January 9, 2012 / 5:58 PM / 6 years ago

Ottawa may face C$15 billion suit over Wheat Board

5 Min Read

(Reuters) - A Saskatchewan lawyer said on Monday that he will file a C$15.4 billion ($15 billion) class action lawsuit against the Canadian government over the dismantling of the Wheat Board's grain marketing monopoly.

But Agriculture Minister Gerry Ritz called the proposed legal action "baseless" and said it would not affect Ottawa's moves to overhaul the Wheat Board and create an open grain market in Western Canada.

Lawyer Tony Merchant said the government must pay western farmers for the Canadian Wheat Board's assets, which he said include C$100 million in cash, 3,402 rail hopper cars, Great Lakes freighters, an office building and other assets.

In addition, Merchant said in an interview, Ottawa should also pay compensation for the value of the CWB itself and the value of its marketing monopoly - including the premium prices some say it gets for grain and savings on transportation costs.

"(The government) can do whatever they like, but when they take away assets, then they have to pay," Merchant said.

He said the Conservative government must compensate farmers for what they are losing, similar to how the former Liberal government paid farmers for removing a grain transportation subsidy in the 1990s.

The move is the latest of several legal entanglements around the government's move to end the world's last major agricultural monopoly, which has sharply divided farmers.

"It's disappointing to see further misguided legal action against Western Canadian farmers and their right to the same freedoms as farmers in Ontario already enjoy," Ritz said in a statement.

"This baseless action in no way affects the duly passed Marketing Freedom for Grain Farmers Act or western farmers' ability to forward contract right now for an open market on August 1, 2012."

The proposed class action may struggle to prove that the government's change has hurt farmers, said Gerry Chipeur, a Calgary, Alberta-based lawyer.

"It's going to be very difficult to say you made less money this year and the reason you made less money is because you don't have a monopoly anymore," Chipeur said in an interview.

Legal Risks

Grain handlers are already buying farmers' next wheat and barley crops through forward contracts, and such deals already carry some legal risk.

Eight of the CWB's former farmer-elected directors, who were removed when Ottawa took control of the board last month, will ask a Manitoba court on January 17 to suspend the open-market law until another court can determine whether the law is valid.

The Conservative government passed a law in December ending the board's marketing monopoly over Western Canada's wheat and barley for milling or export, as of August 2012.

Also in December, a Federal Court judge ruled Agriculture Minister Ritz broke the existing law by not allowing a farmer vote before moving to end the monopoly, but the judge also said that the ruling did not affect the government's new legislation.

The proposed lawsuit - which has yet to win court approval as a class action - is not likely to rattle the grain industry much since it does not affect the new law, said Wade Sobkowich, executive director of the Western Grain Elevators Association.

"The focus still needs to be on what's happening at the Manitoba court and the Federal Court - that's what people are going to be most concerned (about)."

Once the CWB monopoly disappears, Western Canadian farmers will be able to sell their wheat and barley to any buyer, not just the Wheat Board, but some believe the marketing monopoly gave them added clout to receive the highest prices.

Merchant is a former provincial Liberal politician in Saskatchewan, and his wife, Pana Merchant, is currently a Liberal senator. But he said their political affiliation was not a factor in launching the suit against the Conservative government.

The lawyer said he will now seek to sign as many farmers as he can to his class action, which may be certified within six months. It would likely take two or three years to resolve the case, he said.

($1=$1.02 Canadian)

Reporting by Rod Nickel in Winnipeg; editing by Rob Wilson

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