October 18, 2011 / 12:27 AM / in 6 years

Canada to support Wheat Board into transition

WINNIPEG, Manitoba (Reuters) - Ottawa will support the Canadian Wheat Board for up to five years after it dismantles the board’s 69-year-old grain marketing monopoly, a senior government source said on Monday.

The federal government plans to introduce legislation on Tuesday to remove the Wheat Board’s monopoly over Western Canada’s wheat and barley for milling and export.

The Conservative government intends to pass the legislation by the end of 2011 and move to an open market system on August 1, 2012.

Ottawa is willing to help the board survive in an open market and wants the board to wean itself off public support well ahead of the maximum five-year period, the senior government source said, adding that the government will outline details of its plans in the new legislation.

“Western Canadian wheat and barley farmers can better drive our economy and create jobs if they have marketing freedom, whether that’s through a voluntary Canadian Wheat Board or on an open market,” according to the source.

“To do that, it’s expected that the legislation will allow the government to support the Wheat Board’s transition for up to five years, when they will be expected to transition to full private ownership.”

Financial assistance seems likely to be included in the government’s support plan, and the Wheat Board called earlier in the day for start-up capital and a reserve fund worth a total of C$425 million ($417 million).

The CWB also wants regulated access to grain-handling elevators and port terminals, since it owns none, and continued government guarantees of its borrowings.

Viterra Inc, Richardson International Ltd and Cargill Inc own the largest networks of grain-handling elevators and port terminals in Western Canada.

A spokesman for Richardson, the second-biggest grain handler, said in summer that it would be willing to work with the Wheat Board in an open market, but doesn’t want to see the CWB gain a government-granted advantage.

There are also a number of smaller grain handlers and marketers -- some of whom don’t own facilities -- who like the CWB would welcome regulated access to elevators and terminals in what is likely to become a fierce battle for market share among existing and new, multinational players.

Canada is the world’s biggest exporter of spring wheat, durum and malting barley.

($1=$1.02 Canadian)

Reporting by Rod Nickel; editing by Rob Wilson

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