Frequently Asked Questions
- 1. Why did the Government pass the Marketing Freedom for Grain Farmers Act?
The Marketing Freedom for Grain Farmers Act fulfills a longstanding commitment to give Western Canadian wheat and barley growers the freedom to make their own business decisions which will result in more money at the farm gate and a stronger sector.
The Government considers the economy a top priority, with agriculture playing a vital role in it. Marketing freedom will unleash the true economic potential and entrepreneurial energy of the Western Canadian grain sector. An open grain market will help attract investment, encourage innovation, create value-added jobs, and build a stronger economy.
- 2. How does the Marketing Freedom for Grain Farmers Act change how farmers market their wheat and barley crops?
The Marketing Freedom for Grain Farmers Act removed the monopoly of the Canadian Wheat Board effective August 1, 2012. This Act provides an orderly transition from the previous marketing monopoly to an open market system where farmers choose how, when and to which buyer they sell their crops. Western Canadian farmers can now market their wheat and barley based on what is best for their own businesses.
- 3. How is the Western grain industry affected?
The Marketing Freedom for Grain Farmers Act allows anyone to buy and sell wheat and barley, so it will attract investment and allow entrepreneurs to seize new markets and increase sales.
- 4. Did the Act end the Canadian Wheat Board itself?
No. The Act removes the monopoly for wheat and barley; however, a voluntary CWB remains. The interim CWB will be in place for up to five years as it makes the transition to full private ownership. The Government is committed to assisting the CWB during the transition period.
- 5. Can the interim CWB market grains other than wheat and barley?
Yes, it can market all crops defined as grain under the Canada Grain Act, as of August 1, 2012. In September 2012, the CWB established its first canola pool.
- 6. Why the five year transition period?
An orderly transition period will allow sufficient time for the CWB to adjust its operations to better meet the needs of those farmers who choose to market their commodities through the CWB.
- 7. How does the removal of the monopoly affect the economy?
There is great potential for the grain industry in our economy. An open market will attract investment, encourage innovation, and create value-added jobs. The removal of the monopoly allows farmers to sell their grain directly to a processor, without being forced to go through the CWB. In an open market, farmers and industry are free to respond to market demands by innovating their farming and processing practices, and should be rewarded with premium returns.
- 8. Are jobs affected?
A top priority for the Government is the economy, in which agriculture plays a vital role. An open market for Western Canadian grain farmers will attract investment and encourage innovation, which in turn creates value-added jobs and builds a stronger economy. Wheat and barley will continue to be grown, handled and shipped from Western Canada, and the industry will still need handlers, shippers, and marketers.
The Act ensures that the CWB is assisted as it transitions into a private enterprise. If farmers choose to continue selling through a voluntary CWB, then it is expected that current employees with strong marketing skills will be instrumental to that entity. Alternatively, if farmers choose to sell to grain companies, those companies are expected to expand their wheat and barley marketing expertise - again opening up job opportunities. An open market provides the best potential to attract new jobs and investment to the sector across Western Canada.
- 9. Do Western Canadian farmers have experience in marketing crops in an open market environment?
Yes. Western Canadian grain farmers already have what it takes to succeed in an open market as demonstrated by the growth in recent years of the canola and pulses industries. Marketing freedom gives wheat and barley farmers that same marketing choice so they will be better able to create new opportunities, bringing more money to the farm gate.
- 10. How will the value of wheat, barley and durum be affected in an open market?
Farmers are responsible for Canada's world class reputation of producing safe, high quality grain and this will continue. The prices of Canadian grains and oilseeds are set by world market supply and demand conditions. Open markets attract investment, encourage innovation and create value-added processing. Prices will respond better to market demand, giving farmers the opportunity to achieve the premium prices they deserve.
Payments and Check-offs
- 11. What is the purpose of the new wheat and barley check-off?
The intent of the check-off is to fund wheat and barley research, market development and technical assistance for the Canadian International Grains Institute (CIGI), the Canadian Malting Barley Technical Centre (CMBTC) and the Western Grains Research Foundation (WGRF) so that these activities continue uninterrupted during the transition to marketing freedom, giving the industry sufficient time to establish a long-term funding model. This transition period will last up to five years.
