Canadian Wheat Board

First wheat boards By the early 20th century in Western Canada, grain purchasing, transportation and marketing were controlled by large companies headquartered outside the region, such as the Canadian Pacific Railway and the trading companies that had a significant presence the Winnipeg Grain Exchange. Farmers took note of the success of state-led marketing as it was practised during World War I. The government created a series of boards in and around the war. The Board of Grain Commissioners of 1912 was established for regulation, to supervise grading, etc. By 1915, the government had assumed control of all wheat exports to support the war effort, and by 1917, futures trading on the Winnipeg Exchange was banned. In 1917, the new Board of Grain Supervisors was given exclusive control over wheat and fixed uniform prices across the country. Soon afterwards, the Board took control of the marketing of other crops as well. Farmers expressed concerns that after the war, prices might decline, leading various agrarian groups to lobby Ottawa to keep the Board in place. In response, the government complied by establishing the Canadian Wheat Board for the 1919 crop exclusively. Under this arrangement, farmers received a guaranteed price for that crop, paid promptly, and subsequently received an additional payment once the Board had finalized the year's sales. This system of guaranteed prices and distributed income was well received and when the Board dissolved in 1920, many farmers dissented. From 1920 to 1923, prices declined. This marked contrast to the stable prices of 1919–1920. Interregnum (1920–1935) After the dissolution of the early board in 1920, farmers turned to the idea of farmer-owned cooperatives. Cooperative grain elevator operators already existed, like United Grain Growers, which had already been started in 1917. In 1923 and 1924 the wheat pools were created to buy Canadian wheat and resell it overseas. The Alberta Wheat Pool, the Saskatchewan Wheat Pool, and Manitoba Pool Elevators emerged as significant players in the industry and supplanted the private traders. However, they did not hedge against falling prices, opting for provincial government guarantees instead. During the price collapse of 1929, they faced financial challenges. The majority of farmers opposed the return of private traders, and the prospect of owning their own marketing companies appeared unattainable. Consequently, the concept of a government marketing board was reintroduced. Revival and flourishing (1935–2000) The Canadian Wheat Board was re-created in 1935 with the aim of controlling grain prices to benefit farmers devastated by the Great Depression. Anti-GMO stance of the CWB (2004) The Canadian Wheat Board was instrumental in halting the genetically modified (GM) wheat of Monsanto in 2004. Serving as a unified advocate for wheat farmers, the CWB conducted market research that revealed international markets' reluctance towards GM wheat and their intention to reject wheat exports from Canada if GM wheat was sanctioned, citing contamination risks. Additionally, the CWB surveyed wheat farmers and discovered that many were opposed to GM wheat. Subsequently, the CWB presented its research findings and the perspectives of wheat farmers to the government. Late operations The farmers delivered their wheat and barley to grain elevators throughout the crop year. The Board acted as a single desk marketer of wheat and barley on behalf of prairie farmers. Upon delivery to an elevator, farmers received an initial payment for their grain from the CWB that represented a percentage of the expected return for that grade from the pool account. After the end of the crop year, on July 31, farmers received an interim payment and a final payment, in addition to their initial payment, ensuring they received 100% of the return from the sale of the grain they delivered, minus all overhead costs of the CWB. The initial payments were guaranteed by the Government of Canada, ensuring farmers received payment even in the event of a deficit in the pool account. These initial payments were intentionally set below expectations for the crop year as a risk management measure to mitigate the possibility of unmet price expectations. Prior to the December 2011 passage of Bill C-18, An Act to reorganize the Canadian Wheat Board and to make consequential and related amendments to certain Acts, the CWB was governed by a 15-person Board of Directors, of which: • Ten of the directors were elected by grain farmers in the western Canadian provinces of Alberta, Saskatchewan, Manitoba and parts of British Columbia; • Four of the directors were appointed by Governor in Council on the recommendation of the Minister responsible for the Canadian Wheat Board; • One was the President of the CWB, appointed by the Governor in Council, on the recommendation of the Minister responsible for the Canadian Wheat Board with certain restrictions including that the CWB Board of Directors must be consulted on the recommended candidate. Upon the implementation of Bill C-18, the original elected board was replaced by four directors, and along with the president, they were appointed by the Governor in Council on the recommendation of the Minister of Agriculture. Until 15 December 2011, compliance with the wheat board was mandatory for most farmers and elevators under threat of punishable by fines and/or imprisonment. Farmers from Eastern Canada and most of British Columbia were not subject to the control of the Canadian Wheat Board and could market all their grain on the open market. The Peace River District in British Columbia was under the jurisdiction of the Canadian Wheat Board. Bill C-18, the Marketing Freedom for Grain Farmers Act, reorganized the CWB to market grain through voluntary pooling. ==Quality grading system==

