UPDATE 2-W.Canada farmers back grain monopoly in nonbinding vote

Mon Sep 12, 2011 1:40pm EDT

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By Rod Nickel

WINNIPEG, Manitoba, Sept 12 (Reuters) - Nearly two-thirds of Western Canada's farmers want to keep a decades-old monopoly system for selling their grain, according to a non-binding vote that is unlikely to derail plans to open the market.

The mail-in vote, which Ottawa said was flawed, appears to entrench both sides in their adversarial positions with less than 11 months to design any new model for the Canadian Wheat Board if it is to continue operating once the monopoly ends in August 2012.

Farmers in Alberta, Manitoba, Saskatchewan and part of British Columbia are required by law to sell their wheat and barley (other than for domestic animal feed use) to the Wheat Board, which then pools the grain for sale in Canada or for export. The government wants to open the market, giving farmers a choice of buyers for their crops.

Farmers who support the Wheat Board monopoly believe it gives them to the best prices.

Sixty-two percent of those who responded, or 22,764 farmers, voted to keep the CWB's single-desk system, the last major agricultural monopoly and one that controls most of the supplies from the biggest exporter of spring wheat, durum and malting barley.

The other 38 percent voted for an open market system, the election coordinator said on Monday.

The vote was nearly evenly split for barley marketing, with 51 percent of respondents, or 6,283 farmers, voting to keep the CWB's monopoly and 49 percent, or 6,014, voting for the open market.

The rate for returned ballots was 56 percent.

"We will fight to have this democratic decision honoured," said Allen Oberg, an Alberta farmer and the CWB's chairman. "We will not sit back and watch this federal government steamroll over farmers."

While the CWB is talking with the federal government about the change, it is not negotiating a new model for the board, Oberg said.

GOVERNMENT STAYS COURSE

Agriculture Minister Gerry Ritz said on Friday that the results would not change the government's plans.

"Let me repeat -- regardless of the plebiscite results -- at the end of the day, every farmer will have the right to choose how they market their grain," he said. "...No expensive survey can trump the individual right of farmers to market their own grain."

The ballot question was a choice between keeping the monopoly or moving to an open market, but the government believes there's a third possible outcome - a so-called dual market with a voluntary CWB competing against private grain handlers.

Canada's Conservative government said shortly after it won majority status in May that it will pass legislation this autumn to scrap the CWB's monopoly over Western Canada's wheat and barley in time for the 2012/13 marketing year.

Grain handlers like Viterra Inc VT.TO, Cargill Inc [CARG.UL] and privately held Richardson International Limited will be able to buy grain directly from farmers once the monopoly ends, rather than handling crops for the CWB.

Politically, the Conservative majority of seats in the House of Commons gives it a clear path to dismantle the monopoly and it already is the most popular federal party in Western Canada.

The political risk at stake for the government appears small, while time is running short for the Wheat Board to plan a new role, said Paul Thomas, professor emeritus of political science at University of Manitoba.

"I think the tide has long since passed that you can mobilize opposition to their decision to end the monopoly," Thomas said. "At some point, if you're the leader of a pressure group (like the CWB) ... you had better move on to dealing with the change that's coming and try and negotiate more favorable terms."

The Wheat Board has emphasized that current Canadian legislation requires a farmer vote to decide the future of the monopoly, which has been in place since the Second World War.

Ottawa faces a legal challenge on that basis from a coalition of farmers called Friends of the Canadian Wheat Board. (Editing by Jim Marshall; David Gregorio and Bob Burgdorfer)

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