- 12. Why is it important to provide funding for research, market development and technical assistance?
The Government believes that research, market development and technical assistance activities being carried out by the Western Grains Research Foundation (WGRF), the Canadian International Grains Institute (CIGI) and the Canadian Malting Barley Technical Centre (CMBTC) are vital for the Western Canadian grain value chain and these activities should continue without disruption.
- 13. When did the new check-off begin?
These regulations came into force August 1, 2012, coinciding with Marketing Freedom and the start of the new crop year.
- 14. Will the Government continue to guarantee initial payments and borrowing for the CWB during the transition period?
Yes. During this period, the Government will continue to guarantee initial payments and borrowing for the CWB.
- 15. Which commodities and what jurisdictions are covered by this check-off?
The check-off is deducted on sales of wheat and barley delivered to licensed grain buyers who issue cash purchase tickets in Manitoba, Saskatchewan, Alberta and the Peace River District of British Columbia. However, the deduction does not apply to imports, producer-to-producer sales, and feed and exports not delivered through licensed facilities. In Alberta, the research portion of the barley check-off is not collected due to its pre-existing exemption.
- 16. Is the proposed check-off voluntary?
Yes. Upon delivery to a licensed issuer of a cash-purchase ticket, the deduction is automatically made. However, if they wish, producers can request a refund in writing.
- 17. How would I apply for a refund?
If producers wish to receive a refund for the check-off collected on their deliveries in a given crop year, they should write to the Alberta Barley Commission by July 31 of that crop year. The Alberta Barley Commission would provide a refund by no later than 60 days after the end of that same crop year.
- 18. Why is the Alberta Barley Commission the prescribed Agency to oversee the check-off?
The Alberta Barley Commission was selected as the prescribed agency based on its contact with industry, experience administering a check-off (it has administered the existing Alberta barley check-off since 1991), and its ability to complete the required tasks as identified in the Canada Grain Act and the check-off regulations.
- 19. What will the funds collected through the check-off be used for?
As outlined in the Marketing Freedom for Grain Farmers Act, the check-off funds can be used for:
- research activities into new and improved grain varieties;
- the promotion of the marketing and use of grain grown in Canada;
- technical assistance relating to the use of grain grown in Canada; and
- covering the administrative costs incurred.
- 20. Is the work of organizations like the Western Grains Research Foundation, the Canadian International Grains Institute and the Canadian Malting Barley Technical Centre affected?
The Government recognizes that the Western Grains Research Foundation, the Canadian International Grains Institute and the Canadian Malting Barley Technical Centre deliver vital information to the Western Canadian grain industry. They will continue to do so in an open market system. The Marketing Freedom for Grain Farmers Act allows for a check-off to support these organizations for up to five years.
- 21. Will funds continue to be directed to the WGRF, CIGI and CMBTC?
The Government's intent is that the WGRF, the CIGI and the CMBTC continue to receive funding that is similar to what they received previously through the CWB.
- 22. How will the Alberta Barley Commission be held accountable for the funds?
The Alberta Barley Commission is required to submit an annual report to the Minister of Agriculture and Agri-Food no later than 90 days after the end of the crop year. The report will contain the following information with respect to wheat and barley: the total amount of deductions; the total amounts paid for research activities; the total amounts paid for the promotion of the marketing and use of wheat and barley; the total amounts paid for technical assistance; the total amounts of refunds; and details of the administrative costs.
- 23. Why is the check-off set at these rates?
The check-off rates are established at a level that is similar to the previous wheat and barley research check-offs and the market development and technical assistance cash transfers previously administered through the CWB.
- 24. Why are the new check-off rates higher than they were under the CWB?
The rates are established to provide a similar level of funding and take into account cash transfers previously provided from the CWB using funds from farmer's pool accounts. This has the added benefit of being more transparent to farmers.
- 25. Why are Alberta barley producers paying a different check-off rate?
