December 17, 2003

Canadian Wheat Board Suffers $85 Million Loss On International Wheat Sales

Poor crops, low prices and a stronger Canadian dollar are to blame for The Canadian Wheat Board (CWB) suffering an $85 million loss on international wheat sales in the crop year that ended July.

The Wheat Board is the single marketing agency for Western Canadian wheat, Durum and Barley. Farmers usually receive an initial payment when they deliver grain divides any profits with them after all the sales are completed.

This year the board ended up selling wheat for about $9 a ton less than it paid farmers, which means no profit and a loss for the board.

Even though the federal government has guaranteed the loss, the support could mean accusations of illegal subsidies by the American grain producers.

Commodity analyst Larry Weber says the United States is looking for any excuse to bring back extra duties on Canadian grains.

"Right now the U.S is looking for any ammunition that the government is supporting Western Canadian farmers through indirect, or direct subsidies," he says. "Any time you run a deficit in the pools, it's not going to bode well in the international marketplace."

Another factor that caused the collapse in prices was an unexpected increase in exports from Central Asian and Eastern European producers.

The Wheat Board says it doesn't expect the $85 million loss to cause a trade dispute and CWB chief executive officer Adrienne Meisner says it's a small amount in the global grain trade.

The United States has launched a dozen challenges against the Wheat Board in the last decade and two of those challenges are still outstanding.