Fixing the Wheat Board’s Democratic Deficit

Commentary, Agriculture, Rolf Penner

As a review panel considers the rules for electing directors to the Canadian Wheat Board, some simple reforms could make a big difference in its performance. They have the potential to improve its democratic principles, strengthen the Board’s accountability and give Western Canadian farmers the leadership and flexibility needed to ensure success in the global economy. The primary concerns the panel can address have to do with who can vote and how many votes they should get.

The important reforms include redefining voter eligibility, the weighting of ballots and an independent third-party commission to administer elections. They were among the recommendations contained in a Frontier Centre submission to the CWB , which taken together would lead too a more positive economic outcome for our grains industry.

An act of Parliament passed in 1943 forced farmers to sell all their milling-quality wheat to one entity, the CWB. Until 1998, it acted entirely as an agent of “Her Majesty,” with little farmer influence in the Board’s day-to-day business. In that year, Ottawa amended the Wheat Board Act and gave the agency “shared governance” structure. Ten of the fifteen directors running the CWB are now elected by farmers, with the remaining five appointed by Ottawa.

Under criticism since elections began, the election process is the subject of the review panel’s upcoming report. The chief irritant is why farmers are not simply allowed to vote with their trucks. Those who favour the Board could deliver their grain as usual and those who don’t should be free to do as they see fit, as is currently the case in Ontario. Unfortunately, that would require a review of the entire Act, outside the scope of the panel.

Many farmers critical of the compulsory requirement make a valid argument. If they are the ones assuming the risk of growing and financing a crop, they’ve earned the right to sell it to whomever they please. Having farmers elect a majority of the governing directors was partially an answer to this criticism. If they had some say in the Board’s policies, that stake might make them more accepting of the compulsion to sell to a single desk.

Every year farmers apply for permit books that authorize them to sell their grain to the Board. As the system currently stands, votes are allotted to those holding a valid permit book, with one vote allowed for each book, reflective of the “one man, one vote” principle.

But new evidence shows that in practice the principle is being ignored. In the 2004\05 crop year, close to 40% of permit books never had any crop delivered against them. When you include farmers who delivered 33 tonnes or less in that cropping year—on average the product of 30 to 50 acres, hardly enough to be considered more than a hobby farm—this jumps up to almost 50%. In other words, nearly half of those allowed to vote have no or little stake in the Board’s performance.

The logical solution would be to allocate votes on the basis of economic interest, as is the case with the Australian Wheat Board. If the CWB is indeed a business, with the farmers as its shareholders, some of them have widely different levels of interest in its success. Votes should be given out based on the amount of actual grain farmers deliver; the more you deliver, the more votes you receive. Every farmer that delivers grain to the Board should receive at least one vote, then one more if they deliver, say, 100 tonnes, then perhaps one more if they bring in over 500 tonnes, and so on.

This would mean that those who have the most at stake would also have the most say, just like the shareholders in any large company. It would also mean that those who are currently voting with no economic interest would automatically be disqualified, as they should be.

Western Canadian farmers face a number of daunting challenges: foreign subsidies, tariffs and competition from countries with low taxes and regulatory levels, not to mention all the obstacles placed devised by Mother Nature. They need to be able to provide the CWB with the kind of high-performance governance that will allow them to win in the global marketplace. Let’s hope that the CWB election review panel delivers it to them.