Unlike the United States, Canada had a tight grading system established by the Canadian Grain Commission and enforced by the CWB. This enforcement made it "possible to extract premiums for higher quality grain that is not possible in the United States." In an open market system Western Canadian farmers lose the benefits of a grading system. • In the December 2006 CWB Board of Directors election, only one of the five farmer-elected seats was won by opponents of the Canadian Wheat Board's Single Desk power over the selling of Canadian wheat and barley internationally. With just one incumbent farmer-elected board member opposed to the Single Desk, only two out of the ten farmer-elected directors were against it. Despite this, the government appointed five members to the board, giving supporters of the Single Desk a narrow eight to seven majority. Some have raised doubts about the results due to Minister of Agriculture Strahl removing over 20,000 farmers from the voters list during the election. These farmers were disqualified for reasons such as not having delivered any grain to the Wheat Board in the past two years or not having produced enough wheat or malt barley to generate significant income for their livelihood. • December 19, 2006: Chuck Strahl dismissed CWB president Adrian Measner, who was a vocal advocate of the Single Desk system. Strahl justified the decision by stating, "It's a position that [he] serves at [the] pleasure [of the Minister/Government], and that position was no longer his." The majority of the CWB's board of directors were against the dismissal of Measner. • March 28, 2007: Barley Plebiscite. 62% of farmers voted to terminate the wheat board's barley Single Desk power. The legislation to amend the act is left unfinished on the order paper when the September 2008 election is called. • February 26, 2008: The courts rule against the conservative government in a battle over unilaterally dismantling the CWB as it was found to be in violation of the Canadian Wheat Board Act. • January 21, 2010: Supreme Court of Canada ruled in favor of the federal government in its 2006 order prohibiting the board from using its funds for lobbying activities. • December 7, 2011: Federal Court Judge Douglas Campbell rules that the Conservative government violated the law by introducing legislation to terminate the Wheat Board. • December 15, 2011: Bill C-18 receives royal assent. • June 18, 2012: The Federal Court of Appeal upholds Bill C-18. • August 1, 2012: The end of monopsony takes effect. Wheat farmers, railways and CWB Ian Robson, whose great-grandfather played a role in initiating the co-operative pool system, contended that as a multi-generational small farmer, he relied on the CWB to counterbalance the influence of the railway. Robson asserts, "We're at the mercy of the railways, and the consequences are evident. Transport Canada is tasked with protecting our interests, but they are hesitant to confront the railways." By 2014, CP was shaped by CEO Hunter Harrison and activist shareholder Bill Ackman, both of whom were Americans. In October that same year, Americans owned 73% of CP shares while Canadians and Americans each owned 50% of CN. Modern criticism Arguments in favour of privatization believe that farmers should be allowed to opt out of the board. Others believe that they could get a better price for their grain than the board and would like to market their own grain. Proponents of maintaining the CWB stated that the collective bargaining power of the wheat board gives farmers a better price than they would have if they were individually marketing to large multi-national corporations. CWB opponents disagreed, arguing that there was no evidence of better returns for farmers. At this time, farmers already had the ability to market all the crops save wheat and malt barley independently, meaning it is possible to succeed marketing grain without board oversight. This, however, may make farmers more susceptible to fluctuations in the commodity market and to focus more of their time on the business aspect of farming, rather than farming. The Wheat Board attempted to offer producers more options in its latter years—for example, farmers could sell their wheat with binding forward contracts to the Wheat Board that attempted to pay the same price that they would get for their grain in the U.S. Supporters of the board and labour unions believed the CWB gave individual farmers increased marketing power in a world market which got them a higher price than they would have otherwise gotten, not only through the efficiencies of scale, but as well by exercising oligopolistic marketing power on the selling side, especially for Durum wheat, although the evidence of this is weak or non-existent. A study conducted in the mid 1990s suggested that farmers gained on average a premium of $13.35 a tonne on wheat as a