6 things the wheat board needs to survive
Legislation coming Tuesday will 'reorganize' the Canadian Wheat Board
As the Harper governmentfollows through on its campaign promiseto dismantle the"single desk" for selling all Western Canadian wheat and barley, here are six thingstheCanadian Wheat Board(CWB) says it needsin order to survive in an open market:
1. Capital
The CWB says the federal government needs to contribute sufficient capital, perhaps $225 million, to finance grain inventories and conduct business operations. The board argues that in the midst of the dismantling of its monopoly,and given the tight proposed timelines for the change (2012 growing season), it would not be possible for a new entity to secure investment from the private sector.
2. Financing/borrowing
In addition to a base level of capital,the new entity would require debt financing.The CWB believes the governmentneeds toguarantee borrowing by the reorganized, voluntary boardfor at least five years. The wheat board argues itwould not be possible for the new board to access debt financing without government guarantees, given it would have no track record to assure lenders.
3. Risk management
The CWB is asking for a reserveof $200 million to replace its current guarantees of advance paymentsmade to farmers (payments made before sales are final). A risk reserve wouldenable a new voluntary board to offer price pooling to farmers withenoughadvance payments to attract sufficientgrain deliveries.
4. Ownership structure
The CWB is proposing the governmentbe the initial ownerwith a share-capital structure, as it believesa newvoluntary boardwould be unable to operate under any other ownership structure. (The current wheat board is a producer-controlled"shared governance" organization, withtwo-thirds of the board elected by farmers.) The CWB also wants a specified exit strategyfor divesting the government's shares indue course.
5. Access to grain terminals
The CWB doesn't own any grain terminals of its own, so it wants government-regulated access to existinggrain-handling facilities on the Prairies and in key ports to ensure the competitive prices andservice levels it needstocompete.
6. Export access
The CWB says it needs theregulatory authority to send its grain to the ports of its own choosing.