Canadian Wheat Board

The Canadian Wheat Board (CWB) is the single desk marketer for wheat and barley growers in the provinces of Manitoba, Saskatchewan, Alberta, and the Peace River district of British Columbia. The mission of the CWB is to maximize market returns for prairie farmers. The CWB derives its mandate from federal government legislation, but is controlled by a board of directors, the majority of whom are elected by prairie farmers.

The CWB’s roots can be traced back to wartime conditions in the early 20th century. Prior to World War I the Canadian Council of Agriculture had submitted a plan to the federal government for a Canadian Wheat Board that would market grains on a pooled basis. It would have a monopoly over the marketing of prairie grains. Due to wartime demands and to crop failures in 1916, the futures markets for wheat were oversold in both Canada and the United States, and governments in both countries were forced to suspend futures trading in the summer of 1917. In Canada the government established the Board of Grain Supervisors, which assumed complete control over the purchase, sale and pricing of wheat for export. When the marketing of the 1918 wheat harvest was completed, the Board of Grain Supervisors was terminated. In July 1919, under pressure from the private trade, the government allowed the Winnipeg Grain Exchange to resume trading in wheat futures; but when erratic speculative behaviour occurred, the government required the Exchange to cease trading ten days later. In its place the government by Order-in-Council established the Canadian Wheat Board to market the 1919 crop.

Unlike its forerunner, this CWB did not sell at export prices determined by the government; rather, its mandate was to pool farmers’ sales for the entire crop year (August to July) and to sell wheat in export markets at prices in accordance with world levels. With pooling, the CWB could not determine the final value of wheat marketed on behalf of producers until its sales for the entire crop year had been complete. To manage this uncertainty the CWB implemented a two-payment system. Farmers received an initial payment when they delivered their wheat to elevators, and were issued a participation certificate entitling them to a final payment at the end of the marketing year once the financial results of the sale for the 1919 wheat crop were known. The initial payment functioned as a floor price guaranteed by the federal government, which would absorb any deficit. Because the crop’s total sales value was higher than the initial payment, the difference less marketing costs was returned to farmers in the form of a final payment. Farmers received $2.63 per bushel (#1 Northern basis Fort William), the highest price they had ever received; it would be the highest price received until the early 1950s.

This first CWB was disbanded in 1920, although the concept had won solid support from the prairie farm co-operative movement and farm organizations. They pressed the federal government to re-establish the CWB. When the government declined to reverse its decision, these groups were instrumental in forming the Alberta, Saskatchewan and Manitoba Co-operative Wheat Producers organizations which became known as the “Wheat Pools.” They operated a system of pooling and payment similar to that established by the 1919-20 CWB, but lacked government guarantees for the pool accounts. In 1924 they formed the Central Selling Agency for the purpose of joint marketing. The organization enjoyed some success during its first six years of operations, but when world wheat prices collapsed in 1929 and the Great Depression began in the 1930s, it experienced serious financial difficulties. Operating on bank loans, the prairie Wheat Pools were threatened with foreclosure by the banks when the open market wheat price fell below the initial payment. The federal government was once again called upon, and this time it responded. It provided a guarantee of borrowings by the Central Selling Agency and later, through Act of Parliament, re-established the CWB as a voluntary marketing agency for wheat. The Canadian Wheat Board Act received royal assent on July 5, 1935.

Over the years the jurisdiction of the CWB in the grain market has varied. At first, the deliveries to the CWB were only voluntary and it handled only wheat. This was a difficult period for the CWB, as deficits and lack of deliveries plagued the organization. During World War II, the CWB was empowered to market all Canadian grains, including oilseeds and Ontario corn. The CWB was made permanent by the government in 1943. After the war the CWB returned to marketing only wheat. In 1949 Parliament expanded the CWB to include oats and barley. In 1974, interprovincial sales of wheat, oats and barley for animal feed were removed from the CWB’s sole jurisdiction. In 1989 oats marketing was also removed from the CWB, leaving it responsible for marketing wheat and barley for export and for domestic human consumption. In the 1998–99 crop year, one of the most significant changes in the history of the CWB took place: on December 31, 1998, the CWB changed from being a federal Crown corporation led by federally-appointed commissioners to being a shared-governance corporation where a fifteen-member board of directors assumed control of the organization.

This board of directors consists of ten farmers, elected by their farming peers from districts across western Canada, and five directors appointed by the federal government. One of the farmer-elected directors is selected each year by the board of directors to be the chair. The board of directors is responsible for the overall governance of the corporation and its direction. Farmer control of the CWB has led to significant changes to pricing and payment options available to farmers. In addition to the system of government-guaranteed initial and final payments through the pooling system, farmers can now sign a number of producer payment option contracts, which enable farmers to access more of the value of their grain early in the crop year, or price grain based on US grain futures contracts markets. This increased flexibility allows farmers more control over managing their income and the marketing of their grain.

Gordon Gilmour