Canada to Implement Wheat Board Law Regardless of Court Ruling, Ritz Says

The Canadian government will implement newly passed legislation abolishing the Canadian Wheat Board’s marketing monopoly regardless of whether a court grants an injunction against it, Agriculture Minister Gerry Ritz said.

The bill allows farmers in the country’s main growing region to sell to any buyer of wheat and barley for delivery after Aug. 1, ending a system in place since 1943 under which farmers were required to sell through the board. The law took effect yesterday after passing Canada’s Senate and receiving royal assent.

The wheat board and former members of its board of directors asked a provincial court Dec. 14 for an injunction to stop the law from being implemented. The request followed a Dec. 7 Federal Court ruling that Ritz breached a part of the previous law that required the government to hold a vote among farmers before changing the board’s marketing system.

The Conservative government has appealed the ruling, and Ritz said today the government wouldn’t be deterred by a court injunction, if one is granted. “I don’t worry about any legal cloud,” he told reporters on a conference call from Balgonie, Saskatchewan.

“In the absence of any ruling that says otherwise, Western farmers have marketing freedom and our government remains focused on ensuring that it remains law,” Ritz said in a statement e-mailed by his office.

Spur Investment

Prime Minister Stephen Harper’s Conservative government has argued that an open market will spur investment and innovation in the grain industry. Canada is the fourth-biggest wheat exporter in the world.

Harper said today he doesn’t expect the court to grant an injunction blocking the law. “Parliament is certainly within its right to pass such legislation even if the wheat board doesn’t agree with it,” he said at a news conference in Toronto.

The government has “a strong mandate from western Canadian farmers to reform the wheat board,” Harper said. “Farmers have demanded that choice for a couple of generations now and we passed legislation in that regard.”

The uncertainty about the legislation’s status risks causing “confusion and chaos in the marketplace,” said Ralph Goodale, a lawmaker for the opposition Liberal Party who represents a Saskatchewan district. “Because he’s proceeded in a way that ignores the rules, he runs the risk of creating losses for farmers.”

Voluntary Change

The wheat board can continue to operate as a voluntary marketing option for farmers under the law, and the government has said it will continue to guarantee the board’s debt and assist it with transition costs.

The wheat board “has been preparing for this change for many months, developing both pool and cash programs for farmers for the upcoming crop year,” Ian White, the board’s chief executive officer, said in a statement on the agency’s website. The board will soon announce details of its programs for the crop year that begins in August 2012, he added.

Viterra Inc. (VT), a Saskatchewan-based grain-handling firm, will begin offering bids today to Western Canadian farmers for their wheat, durum and barley, the company’s chief executive officer, Mayo Schmidt, said in a statement. The changes to the wheat board will create new contracting opportunities and risk- management tools, the company said.

‘Market-Share Game’

The wheat board will be under pressure from private companies to maintain its share of the grain-handling market, Brenda Tjaden Lepp, co-founder and chief analyst at Winnipeg- based agricultural advisory firm FarmLink Marketing Solutions, said in an interview. “They’re in the market-share game now,” she said.

Firms such as Viterra, which are offering forward contracts, could face difficulties if the law is changed, she added.

The government will conduct an audit of the board’s books to assess the agency’s financial shape and determine what assets can be used to offset its costs, said Ritz.

The Winnipeg Free Press newspaper reported on its website that former wheat board chairman Allen Oberg and other former farmer-elected directors were continuing their legal challenge of the bill. Oberg didn’t immediately respond to a telephone message and other former directors didn’t immediately respond to e-mails.

The wheat board, which had the farmer-elected directors removed and is being overseen by five government appointees, has discontinued its application for an injunction, spokeswoman Maureen Fitzhenry said in an e-mail today.

‘Rule of Law’

A section of the law that previously governed the wheat board said the government must hold a vote among farmers before adding or removing any type of grain from the board’s marketing system. Federal Court Justice Douglas Campbell said in his Dec. 7 decision that Ritz’s conduct in introducing the new bill was “an affront to the rule of law.”

The board’s jurisdiction in Western Canada includes Manitoba, Alberta, Saskatchewan and parts of British Columbia. The board conducted its own plebiscite in September, in which 62 percent of wheat farmers and 51 percent of barley growers voted to retain the monopoly.

To contact the reporters on this story: Andrew Mayeda in Ottawa at amayeda@bloomberg.net; Whitney McFerron in Chicago at Wmcferron1@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net

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