February 18, 2009

The Canadian Wheat Board is encouraging a further review of its risk management practices following questions regarding losses posted in its 2007-08 contingency fund.

"The 2007-08 crop year was unlike any seen in the history of grain markets," Larry Hill, chairman of the CWB's board of directors, said in a press release issued Tuesday.

The review also follows comments made by Canadian Agriculture and Agri-Food Minister Gerry Ritz, who is also the minister responsible for the CWB, and Parliamentary Secretary David Anderson.

Anderson expressed outrage that the CWB lost C$130 million of farmers' money during the past two crop years.

"The CWB is playing fast and loose with farmers' money," said Anderson in a separate news release late last week. "It's not enough to hide the numbers in a report and hope that no one asks any questions."

Anderson said the CWB needs to give a full account to farmers of what went wrong and provide them with assurance that such a loss will not happen again in the future.

Anderson noted that in 2006-07, the CWB lost C$39.9 million. During 2007-08, the loss ballooned to C$89.5 million.

Recognizing the need for rigorous practices in such a volatile environment, Hill said the board in February 2007 instructed management to undertake a comprehensive review of the risks associated with the contingency fund. The review resulted in changes to the CWB's risk management practices. The CWB then engaged Gibson Capital to conduct an external risk management and pricing review of the CWB's producer payment options.

"In order to remove any shadow of doubt, I wrote Minister Ritz [Tuesday] and extended him an invitation to review this process with his officials, along with officials from the Department of Finance," Hill said.

US$1 = C$1.26313 (Feb 18)