Analysis: Canada grain sector wary of Wheat Board battle

Tue Dec 13, 2011 2:17pm EST
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By Rod Nickel

WINNIPEG, Manitoba (Reuters) - A wary Canadian grain industry will ease cautiously into signing forward price contracts for the prized 2012 wheat and barley crops, as legal entanglements over Ottawa's plan to end the Wheat Board's marketing monopoly hamper any swift moves into an open market.

A Conservative government bill is set to end the Canadian Wheat Board's monopoly on western wheat and barley sales next August. The change would shake up the industry, creating an open market and leaving the CWB a smaller, optional grain buyer.

As soon as the legislation becomes law - possibly within the next week - handlers and farmers will be able to immediately sign forward price contracts for the 2012 harvest and forge deals to supply Canadian and foreign buyers such as millers and maltsters.

But while that race to secure Canada's grain supplies was shaping up as a sprint, the latest court battle over the Wheat Board's fate now has all players weighing the risks.

"People are seeking to understand this better now, everywhere," said Wade Sobkowich, executive director of the Western Grain Elevators Association .

He expects some grain handlers to sign forward contracts, despite the risks, but also said they well remember the pain in earlier years of acting too soon.

"People have learned they need to proceed with caution."

A Federal Court judge ruled last week that Agriculture Minister Gerry Ritz breached existing law by not consulting the Wheat Board or holding a farmer vote beforehand. But he did not order the new legislation to be killed and the government has appealed the ruling.   Continued...