Analysis: Canada farmers brace for life after wheat monopoly

Mon Oct 3, 2011 2:54pm EDT
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By Rod Nickel

WINNIPEG, Manitoba (Reuters) - The Canadian Wheat Board's marketing monopoly infuriated Darren Winczura so much that in 2002, he defied Canadian law by carrying a bag of wheat across the U.S. border.

Winczura, who was charged along with about a dozen other farmers in the No.3 wheat exporter, spent a night in a southern Alberta jail and paid a C$900 fine.

Now after generations of passionate, even near-hysterical debate among western farmers, Ottawa is set to introduce legislation within weeks to open the farm belt's grain market to competition next August. It would end the last major grain supply monopoly in the world, completing a decades-long evolution in which private enterprises have taken over trade.

For the first time since World War II, western farmers would be able to sell wheat and barley to any buyer they choose, rather than just the CWB. Australia ended its own monopoly three years ago, leaving Canada with the last major agricultural marketing monopoly.

The change opens the door for a scramble among major grain handlers like Cargill Inc and Viterra Inc for Canada's top-quality supplies, and U.S. grain elevators look to swell with Canadian wheat at least in the early days of the open market.

But it is unlikely to upend a long-term trend of declining wheat acreage, as oilseeds and legume crops -- which have thrived in a free-market system -- take more and more land.

Opponents of the monopoly bid good riddance to a system that forces them to sell to a single buyer and leaves them holding their grain while the Wheat Board musters buyers for it.

"As of now, I'm sitting on about 20-some-thousand bushels of wheat and I can't move it because the Wheat Board has no sale," Winczura said. "So my cash flow is tight. It's just not an organized system."   Continued...