6 things the wheat board needs to survive
Legislation coming Tuesday will 'reorganize' the Canadian Wheat Board
As the Harper government follows through on its campaign promise to dismantle the "single desk" for selling all Western Canadian wheat and barley, here are six things the Canadian Wheat Board (CWB) says it needs in 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 government needs to guarantee borrowing by the reorganized, voluntary board for at least five years. The wheat board argues it would 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 reserve of $200 million to replace its current guarantees of advance payments made to farmers (payments made before sales are final). A risk reserve would enable a new voluntary board to offer price pooling to farmers with enough advance payments to attract sufficient grain deliveries.
4. Ownership structure
The CWB is proposing the government be the initial owner with a share-capital structure, as it believes a new voluntary board would be unable to operate under any other ownership structure. (The current wheat board is a producer-controlled "shared governance" organization, with two-thirds of the board elected by farmers.) The CWB also wants a specified exit strategy for divesting the government's shares in due course.
5. Access to grain terminals
The CWB doesn't own any grain terminals of its own, so it wants government-regulated access to existing grain-handling facilities on the Prairies and in key ports to ensure the competitive prices and service levels it needs to compete.
6. Export access
The CWB says it needs the regulatory authority to send its grain to the ports of its own choosing.