Farmers launch wheat board class action

A class action lawsuit was launched in Saskatoon Monday seeking $15.4 billion in damages resulting from changes made by the Harper government to the Canadian Wheat Board.

Plaintiff Duane Filson, a farmer, teacher and municipal politician from Woodrow, Sask., represents a class that could include any Prairie grain farmer who sold wheat or barley to the Canadian Wheat Board in 2011 or 2012.

Filson ran for the federal Liberals in the 2011 general election in the riding of Cypress Hills-Grasslands, losing to the current parliamentary secretary responsible for the Canadian Wheat Board, Conservative David Anderson.

Merchant Law Group LLP launched the suit on farmers' behalf. Class action lawsuits must be certified by a judge before they can proceed, and the claims in the suit have not been proven in court.

The first court date to consider the certification of the class is expected in about two months.

"This lawsuit is not about the single desk [monopoly marketing system]," said Tony Merchant. "If you're going to make changes, you have to compensate," Merchant said, noting that when the federal government ended the Crow Rate subsidy for shipping grain by rail, farmers were compensated.

Documents filed in court say that farmers should be compensated for losing all of the wheat board's assets at the time the government's changes took effect: $100 million in cash, over 3,000 rail cars, the prepaid purchase value of lake freighters for shipping grain by sea, an office building in Winnipeg and other intangible assets, as valued by experts for the purpose of the lawsuit. Part of the claim includes damages for lost price premiums previously obtained with the selling power of the board's monopoly.

Monopoly ends Aug.1

The wheat board had operated as a shared governance organization since 1998, with farmer-elected directors constituting the majority of the representatives on its board. Proceeds from the board's sales were returned to Prairie grain farmers.

Legislation that received royal assent Dec. 15 ended the wheat board's monopoly over marketing Prairie wheat and barley as of Aug. 1, 2012. The eight remaining farmer-elected board members were dismissed, leaving five government-appointed directors in charge of the organization's future.

The board continues to operate for the 2012 crop year and beyond as a voluntary seller for Prairie grain farmers, who may now also sell to other private sector buyers in an open market.

After a five-year transition period, the government appointees who now manage operations will determine if the wheat board can continue to operate as a viable voluntary organization in an open market. If it cannot, it could be dissolved by the government altogether.

Changes ended farmers' control

The lawsuit argues that when the changes were made, sole control over the wheat board moved out of farmers' hands and into the government's, despite the fact that it will continue to exist as a voluntary seller.

"A corporate dissolution requires surplus funds, proceeds and assets to be returned to appropriate creditors and stakeholders," the lawsuit argues. "The dissolution of the [farmer-controlled wheat board].… requires the return of all funds, proceeds and assets accumulated … back to the class, the rightful owners of the CWB value."

The lawsuit deems the legislation as having "unlawfully repurposed" tangible and intangible assets of farmers, causing $15.4 billion in estimated damages and removing all the value and benefits derived from the previous marketing system.

Further, it argues that the government has "wrongfully and intentionally interfered with the business relations" between the plaintiff, the wheat board and the former farmer-elected directors. The lawsuit claims a "breach of implied trust" to maintain the wheat board's assets to the benefit of the farmers it served, and claims that the new voluntary wheat board controlled by the government has been "unjustly enriched" by the changes.

"How can a voluntary wheat board function? What can they offer?" Merchant said. "Economists say it isn't going to work and those assets will be dissipated."

"Farmers say give me my share right now. I don't want to go into that new gamble," Merchant says.

"Our government has delivered marketing freedom for Western Canadian farmers and we will continue to work with farmers to make sure the CWB remains a viable marketing option," said Agriculture Minister Gerry Ritz in a statement Monday.

"It's disappointing to see further misguided legal action," the statement says, adding that this "baseless action" does not affect the arrival of an open market for Prairie wheat and barley as of Aug. 1, 2012.