Canada’s Conservative government will table legislation on Tuesday to abolish the Canadian Wheat Board’s 76-year monopoly on grain exports, paving the way for competition from private-sector commodity traders.
Announcing the move to a group of Alberta farmers, Gerry Ritz, agriculture minister, said on Monday that the government aimed to pass the law by the end of the year. The board, with sales of C$5.1bn last year, is the world’s biggest wheat and barley exporter.
The end of the board’s monopoly will enable private-sector traders to deal directly with farmers. At present, the private companies act only as agents for the board, providing shipping and handling facilities and other infrastructure.
The biggest players are currently Cargill, Viterra, and Winnipeg-based Richardson International. But others, such as Archer Daniels Midland and Bunge, are also gearing up for the new era of competition.
The new law is aimed at “getting the government out of the way so that farmers can do what they do best”, Mr Ritz said. Referring to recent experience in Australia and the Canadian province of Ontario, he predicted that the new regime would attract investment, encourage innovation and create jobs.
While details of the legislation were not immediately available, the government has previously said the board’s “single desk” marketing system would come to an end next August.
The CWB has fought a vigorous rearguard action against the government’s plans, maintaining that its negotiating clout provides farmers with prices and freight rates that private traders cannot match, especially in tough times.
The board also provides Canada’s biggest non-government weather service and offers low borrowing rates to farmers thanks to government guarantees.
Almost two-thirds of wheat farmers and 51 per cent of barley producers voted to retain the board’s monopoly in a plebiscite organised by the board during the summer.
However, Mr Ritz pointed to the strong mandate that the Conservatives received from farmers in last May’s general election, turning their five year-old minority government into a majority. The wheat board reforms were a prominent part of the Tories’ campaign platform. “We made a handshake with farmers to proceed”, he said.
The reformers have said that the wheat board can continue to operate in a more competitive environment, probably in the form of a co-operative.
But the board and its supporters have warned that it is likely to be swallowed up by one of the private-sector traders, as happened in Australia, because it has no grain-handling infrastructure of its own, and no capital base for borrowing or financing operations.