Why is the Canadian Wheat Board opposed to a farmer-led bid?
Harper will never let farmers be in control again, says former wheat board director
It takes a lot to get farmers out to meetings in the middle of harvest.
But that’s what happened across the Prairies this fall, when Farmers of North America (FNA) made a last-minute appeal in a bid for what’s left of the Canadian Wheat Board (CWB).
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The farmer-investor group already has about 3,000 producers purchasing shares in a fertilizer plant. The CWB’s grain-handling capabilities could help them hit the ground running on a distribution strategy.
Farmers had record yields but dismal margins in 2013. So when FNA had 1,000 farmers express interest in turning the wheat board into a 90 per cent farmer-owned enterprise, they weren’t driven by nostalgia.
The motive was all business: the new partnership would retain the investment and put money back in farmers’ pockets once profitable.
“Whoever owns the hopper cars owns the game,” as FNA vice-president Bob Friesen put it.
‘No thanks’ – but why?
The farmers’ bid – based on a business evaluation of $250-300 million – was rejected Oct. 20, with no reasons given.
NDP MP asks: has Ritz ‘lost his freaking mind?’2:21
“We considered it to be worth more to farmers than anyone else,” Friesen said.
“CWB basically told farmers to take a hike. The same farmers they’re expecting to take delivery from,” he said.
‘No one would acquire the CWB if they only had the information we were allowed to give farmers.’
– Bob Friesen, Farmers of North America vice-president
FNA is bound by confidentiality agreements not to disclose what it learned about the CWB’s financials.
But Friesen feels they weren’t given an equal opportunity to compete as the CWB fast-tracks its capitalization process.
“No one would acquire the CWB if they only had the information we were allowed to give farmers,” he said.
The wheat board was an institution some farmers loved to hate — not only because they were forced by law to sell it their wheat and barley, but also because some felt the board held back too much of the returns.
Where’s farmers’ money?
Grain Growers of Canada president Gary Stanford says he still jokes with CWB president Ian White about wanting his money back.
“I don’t run ‘em down,” Stanford said, “but living in Alberta, we wouldn’t notice if it wasn’t here at all.”
Agriculture Minister Gerry Ritz says the process to commercialize the Canadian Wheat Board is down to a very short list of potential investors. (Adrian Wyld/Canadian Press)
Stanford said other growers farther east don’t have as many buyers as he does, with access to markets in Montana or through Port Metro Vancouver.
“My neighbours still want to deal with CWB, and I’m happy for them … I think they’re still strong competitors,” he said. “But 80 or 90 per cent of farmers never wanted to deal with them again.”
Whether CWB is performing well post-monopoly is hard to tell. Agriculture Minister Gerry Ritz has not released any financial statements since 2011-12.
If the first two crop years were strong, wouldn’t Conservative politicians want to sing it from the rafters?
Wanted: a multinational partner
Stanford says the CWB doesn’t need a small, Canadian-owned partner like FNA. It needs one that can bring things such as West Coast port facilities to the table.
Ritz says wheat board wants ‘better footprint’2:05
“They want a partner right away. You can only use other people’s facilities for so long,” he said. “A long-term, viable solution needs an international company.”
But Stanford regrets a third option wasn’t possible: ending the monopoly without turning it all over to a corporate partner with no reimbursement for farmers or taxpayers.
That ship sailed when the former board wasn’t willing to compromise, he said.
“I’m OK if [the CWB] chooses a partner in Chicago,” he said, noting there are only a couple of Canadian players.
“As long as the headquarters are still in Winnipeg, it will make farmers happy they’re still operating out of Canada.”
Clearing the political decks?
The Harper government could have wound the wheat board down. Instead, it provided $350 million of taxpayers’ money for transition costs.
”The only reason in business to give something away is if no one is willing to pay for it’
– Stewart Wells
But it’s not seeking anything in return with this capitalization.
“If they only valued [the CWB’s business] at $270 million, that doesn’t sound like a good financial prospect,” said Stewart Wells, one of the farmer-elected wheat board directors let go in 2011.
“The other grain companies know they can starve this company out any time they want to. They’ll get it in the end anyway,” he said.
“The only reason in business to give something away is if no one is willing to pay for it.”
The FNA rejection — a bid that might have offered some political cover — was telling, in Wells’s view.
“There are no circumstances under which [Prime Minister Stephen] Harper will let farmers have control again,” he said. “They’re trying to clear the decks before the election gets closer.
“They don’t want this monkey on their back.”