Alberta had a pre-existing provincial exemption from the barley research check-off. As such, in the interest of replicating as closely as possible the funding model administered by the CWB, Alberta is also exempted from the research portion of the transitional check-off.
- 26. How is this check-off different than the check-off under the CWB? Why is my levy now also paying for CIGI and CMBTC?
For the research portion of the check-off, the funds were previously collected by the CWB and provided directly to the WGRF. As such, the research portion of the check-off is similar to the previous model except that the Alberta Barley Commission now collects and distributes the funds, and a small portion of the check-off funds the administrative costs. For market development and technical assistance, under the CWB, funds were provided directly to CIGI and CMBTC and came from farmers' pool accounts administered by the CWB. By including this funding in the check-off, producers are now able to see how they are supporting these activities. Producers have the ability to request a full refund if they wish. Previously, they had no choice but to support these organizations.
- 27. Why does this deduction sunset after five years?
To allow industry time to establish its own long term funding model. Industry leaders have already begun to discuss ways to develop a comprehensive approach to funding research, market development and technical assistance and the Government supports this effort.
- 28. Will producer-to-producer sales, exports and imports be covered?
The check-off does not apply to imports as the check-off is only eligible on wheat and barley grown in Western Canada. Also, producer-to-producer sales, and feed and export sales not delivered through licensed grain buyers are not subject to the check-off, as a cash purchase ticket needs to be issued in order for the check-off to be applied.
- 29. Will grain handling facilities be required to collect the check-offs?
Yes. All issuers of cash-purchase tickets are required to collect the appropriate check-offs and remit the funds to the Alberta Barley Commission.
- 30. Is the Advance Payment Program affected?
No. With the announcement of the transfer of the wheat and barley Advance Payments Program to the Canadian Canola Growers Association on September 29, 2011, the Government ensured that there will be no disruption to farmers who use this important program.
- 31. Can farmers still access producer cars, elevators, ports and terminals?
Yes. The right to producer cars is set out in the Canada Grain Act. Producer cars are allocated by the Canadian Grain Commission and access to them is protected. Short-line railways and inland terminals will continue to play an important role in getting Western Canadian wheat and barley to both domestic and international markets. The Government is committed to working with industry to monitor any anti-competitive behaviour.
- 32. What happens to the Port of Churchill?
The Government of Canada is taking action to ensure that the Port of Churchill continues to be an important northern shipping port.
Now that the Marketing Freedom for Grain Farmers Act is law, the Government of Canada is:
- Providing an economic incentive of up to $5 million per year for five years to support the shipping of grain, including oilseeds, pulses and other crops, through the Port through Agriculture and Agri-Food Canada,
- Providing up to $4.1 million over three years through Transport Canada for Port maintenance,
- Working with the Churchill Gateway Development Corporation on Port infrastructure improvements and extending the project completion date an additional two years, from 2013 to 2015, through Western Economic Diversification Canada, and;
- Exploring options for the development of the community of Churchill.
- 33. How are the rail and logistical systems affected?
The Government of Canada agreed with the Working Group on Marketing Freedom that this fundamental reform of Canada's grain marketing approach must be aligned with and supported by timely implementation of the Government's Response to the Rail Freight Service Review.
As recommended by the Working Group, the Government intends to give market forces every opportunity to work. The Government is committed to working with industry to monitor any anti-competitive behaviour or systemic issues, should they arise. Other sectors have been successful in managing existing contractual arrangements between terminal operators and non-terminal companies for other crops. Facility owners are expected to actively seek arrangements for additional grain volume and profitability.
The CWB successfully negotiated handling agreements with all western grain handlers for 2012-13.
On December 11, 2012, the Government introduced the Fair Rail Freight Service Act bill to give companies that ship goods by rail the right to a service agreement with railways. It will also create an arbitration process to establish an agreement when commercial negotiations fail.
This fulfills a key Government commitment following the recommendations of the Rail Freight Service Review Panel in 2011. The Panel's report encouraged the use of bilateral service agreements between shippers and railways as an effective way of bringing more clarity, predictability and reliability to rail service.
- 34. Why was the Crop Logistics Working Group established?
