Winnipeg Free Press - PRINT EDITION

Grain companies under fire

Wheat board loyalists accuse them of taking $1.6B in excess profits

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Private grain companies have raked in more than $1.6 billion in excess profits since last summer from the sale of wheat, according to a farm group that opposed the federally imposed switch to an open-market system for selling wheat and barley.

"We followed the money," Canadian Wheat Board Alliance (CWBA) spokesman Kyle Korneychuk said in a news release Tuesday.

"In fact, the farmers' share of the international price of grain has gone down from 84 per cent under our single-desk Canadian Wheat Board to around 40 per cent today," Korneychuk said. "It is the grain companies who have taken the lion's share (about $170/metric tonne) of the international price at the West Coast because the railways are constrained by legislation from taking much more than 12 per cent."

However, spokesmen for the group representing Prairie grain companies, the Western Grain Elevator Association (WGEA), and one of the country's largest grain companies, Richardson International, disputed the alliance's figures.

'We're not sure where they got their numbers from. The numbers seem highly inflated'

—Tracey Shelton, director of corporate communications for Richardson

"We're not sure where they got their numbers from. The numbers seem highly inflated," said Tracey Shelton, director of corporate communications for Richardson.

Shelton and WGEA executive director Wade Sobkowich said the numbers don't take into account the daily demurrage fees grain ships charge for every day they sit empty waiting to be loaded with grain.

"Those are costs we incur," Sobkowich said, adding they range from $15,000 to $25,000 per ship per day.

"So we're not profiting from any of this (the delays this year in getting grain to port). We're bleeding badly," Sobkowich said.

The CWBA said it based its calculations on data contained in a Feb. 26 market research report by CWB, the private grain company that rose from the ashes of the Canadian Wheat Board when the single-desk marketing system ended on Aug. 1, 2012, and on posted tariff rates and grain-export volumes to the end of January from the Canadian Grain Commission (CGC) and the Canadian Transportation Agency.

That report said that on Feb. 26, wheat was being offered at the Vancouver port for $11.38 per bushel, or $417 per tonne, the alliance said. The price farmers got at the country elevator was $4.69 per bushel, or $171 per tonne, a difference of $246 per tonne.

After deducting $77.07 per tonne for the cost of cleaning and handling the grain and moving it to port by rail, that left $168.93 per tonne, the CWBA said. Under the single-desk system, most of that money would have gone to farmers in the form of CWB pool payouts, it argued, but under the open-market system, it goes into the grain companies' coffers.

It said CGC data show 9,697,210 tonnes of wheat and durum were exported between the Aug. 1 start of the current crop year and Jan. 26. So if you multiply that by $168.93, it adds up to excess profits of more than $1.6 billion, Korneychuk said.

Now that farmers have had a chance to see how the new system works, he said he believes most would vote to go back to the single-desk system if given the chance.

"So let us take a vote. If we win, we'll be out (of the open-market system), and if we lose, we (CWBA members) will be quiet."

Based on the response from federal Agriculture Minister Gerry Ritz, who championed the switch to a free-market system, that's not likely to happen.

"Farmers and our government categorically reject the CWBA's creative extrapolations," the minister said in a written statement.

"If the CWBA was at all interested in facts, they would know that under marketing freedom, western grain farmers are seeing record net operating incomes," he said.

"While a small few will always remain stuck in the past, the overwhelming majority of farmers are taking advantage of new economic opportunities, thanks to marketing freedom, and are not looking back."

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition March 19, 2014 B6

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