say whether they’re getting a good deal or selling something valuable for a song (or less).
As is the case with so many files, the Harper government’s habit of secrecy isn’t doing it any favours. Of course the government should privatize the Wheat Board – but it should do so in the most transparent way possible. For fiscal reasons, Ottawa should want to get the most out of the sale of any asset. For economic reasons, it should want any sale to enhance, not diminish, market competition. And for political reasons, it should want to be seen to be achieving the highest value for both taxpayers and farmers. If the government can’t recognize that, it really has lost its freaking mind.
Editor’s note: A previous version of this editorial incorrectly said that Farmers of North America is a co-operative. In fact, it is a privately owned company.