Canadian Wheat Board


The Canadian Wheat Board was a marketing board for wheat and barley in Western Canada. Established by the Parliament of Canada on 5 July 1935, its operation was governed by the Canadian Wheat Board Act as a mandatory producer marketing system for wheat and barley in Alberta, Saskatchewan, Manitoba, and a small part of British Columbia.
This system was historically referred to as "Single Desk" marketing as it was the only channel by which farmers could legally sell their wheat and barley in the CWB jurisdiction.
Amid criticism around this restriction, the Canadian Wheat Board's Single Desk marketing power officially ended on 1 August 2012 as a result of Bill C-18, also known as the Marketing Freedom for Grain Farmers Act. The Canadian Wheat Board changed its name to simply CWB and continued to operate as a grain company, although the bill also set a timeline for the eventual privatization of CWB.
On 15 April 2015, it was announced that a 50.1% majority stake in CWB would be acquired by Global Grain Group, a joint venture of Bunge Limited and the Saudi Agricultural and Livestock Investment Company, for $250 million. CWB was combined with the grain assets of Bunge Canada to form G3 Canada Limited.

History

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. During the Second World War, the authority of the Board was expanded, and it was granted the authority to set statutory maximums on wheat, oats, barley, flax, and corn from December, 1941 until the end of the war. Membership was mandatory for Western Canadian farmers in 1943 via the War Measures Act, with the new objective of supporting the war effort. In April, 1943 the Board was authorized to buy rapeseed and sunflowers as well.
Between 1958 and 1970, the CWB was chaired by William Craig McNamara. In 1965, MacNamara succeeded in persuading Parliament to eliminate the time limit in the Act, establishing a permanent Board. The CWB's authority over interprovincial shipments of feed grains became a matter of public concern during the grains crisis from 1969 to 1972 and was subsequently revoked. Only non-feed wheat and barley remained under the control of the CWB.

Anti-GMO stance of the CWB (2004)

The Canadian Wheat Board was instrumental in halting the genetically modified 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:
  1. Ten of the directors were elected by grain farmers in the western Canadian provinces of Alberta, Saskatchewan, Manitoba and parts of British Columbia;
  2. Four of the directors were appointed by Governor in Council on the recommendation of the Minister responsible for the Canadian Wheat Board;
  3. 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.

Reorganisation (2006–2012)

Since 2006 when the Conservative Party came to power, Chuck Strahl, then Minister of Agriculture, worked towards ending the Wheat Board's Single Desk. This included replacing government appointees on the Board of Directors with individuals who opposed the board's Single Desk, imposing a gag order on Wheat Board staff, dismissing the pro-board President, and intervening in the election of farmer-elected members of the Board of Directors.
  • 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 serves at pleasure , and that position was no longer his." IIt was suggested that Measner had overstepped by refusing to remove pro-CWB documents from the Board website and by appearing at press conferences with opposition leader Stéphane Dion. 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.
  • December 7, 2008: In the Board of Directors elections, four out of five candidates elected are in favor of supporting the Single Desk marketing agency.
  • 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.