Reuters Edge

Canada Wheat Board hopes for government support

WINNIPEG, Manitoba (Reuters) - Canada’s government is no fan of the Canadian Wheat Board, but the chairman of the farmer-controlled marketing agency said on Thursday he is counting on Ottawa to defend the CWB in crucial world trade talks next week.

Larry Hill said he expects the United States and European Union to push for a change that would see the CWB, one of the world’s largest grain exporters, lose its monopoly on sales of wheat and barley from Western Canada.

“We’re certainly hoping that the government will make sure that the decision on Canada’s marketing structures is made in Canada,” Hill said.

The issue of the CWB’s monopoly has not been a primary focus at the WTO. But at home, the Conservative government has fought hard to end the monopoly and to give farmers the option of selling directly to buyers.

The government has so far been blocked by court rulings saying such changes must be approved by Parliament. The Conservatives’ minority status requires them to have support from at least one opposition party to pass legislation, but other parties do not support its stand on the CWB.

Despite government antipathy toward the monopoly, the CWB’s Hill said he was “confident” Ottawa would resist any move to force changes on a domestic issue at the WTO.

The blueprint for the WTO deal on agriculture includes an end to government guarantees on borrowings and payments made by “state trading enterprises” like the CWB.

“We’re giving up a major piece in the government guarantees, and we shouldn’t be asked for more,” said Hill, a farmer from Swift Current, Saskatchewan, and CWB chairman.

“There’s no proof that organizations like the CWB are trade-distorting,” Hill said, noting that Canada has won a series of trade challenges from the United States since 1990 involving the CWB, including a WTO challenge.

Canada’s negotiating position at the WTO talks has focused on protecting its supply-managed dairy and poultry sectors while pushing for an end to big export subsidies and farm support programs like those in the United States and Europe.

Hill, who will travel to Geneva for the WTO talks next week, said he would not be disappointed if the deal falters.

“There’s not a lot of market access for wheat and barley in this deal,” Hill said.

“We see things in there like the Americans having a lot of leeway on food aid and export credit that help them, and there’s not a clear reining-in of the trade-distorting domestic support systems that the U.S. and the EU have,” he said.

Hill said the CWB has not released any estimates of the value of the loan guarantees, but said it was “significant,” because they allow the CWB to borrow money at preferred rates.

Without the guarantees, the CWB would need to raise capital to be able to establish a credit rating, Hill said.

CWB borrowings totaled C$3.13 billion ($3.1 billion) last year, according to its annual report. The agency had revenue of C$4.95 billion, which it returned to farmers, less its marketing costs.

The CWB has no firm conclusions about how it would raise capital nor how much it would need to raise, he said.

“We will have to figure out how we’re going to handle that. It will be a significant issue,” Hill said.

($1=$1.01 Canadian)

Reporting by Roberta Rampton; editing by Rob Wilson