Frequently Asked Questions
- 1. Why did the Government pass the marketing Freedom for Grain Farmers Act?
The Marketing Freedom for Grain Farmers Act fulfills a longstanding commitment to give Western Canadian wheat and barley growers the freedom to make their own business decisions which will result in more money at the farm gate and a stronger sector.
The Government considers the economy a top priority, with agriculture playing a vital role in it. Marketing freedom will unleash the true economic potential and entrepreneurial energy of the Western Canadian grain sector. An open grain market will help attract investment, encourage innovation, create value-added jobs, and build a stronger economy.
- 2. How does the Marketing Freedom for Grain Farmers Act change how farmers market their wheat and barley crops?
The Marketing Freedom for Grain Farmers Act removed the monopoly of the Canadian Wheat Board (CWB) effective August 1, 2012. This Act provides an orderly transition from the previous marketing monopoly to an open market system where farmers choose how, when and to which buyer they sell their crops. Western Canadian farmers can now market their wheat and barley based on what is best for their own businesses.
- 3. How is the Western grain industry affected?
The Marketing Freedom for Grain Farmers Act allows anyone to buy and sell wheat and barley, so it will attract investment and allow entrepreneurs to seize new markets and increase sales.
- 4. Did the Act end the Canadian Wheat Board itself?
No. The Act removes the monopoly for wheat and barley; however, a voluntary CWB remains. The interim CWB will be in place for up to five years as it makes the transition to full private ownership. The Government is committed to assisting the CWB during the transition period.
- 5. Can the interim Canadian Wheat Board market grains other than wheat and barley?
Yes, it can market all crops defined as grain under the Canada Grain Act, as of August 1, 2012. In September 2012, the CWB established its first canola pool.
- 6. Why the five year transition period?
Five years was an estimate of the amount of time required by the CWB to adjust its operations to better meet the needs of those farmers who choose to market their commodities through the CWB.
- 7. How does the removal of the monopoly affect the economy?
The grain industry is an important driver of our economy. An open market is attracting investment, encouraging innovation, and creating value-added jobs. The removal of the monopoly allows farmers to sell their grain directly to a processor, without being forced to go through the CWB. In an open market, farmers and industry are free to respond to market demands by innovating their farming and processing practices, and can be rewarded with premium returns.
- 8. Are jobs affected?
A top priority for the Government is the economy, in which agriculture plays a vital role. An open market for Western Canadian grain farmers is attracting investment and encouraging innovation, which in turn creates value-added jobs and builds a stronger economy. Wheat and barley continues to be grown, handled and shipped from Western Canada, and the industry still needs handlers, shippers, and marketers.
The Act ensures that the CWB is assisted as it transitions into a private enterprise. If farmers choose to continue selling through a voluntary CWB, then it is expected that current employees with strong marketing skills will be instrumental to that entity. Alternatively, if farmers choose to sell to other grain companies, those companies are expected to expand their wheat and barley marketing expertise - again opening up job opportunities. An open market provides the best potential to attract new jobs and investment to the sector across Western Canada.
- 9. Do Western Canadian farmers have experience in marketing crops in an open market environment?
Yes. Western Canadian grain farmers already have what it takes to succeed in an open market as demonstrated by the growth in recent years of the canola and pulses industries. Marketing freedom gives wheat and barley farmers that same marketing choice so they will be better able to create new opportunities, bringing more money to the farm gate.
- 10. How will the value of wheat, barley and durum be affected in an open market?
Farmers are responsible for Canada's world class reputation of producing safe, high quality grain and this will continue. The prices of Canadian grains and oilseeds are set by world market supply and demand conditions. Open markets attract investment, encourage innovation and create value-added processing. Prices will respond better to market demand, giving farmers the opportunity to achieve the premium prices they have earned.
- 11. Is the CWB being sold?
No, the CWB is not being sold. The CWB is seeking the financial and other resources it needs to carry on as a viable independent organization and an attractive choice for grain sellers.
- 12. Why has the CWB accelerated the commercialization process?
The Marketing Freedom for Grain Farmers Act gives the CWB until August 2016 to submit an application for continuance to the Minister. However the legislation does not prevent the CWB from moving more quickly than that, and preparing for commercialization before the end of the transition period.
Potential investors have been aware since the Marketing Freedom for Grain Farmers Act was introduced in 2011 that the CWB would be preparing for commercialization. CWB has long said it wants to complete the privatization process required under federal legislation sooner than later.
- 13. Will there be farmer participation in the CWB?
The CWB has initiated a Farmer Equity Plan (external PDF) that would allow farmers to have a significant equity interest in CWB after commercialization. The proposed plan will allow farmers to benefit from CWB’s business activities. Any farmer who delivers grain against a CWB contract beginning in the 2013-14 crop year is eligible to participate in the plan. Post-commercialization, eligible farmers would be entitled to an equity interest in CWB based on the volume of grain delivered by them to CWB. The nature and terms of such equity interest will be determined by CWB at the time of commercialization.
