Western Canada grain monopoly, world's last, passes into history

Tue Jul 31, 2012 11:56am EDT
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By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Western Canada's grain-marketing monopoly, a system dating back to World War 2 and the last of its kind in the world, ends on Wednesday, officially opening a new era of competition for grain in the No. 7 wheat grower.

Starting August 1, the start of Canada's 2012/13 crop marketing year, Western Canadian farmers can legally deliver wheat and barley to any buyer in Canada or the United States, not just on sales through the Canadian Wheat Board.

Canadian grain companies can also export without the CWB's involvement, potentially redrawing transportation patterns and market shares.

It is not shaping up to be an immediate free-for-all, however, as there are likely modest supplies left in farmers' bins from last year's wheat crop not committed to the CWB, and this year's harvest of spring-planted grains is just beginning.

The rights to much of the new harvest are already determined, as grain handlers such as Viterra Inc, Richardson International Ltd and Cargill Ltd have inked forward contracts with farmers since Ottawa passed a new grain-marketing law in December.

"We don't expect big shocks to the system," said Elwin Hermanson, chief commissioner of the Canadian Grain Commission, which regulates the country's grain-handling system.

"We expect everything to be orderly, (but) there will be new players marketing wheat and barley in Canada. It will be a very interesting time."

Hermanson doesn't expect farmers to truck much Canadian grain south to U.S. country elevators, since prices along both sides of the border should quickly even out.   Continued...