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Feds commit funding for CWB transition

A cash injection of $350 million is to help the Canadian Wheat Board as it becomes a voluntary marketing company


Winnipeg, Man. – The federal government is giving the Canadian Wheat Board (CWB) $350 million to help the organization as it transitions into a voluntary marketing company.

Agriculture Minister Gerry Ritz made the announcement from the CWB’s offices on Thursday.

Ritz says the cash injection is to help ensure an orderly transition to an open market for producers in Western Canada.

Investment to defray costs

The investment will help defray certain transition costs such as pension and post-employment benefits, severance, computer systems, winding up the final statutory pool accounts and decommissioning costs. The pools for current and future years will continue to be used to pay for the normal operations of the CWB.

The StarPhoenix.com reports that severance payments will be for about 300 employees who will be laid off as the company becomes smaller. About 75 per cent of the CWB workforce will be laid off by the end of 2012.

Ian White, the CWB’s CEO, told the StarPhoenix.com that the cash injection will mean the new company can compete with other private grain handlers without being saddled with legacy costs of the old board.

The CWB monopoly was eliminated in legislation Ritz passed through Parliament last year. As of Aug. 1, farmers in the Prairies will be allowed to choose where to sell their wheat and barley for the first time in 69 years.

The new company will be able to not just sell wheat and barley if farmers choose, but any of the other 21 grains in the Canadian Grain Act, including canola, chick peas, soy beans and corn, says the StarPhoenix.com.

A different view

The StarPhoenix.com also reports that NDP MP Pat Martin, the critic for the Canadian Wheat Board, says it’s “hogwash,” adding the money is really the funds for shutting down the organization.

The CWB without the monopoly is just one of many grain companies, but it doesn’t have its own infrastructure, such as grain elevators and terminals. It has to buy space from other companies it is competing with in order to move grain. The CWB recently announced it has contracts with eight grain companies to use their facilities, and more are coming over the summer, says the StarPhoenix.com.

However Martin said taxpayers should take note they didn’t subsidize the CWB when it was a monopoly.

“They wanted to kill the CWB so badly they are borrowing $350 million they don’t have to shut it down,” he said.