* Contract penalties, pensions, severance costs seen
* Chairman sees CWB shutting, says new entity may form
By Rod Nickel
WINNIPEG, Manitoba, July 29 The Canadian Wheat
Board has asked the federal government to pay "hundreds of
millions of dollars" in penalties for canceled grain contracts
and other expenses that it says would arise if it shuts down
next year when its marketing monopoly ends.
If Ottawa removes the board's monopoly to buy and sell
Western Canada's wheat, durum and barley, the board will close,
even if an organization with an altered role takes its place,
CWB Chairman Allen Oberg said on Friday.
"Let's be clear, this is not a transition process. This is
the winding down of the current organization and the creation
of something entirely new," Oberg said in an interview.
Oberg could not say how long the Wheat Board's contracts to
supply buyers with grain extend. With the CWB gone, countries
like China and Japan would have to buy grain directly from
Canadian grain handlers or other countries such as the United
States, Australia and Russia.
The board has already sold about 10 percent of the expected
2011-12 wheat crop and Oberg said he hasn't heard of any impact
on sales from the uncertainty around the board's future.
The Wheat Board has asked Ottawa to assume contract
penalties, as well as staff pension and severance costs, in
meetings with federal administrators, Oberg said.
The country's Conservative government says it will pass
legislation this autumn to end the Wheat Board's marketing
monopoly on western wheat and barley in August 2012. The change
will allow farmers to choose whom they sell their crops to for
the first time since World War Two.
Canada is the world's top shipper of spring wheat, durum
and malting barley.
The Wheat Board sent a letter last week to Agriculture
Minister Gerry Ritz outlining 19 alternative models, none of
which it says are as valuable to farmers as the monopoly.
Among the alternatives are scenarios in which Ottawa would
leave in place part of the CWB's monopoly -- for example on
export sales only -- but the government has given no sign it
would consider that idea.
Ritz could not be reached for comment immediately.
The Wheat Board has said it cannot compete with established
grain handlers unless it has regulated access to storage and
handling facilities, because it has none of its own.
Canada's grain-handling industry is dominated by Viterra
Inc VT.TO, Richardson International Ltd, and Cargill Inc
[CARG.UL], while U.S.-based Bunge Ltd (BG.N) has said it is
interested in taking a bigger role in Canada after the Wheat
Board monopoly ends.
The Wheat Board has no retained earnings but collected
C$5.2 billion ($5.4 billion) in revenues last year.
(Reporting by Rod Nickel; editing by Peter Galloway)