Canadian Wheat Board prepares for corporate takeover

They called it "Marketing Freedom Day":Prime Minister Stephen Harper stood in a Saskatchewan field and vowed that Prairie grain farmerswould "never, never again" suffer at the hands of the Canadian Wheat Board.

What the politicians weren't saying in 2012, when the monopoly that controlled where farmers could sell their product sank into the horizon, was that the liberation wouldn't stop there.

Farmers and Canadian taxpayerswill soon be completely free of the wheat board's assets but not witha conventional sale.

Under asort of reverse-nationalization plan now taking shape behind closed doors, aprivate-sector investor will assume controlwithoutreimbursingthe federal treasuryforassets Canadianspaid for, or at least indirectly financed.

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Little is known aboutthe board'scurrent financial health, because Agriculture Minister Gerry Ritz exercises power given to him in 2011 to withhold information "detrimental tocommercial interests."

Areport Ritz submittedto Parliament last July contained no financial statements.Manybig players inthe international grain business aren't publicly traded.

How did this happen?

2011's Marketing Freedom for Grain Farmers Act gave a revamped wheat board purged of farmer-elected directors and now runby a board of Harper government appointees until 2016 to come up with a privatization planand until 2017 to implement it. Otherwise, itwillbe dissolved.

Parties involved in the talks arebound by confidentiality agreements.

The board'swebsitesays it is "fast-tracking" and "intends to beat that deadline."

PresidentIan White, who's overseen recentpurchases of new grain-handling facilities, wants toaccelerate the process for fear the organization will be wound up.

With an uncertain future, farmers may bereluctant to sell it their grain. Post-monopoly,CWB hasneeded help from largergrain companies.

You can get cash from the sale of something, or you can get a return over the years as the economy grows.- Agriculture Minister Gerry Ritz

The board wants a large, international player as its majority partner. Any investment from that partner willremain within the newlyprivatized company itcontrols.

And grain farmers participating ina newfarmer equity plan will have onlya minority stake.

Fast-tracking could also see a deal before the next federal election. But this is not the sort of privatization that helps balance governmentbooks.

"There's no rush," Ritz said last Thursday. "They're expediting the process on their own simply to get stability."

What'sCWBworth?

No one's sure what kind of numbers figureinthetalks.

A rejectedbid by the Farmers of North America, a group of more than 3,000 Canadian farmer-investors, evaluated the business at between $250-300 million. (No reasons were given for declining this offer.)

A class-action lawsuit seeking leave to appeal at the Supreme Court of Canada next spring claims the value of CWB'scash and hard assets in 2011 was more than $200 million.

The CWB is still backstopped bygovernmentcredit. The federal government provided it with nearly $350million to help withtransition costs.

When Ritz was asked in question periodhow proceeds of the privatization would be distributed, he said "there were no assets" in 2011.

But the CWB ownsits headquarters in Winnipeg. It had ordered two Great Lakes freighters.It also owned some3,400 railcars, and Ritz sayshe's not aware that any have been sold.

There were no debts piling up over the years... "That's just bull- Stewart Wells, former farmer-elected wheat board director

Ritz told the Commons agriculture committee Thursdaythat the "supposed assets" were "heavily leveraged." The government helped farmers by taking these off their hands, he suggested.

Stewart Wells, a Swift Current, Sask. farmer who was afarmer-elected CWB director until he was dumped in 2011,disagrees.

He saysthe 2011-12 financial statementsshow no outstanding debts outside of the newly-purchased ships. Even that wasrelatively smallthe board's cash contingency fund had three times that amount, he says.

"There were no debts piling up over the years," Wells says. "(Ritz) is trying to put that notion in farmer's minds."

"That's just bull."

Greg Meredith, assistant deputy minister for Agriculture and Agri-Food Canada's strategic policy branch, told the samecommittee after Ritz left on Thursday that CWB was meeting its financial commitments inborrowing againstassets.

American takeover?

Ritz also told the committee the search for a partner isdown to a "very short list."

Chicago-based Archer Daniels Midland Company, saidto be a serious contender, told CBC News that it doesn't comment on "rumours or speculation."

"The vast majority of grain buyers in Canada aren't Canadian now," Ritz says of control passing into foreignhands. "I'd leave that final decision up to the wheat board itself."

As minister, Ritz isresponsible for the Conservative-appointedboard's decision.

I don't expect anything to come back to farmers.- NDPagriculture critic Malcolm Allen

Saskatchewan Liberal Ralph Goodalesays thelack of transparency differs from his approach to selling the government's final stake in Petro-Canada as finance minister, when every effort was madeto get a gooddealfor taxpayers.

"From day one, they've hated this institution," the former Liberal minister for the wheat board says. "Dumping it off as a fire sale is bad business and just plain wrong in terms of public policy."

Who benefits?

"This is a weird way they've done this. They don't want questions to be asked," says NDP agriculture critic Malcolm Allen.

"I don't expect anything to come back to farmers."

Ritz argues there aredifferent ways to get a return.

"You can get cash from the sale of something, or you can get a return over the years as the economy grows," he says. "That's more the long-term look that this government is interested in."

A privatizedCWBwas supposed to adda strong Canadian competitor to the market.But could a future partner carve up and sell it? Nothing appears topreventthat.

Goodale remembers the monopoly asa majorcomplaint in Canada-U.S. trade negotiations.

"The government gave it away," he says. "For heaven's sake, get some value back from the Americans.

"They're just giggling."