Canada legislature approves bill to dismantle Canadian Wheat Board

The governing Conservative Party, which holds the majority of seats in the Canadian legislature, used Parliamentary procedures to limit debate on the wheat-board bill, which would allow Canadian barley and wheat farmers in western Canada to choose who they sell their wares to.

 

Grain farmers are currently compelled to sell to the Canadian Wheat Board.

 

The bill passed Monday – 153 in favor versus 120 against – and now the upper chamber, or Senate, can conduct its own review.

The Conservative government has repeatedly said it wanted the bill to receive Parliamentary approval – meaning endorsements from both legislative chambers – before the end of 2011 in an effort provide certainty to farmers and commodity markets.

The Conservatives also hold a majority in the Senate, meaning the bill’s passage before Dec. 31 looks likely.

Great day
"This is a tremendous day," said Canadian Agriculture Minister Gerry Ritz, hours before the vote but anticipating the bill’s approval. "This is a movement forward. This is what we have been waiting for for decades. We will get the job done."

The Conservative Party had long argued for dismantling the wheat board, which it said was a relic of another era and denied western Canadians basic economic freedoms.

Even though it has been in power since 2006, the Conservative government didn’t have enough votes to repeal the wheat board until this year, when it won a majority mandate last May.

Once the bill is approved by the Canadian senate and receives royal assent – largely a formality – farmers and grain companies can begin to enter into forward contracts for delivery after Aug. 1 of next year.

In addition, as of next August, western Canadian wheat and barley farmers can sell all their grain as they so choose.

Ritz had warned Canada’s parliament would sit through the Christmas holiday break, if required, to ensure passage before year end.

The wheat board, through its power as sole purchaser, controls around 14% of global wheat exports, including about half the world’s exports of durum wheat, which is used to make pasta.

Traders entrance
As a result of the pending legislation, grain handlers such as Cargill, Viterra and Bunge could see their roles (and returns) in Canadian grain markets grow.

Some wheat-board directors have filed a lawsuit with the Federal Court of Canada in a last-ditch effort to stop the Conservative government.

The directors’ lawyers argue the government did not seek farmer consent before moving ahead with changes to the Winnipeg-based agency, something they say is mandatory under existing legislation.

Bryan Schwartz, a law professor at the University of Manitoba in Winnipeg, said the lawsuit faces a "major" hurdle, in that it is challenging the principle of parliamentary supremacy or the power of elected legislators to pass, repeal or amend the country’s laws.