Government Support During the Transition
- 14. Does the Government want the CWB to commercialize?
The Government of Canada has always acted in good faith and has every hope of success for the CWB to become a voluntary commercial organization. That is why the Government continues to take measures to help ensure the CWB can stand on solid footing, and are giving the CWB an opportunity to build a business case to become a viable, voluntary organization.
- 15. Does the Government continue to guarantee initial payments and borrowing for the CWB?
The Government of Canada provides a borrowing guarantee to the CWB until the point that it is commercialized. This guarantee does not extend to the CWB’s asset acquisition plans which must be done on commercial terms.
- 16. Is the Government funding the CWB’s asset acquisition?
No. The Government is not providing any funding for the CWB’s investments in building its grain handling capacity.
- 17. What is the CWB Transition Costs Program?
The CWB Transition Costs Program was established to help defray certain transition costs as the CWB adjusts to operating in an open market. Types of transition costs covered include post-employment benefits, severance, costs to settle debts from monopoly era operations, costs to close the 2011/12 CWB pools, costs to wind-up the defined benefit pension plan and decommissioning of systems and records. The Program provides up to $349 million, based on auditable, actual costs as they are incurred.
No funds are given to the CWB for ongoing operations. The CWB continues to carry its administration and marketing costs for its ongoing marketing activity. Long-term investment decisions taken by the CWB will continue to be covered by the CWB.
- 18. Can farmers still access producer cars, elevators, ports and terminals?
Yes. The right to producer cars is set out in the Canada Grain Act. Producer cars have always been, and continue to be allocated by the Canadian Grain Commission and access to them is protected. Short-line railways and inland terminals will continue to play an important role in getting Western Canadian wheat and barley to both domestic and international markets. The Government is committed to working with industry to monitor any anti-competitive behaviour.
- 19. What happens to the Port of Churchill?
The Government of Canada wants to ensure that the Port of Churchill continues to be an important northern shipping port. The Government of Canada has:
- provided an economic incentive of up to $5 million per year for five years to support the shipping of grain, including oilseeds, pulses and other crops, through the Port through Agriculture and Agri-Food Canada;
- provided up to $4.1 million over three years through Transport Canada for Port maintenance,
- worked with the Churchill Gateway Development Corporation on Port infrastructure improvements and extended the project completion date an additional two years, from 2013 to 2015, through Western Economic Diversification Canada; and
- explored options for the development of the community of Churchill.
- 20. How are the rail and logistical systems affected?
This is now the third year without the CWB monopoly for wheat and barley. In 2012, during the first year of marketing freedom, there were no significant issues related to grain transportation. Although 2013 presented unique challenges because of the record crop and transportation issues during the winter months, the latest figures show that the government's efforts to get grain moving are working and that a monopoly CWB would not have helped clear the backlog.
- 21. What is the status of the court cases in relation to Marketing Freedom?
The Federal Court of Appeal’s October 15, 2014 ruling upheld the December 2013 Federal Court decision on the Dennis class action lawsuit and awarded court costs to the Crown and the CWB. The courts ruled that the Government of Canada respected the rights of farmers as it delivered marketing freedom.
Originally launched in February 2012, the case was heard in Federal Court in December 2013 when six of the plaintiffs’ seven claims, including the claims of expropriation and breach of trust in the elimination of the single desk, were found to have no reasonable prospect of success. Only the claim related to producer payments for the 2011-2012 pool period was allowed to continue.
In its ruling, the Court found that producers were never shareholders in the CWB and were only entitled to payment for grain sold through the CWB. It also found that the government has not acquired a beneficial interest in property related to the CWB, and the CWB continues as a statutory corporation.
- 22. What is the contingency fund?
The contingency fund was established within the CWB to provide financial backing in the event of losses from activities outside of the pool accounts. In addition to managing the pool accounts for wheat and barley, the CWB also operated certain producer pricing contracts such as Producer Payment Options (PPOs) and cash trading programs offered outside of the pool accounts. The operation of the PPOs and cash trading programs was not guaranteed by the federal government as is the case with the pool accounts. Surpluses and deficits from PPOs and cash trading were allocated to the contingency fund to cover any losses that may result from those programs.
The contingency fund continues to back the CWB's non-pool functions, post August 1, 2012, such as producer pricing options and cash trading programs other than traditional pools and payment top-ups to the government-approved initial payments.
- 23. Should the money in the contingency fund be returned to farmers?
These funds were not generated by the CWB's normal pooling operation and do not come from monies owed to farmers. The contingency fund was established by 1998 amendments to the Canadian Wheat Board Act to backstop producer cash pricing contracts and cash trading programs offered outside the normal pooling operations of the Board. All farmers who entered into PPO contracts have received payment in full under these contracts.
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