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WINNIPEG, Manitoba (Reuters) - The Canadian Wheat Board said on Wednesday it will launch legal action to stop the Conservative government from ending the CWB's generations-old grain marketing monopoly, though a politician who supports the board's fight says it has little chance of succeeding.
Agriculture Minister Gerry Ritz said however that the challenge could set back efforts to revamp the Wheat Board to compete effectively for crops next year in an open market.
The board is filing the suit because the government is moving to create the open market system without holding a farmer vote on the issue, as current legislation requires, CWB chairman Allen Oberg said.
The government is instead seeking to replace the legislation.
"Governments can either obey the law, they can change the law, but the can't ignore the law, and that's what's happened here," Oberg said at a news conference on a Manitoba farm.
Ottawa aims to pass legislation by the end of 2011 to terminate the Wheat Board's monopoly on marketing Western Canadian wheat and barley for milling or export as of August 1, 2012. The change would allow farmers to sell those crops directly to grain handlers.
Canada is the world's biggest exporter of spring wheat, durum and malting barley.
The Wheat Board's legal action is baseless, Ritz told reporters. The current legislation only requires a farmer vote on changing the commodities that they sell under the CWB monopoly, not the existence of the monopoly itself, he said.
Ritz said he has no intention of delaying the open market's implementation date, but said the longer the delays last in court, the less chance the board has of adapting successfully to the open market.
"This is probably part of the scorched earth policy of the eight directors" who support the monopoly, Ritz said.
One of the opposition politicians fighting the bill said on Wednesday that legal challenges are likely to fail.
"It's kind of like a faint-hope clause for an inmate on death row," New Democratic Party legislator Pat Martin said in an interview, noting that Parliament has the right to overturn legislation put in place by a previous government.
"Our legal opinions have it that it's a very remote possibility that a court challenge would succeed because you're challenging one of the fundamental tenets of parliamentary democracy."
The move has further split the CWB's ranks over the monopoly issue, with one of the board's farmer-elected directors resigning on Wednesday over the decision to launch a court fight.
"The CWB's decision this week to launch a legal challenge ... when it is clear to everyone that it will not change the outcome and would not change the timing of the government action, is simply wrong," wrote Henry Vos, an Alberta farmer who has long supported a move to an open market.
A group called Friends of the Canadian Wheat Board is already taking the government to court, saying the plan to end the marketing monopoly is illegal.
Opposition parties are also attempting to disqualify some Conservative legislators from voting on the bill under conflict of interest rules. Legislators who are farmers or work in the agriculture industry have a vested interest in the legislation, Martin said.
"Even though it's a faint hope as well, that's probably our best hope," Martin said.
Once the Conservative government uses its political majority to pass the legislation, it will remove the remaining farmer-elected directors, who mostly oppose the move to an open market, leaving the CWB under the control of government appointees.
Ottawa would then shrink the organization and the CWB would become a voluntary option for farmers to market their grain.
The revamped board will get some short-term government support, but it will not get start-up capital from government or regulated access to country elevators or port space.
"They will exist in some form for five years, but after that the probability of survival is very, very low," said Richard Gray, a professor of agricultural economics at University of Saskatchewan.
But Mayo Schmidt, CEO of the biggest Canadian grain handler, Viterra Inc, said last week that he thinks the board can thrive as a voluntary entity in an open market.
Reporting by Rod Nickel; editing by Peter Galloway and Rob Wilson