A Crop Logistics Working Group (CLWG) was established to support the agriculture sector discussions leading to input into the Rail Freight Service Review implementation process, to address any logistics issues related to the grain supply chain in the transition to marketing freedom, and to provide a forum for other transportation-related issues.
Since the Government has acted on the Rail Freight Service Review and the Marketing Freedom for Grain Farmers Act has been passed, the CLWG fulfilled its initial mandate to provide stakeholders with a forum to discuss logistics issues and has reported to the Minister.
On November 20, 2012, Minister Ritz announced the recreation of the CLWG, with a renewed mandate that will focus on improving the performance of the supply chain for all crops, with a focus on innovation, capacity, and stakeholder collaboration.
Federal Court of Appeal decision June 18, 2012
- 35. What is the status of the federal court challenge on marketing freedom?
On January 17, 2013, the Supreme Court of Canada dismissed the application for leave to appeal the June 18, 2012 Federal Court of Appeal decision. The Supreme Court's decision upholds the Federal Court of Appeal's ruling that overturned a declaration issued by Federal Court Justice Douglas Campbell in December of 2011. The Supreme Court decision confirms that the Minister did not breach any duty in how he introduced the legislation.
- 36. What is the contingency fund?
The contingency fund was established within the CWB to provide financial backing in the event of losses from activities outside of the pool accounts. In addition to managing the pool accounts for wheat and barley, the CWB also operated certain producer pricing contracts such as Producer Payment Options (PPOs) and cash trading programs offered outside of the pool accounts. The operation of the PPOs and cash trading programs was not guaranteed by the federal government as is the case with the pool accounts. Surpluses and deficits from PPOs and cash trading were allocated to the contingency fund to cover any losses that may result from those programs.
The contingency fund continues to back the CWB's non-pool functions, post August 1, 2012, such as producer pricing options and cash trading programs other than traditional pools and payment top-ups to the government-approved initial payments.
- 37. Should the money in the fund be returned to farmers?
These funds were not generated by the CWB's normal pooling operation and do not come from monies owed to farmers. The contingency fund was established by 1998 amendments to the Canadian Wheat Board Act to backstop producer pricing contracts and cash trading programs offered outside the normal pooling operations of the Board. All farmers who entered into PPO contracts have received payment in full under these contracts.
- 38. Why is the Government providing transition funding?
Our Government's top priority is the economy and marketing freedom will help attract investment, encourage innovation and help create jobs in Western Canada. As part of our commitment to deliver marketing freedom for Western Canadian farmers, we promised to support the CWB through the transition. This one-time injection will provide clarity and certainty for farmers, buyers and other players in the grain value chain who are doing or intend to do business with the CWB. The Government is fulfilling its commitment to farmers in providing support for a voluntary, viable CWB.
- 39. How will the CWB use nearly $350 million?
As the CWB streamlines its operations for an open market, it will incur extraordinary costs not related to its day-to-day operations. The investment will help defray certain transition costs as the CWB adjusts to operating in an open market such as pension and post-employment benefits, severance, computer systems, winding up the final statutory pool accounts and decommissioning costs.
The Government will cover actual transition costs up to a set amount of nearly $350 million, based on auditable, actual costs as they are incurred.
The Government is not allocating any funding to cover costs that are part of the CWB's normal operations. For example, the CWB will continue to carry its administration and marketing costs as it normally does for its ongoing marketing activity. Long-term investment decisions taken by the CWB, such as that of the Lakers, will continue to be covered by the CWB.
- 40. How will the Government make sure that the money is spent prudently?
To ensure due diligence and manage costs, the Government retained independent auditors to scrutinize transition expenses and to provide independent estimates of the costs. The Government worked closely with the CWB to develop a clear outline of necessary costs, and continues to work with the CWB to mitigate some expenses and to keep spending as low as possible. The CWB is also required to develop a corporate plan for approval by the Minister of Agriculture, in consultation with the Minister of Finance. We are confident that through these processes the CWB will be able to effectively manage the transition in a manner that is respectful of taxpayer concerns.