result of the board's Single Desk, although the study and its methodology was widely refuted. Supporters of the Single Desk feared that an end to the board would put farmers in a situation like in the early part of the 20th century where farmers effectively competed with each other to sell their grain, effectively putting them at the mercy of big agribusiness and the railroad monopolies, believing that would reduce farm incomes. The counter-argument is that producers of non-Board crops such as canola do not seem to have this problem. American complaints Although the Board was reformed to meet free market conditions under the North American Free Trade Agreement and the World Trade Organization Treaty, American producers continually complained. Despite numerous challenges and much posturing by the United States, the World Trade Organization ruled in 2003 that the Wheat Board was a producer marketing body and not a system for government subsidy although the decision has since been overturned. In fact, Canadian producers have almost no government subsidy while their American and European Union counterparts are heavily subsidized. Western alienation The fact that the Wheat Board primarily marketed crops produced in Western Canada became a source of alienation and even Alberta separatism for many Western Canadian farmers. Farmers in Eastern Canada (east of Manitoba) and most of British Columbia (non-Peace River) were exempt from the CWB's Single Desk control of non-feed wheat and barley—Ontario has its own marketing board, but it is not compulsory. Calls for abolition of the CWB There had been calls by many groups to abolish the Wheat Board. Many of these groups took their fight to the Internet to spread their message and gain support for their cause. While many were focused on the Canadian Wheat Board, others concentrated on international wheat boards, the other primary target being the Australian Wheat Board, before the AWB itself converted to a private firm, leaving the CWB as the only significant agricultural State Trading Enterprise (STE) exporter worldwide, if one ignores Chinese State-Owned Enterprises (SOE). On 7 December 2008, CWB permit book holders voted in favour of maintaining the wheat board by electing four pro-board candidates with one marketing choice candidate being elected. Stewart Wells, president of the National Farmers Union, said "The message can't be any clearer". Others argued that the voter's list was flawed, as it included many small or part-time producers who may not deliver to the Board, as well as non-producers such as landowners whose livelihood might not solely rely on farming. In December 2008, the draft modalities text of the Doha Development Round was revised such that upon signing in its revised form, the CWB would lose statutory privileges such as the Single Desk within five years of the signing. Transfer of CWB to Foreign Hands (2012–2015) One of the aims of the Conservative government since coming to power in January 2006 was to end the Single Desk marketing power on Western Canadian wheat and barley. The Conservatives had been unable to get this change approved by Parliament because they held a minority of seats until the May 2011 federal election and all opposition parties supported the Single Desk. The Conservatives also lost a court battle to unilaterally dismantle the CWB without an act of Parliament. In the aftermath, Harper and then Minister of Agriculture Chuck Strahl stated their intent to continue with the removal of the traditional role of the CWB, particularly in regards to barley (which is generally a more corporate crop), perhaps through Parliamentary action. After winning a majority in the May 2011 general election, the Conservative government announced its intention to remove the CWB Single Desk through legislation. In response, the CWB held plebiscites on whether to keep the Single Desk power on wheat and barley. The results were released on September 12, 2011; 51 percent of barley growers and 62 percent of wheat growers voted to maintain the board's Single Desk. The Marketing Freedom for Grain Farmers Act instituted a timeline for the eventual privatization of CWB, requiring the board to formulate a plan by 2016, to be implemented in 2017. On April 15, 2015, it was announced that a 50.1% majority stake in CWB would be acquired by Global Grain Group, a joint venture between Bunge Canada—a subsidiary of Bunge Limited, and SALIC Canada—a subsidiary of the Saudi Agricultural and Livestock Investment Company, for $250 million. The remaining equity of CWB will be held by its member farmers. The sale to G3 took place while a "Farmers of North America" led group of Western Canadian farmers attempted to raise funds to purchase the CWB and keep it Canadian farmer owned rather than selling it to foreign corporations. The group was rebuffed despite having a higher offer, on grounds that they had not raised the funds. On 12 June 2015, the Department of Finance released draft legislation to handle the tax consequence to farmers, and to the Trust which will hold 49.9% of CWB in trust for farmers (proposed section 135.2 of the Income Tax Act). No news release was issued to explain the legislation. An explanation of how the legislation works is included in the 48th edition of Carswell's Practitioner's Income Tax Act and Carswell's Taxnet Pro. ==See also==