WINNIPEG/OTTAWA (Reuters) - A Manitoba judge rejected a request on Friday by former directors of the Canadian Wheat Board to suspend immediately a new law ending the board's grain marketing monopoly.
While Agriculture Minister Gerry Ritz celebrated the newly opened market for sales of western wheat and barley, the CWB's former chairman and farmer directors launched a court challenge.
"You're asking for a fairly draconian remedy," Judge Shane Perlmutter said of their request to have the law suspended.
The judge ruled that he was not convinced there is sufficient urgency to suspend the law based on the fact that grain handlers and farmers can now sign forward contracts for delivery of crops starting in August.
The former directors ultimately want the judge to strike down the law on the grounds that the former legislation governing the Canadian Wheat Board required Ritz to hold a farmer vote before changing the 68-year-old marketing monopoly.
In his ruling on Friday, the judge decided against granting an immediate suspension of implementation of the law until hearings January 17-18. At those hearings, he will again consider whether to suspend the law until he decides the broader question of whether the new law should be struck down.
Federal lawyer Joel Katz said that in any case, a stay of the law would only apply in Manitoba and not the rest of Canada, since the appeal was before a provincial court.
Despite the considerable uncertainty created by the legal challenge, Canada's biggest grain handler, Viterra Inc, began offering forward contracts for the next crop year.
The Conservative government bill became law late Thursday, allowing Ottawa to take control of the board from farmers who oppose its plans to create an open market. The wheat board will lose its monopoly next August.
Ritz told a news conference in Saskatchewan that the farmer directors' roles ceased to exist with the passage of the bill. "They're now on winter vacation," he said.
The legislation provides for the removal of the eight farmer-elected directors, leaving the CWB in the hands of five government-controlled appointees. The CWB formally pulled out of the court case on Friday morning.
"This feels damn good," Ritz said. "It's been a long time coming."
For the first time since 1943, farmers, grain handlers and millers can sign forward contracts for next year's western grains without going through the Wheat Board.
Viterra was quick out of the gate with its offer of forward contracts on wheat, durum and barley.
"Viterra anticipates that the industry, farmers, customers and the economy will see significant benefits as further transportation and logistical efficiencies are realized in this positive new environment," Chief Executive Mayo Schmidt said.
CWB President Ian White issued a statement saying the board is still in operation, though in a much different capacity, and would soon be announcing new pooling and cash programs for the next crop year.
"Amid all the change, one thing remains the same: the CWB will market farmers' grain. We will work to achieve the best prices for farmers and superior service for customers in Canada and around the world," White said.
Canada's second-biggest grain handler, Richardson International Ltd, will wait until at least after Friday's court appearances to offer forward contracts, said Jean-Marc Ruest, vice-president of corporate affairs.
In the Manitoba case, the former directors seek to build on a Federal Court decision last week that said Ritz had breached the law in not holding a farmers' vote. It did not strike the law down, nor was it asked to do so.
Ritz said on Friday that if a suspension were granted by the court, the government would still proceed with plans for the revamped CWB. Asked later if it was his government's practice to ignore court decisions, Prime Minister Stephen Harper said: "No, it is not."
He added that he certainly did not expect such a ruling.
Western farmers have vigorously debated the value of having the CWB's marketing monopoly for at least 20 years.
"I am personally looking forward to the freedom to choose where I sell my first load of wheat and barley," said Alberta farmer Stephen Vandervalk, president of the Grain Growers of Canada.
Others have long said that marketing freedom comes at the cost of collectively selling grain for the best price through the CWB.
The court case leaves farmers feeling they are in limbo as they plan next year's crops, said Doug Chorney, president of Manitoba's Keystone Agricultural Producers.
"There's a lot of concern about the lack of certainty," he said. "Whether they're for the board or against the board, I haven't heard of anyone around here signing contracts yet."
(The case is before the Court of Queen's Bench of Manitoba, Winnipeg Centre, Court File No CI 11-01-75257. It is between Canadian Wheat Board, Allen Oberg, Rod Flaman, Cam Goff, Kyle Korneychuk, John Sandborn, Bill Toews, Stewart Wells and Bill Woods; and Attorney General of Canada.)
Editing by Peter Galloway, Rob Wilson and Jeffrey Hodgson. Editing by Bob Burgdorfer