Tuesday, May 24, 2011

The process of change

The slow, methodical wheels of change have begun to move in Ottawa.  Minister Ritz is back as Minister Responsible for the Canadian Wheat Board and he has already started to talk about the timeline they are looking at to change the CWB to make it voluntary. 

So it looks like Aug 1, 2012 is the “effective date”.  Some open market thinking farmers would like to see something happen sooner – like Aug 1, 2011.  One person I talked to the day after the election said “we should have marketing freedom right now!”  But it’s not that easy – even with a majority government.

Legislative processes


I was thinking that a good way to ensure we see legislative change in time for Aug 1, 2012 would be to take a two-pronged approach.  First, introduce legislation this spring that would repeal the CWB Act, effective Aug 1, 2012.  Once that’s done, work with industry (including the CWB) to hammer out the details of the replacement legislation that would then be introduced in the fall or spring session, prior to Aug 1, 2012.  This would do two things.  First, it would ensure the single desk is dealt with clarity and certainty, as Minister Ritz has indicated.  Second, it puts a great incentive in front of everyone to work toward getting the new model built right away – no dragging of feet, no distractions, delay tactics, or navel gazing.

It seems like such a great idea.  But, people much smarter than me have said that it just won’t work.  Those with experience in all things parliamentary tell me that the Conservatives have so much to do once they get back into the House, that if Minister Ritz were to try to get “house time” for two bills (one to rescind the CWB Act and one to replace it), he probably won’t get it and he runs the risk of delaying things on the CWB file even longer.  The best way, I’m told, is to introduce one bill that will repeal the current CWB Act and replace it with the new model all in one fell swoop.

BUT – that means a lot of work needs to get done before anything is introduced.  And that means a lot of work by everyone, including the folks at the CWB.

Devil is in the details


Some have argued that the grain companies and end-users should have seen this coming and prepared ahead of time.  Well, they did, and they are.  But again, it’s not as simple as just being ready.  There will undoubtedly be some CWB contracts already in place for the 2011-12 crop year.  Establishing an open market ahead of these contracts being executed, and markets being what they are, either the buyer or the seller will benefit from the change to the open market and the other will not.  Effectively, the government will be creating winners and losers.  New rules to the new game have to be in place before the drop of the puck.

The industry folks I talk to say they’ve been preparing for this for some time.  But – they still need to know exactly what the new environment will look and act like.  There are many details to be worked out and as they say, the devil is in the details.


Cultural Shift


Minister Ritz has said we need to do this with clarity and certainty because that is what farmers, the CWB and the industry wants.  To the list of people that need to know, add the people who work at the CWB. 

One injustice in this whole process is how some are saying the end of the single desk is the end of the CWB itself, and therefore, the end of 400+ jobs in downtown Winnipeg.  Both the Manitoba Co-operator and the Winnipeg Free Press have hinted at this.  Regardless of the fallacy of this mindset, without any assurances regarding future directions, many within the CWB will, unfortunately, begin looking for “certainty and clarity” elsewhere. 

The CWB will need to be reinvented and that means it will do some of what it does now and some things it won’t do anymore.  Assuming it will continue to provide marketing services to its supporters, this will mean marketing grain on behalf of “clients”, which requires a different internal culture than operating a marketing monopoly.  The CWB and its staff will need to earn the business; they will need to be accountable.  Not to government, not to the “industry” – but to its clients.  Some of the people within the CWB will embrace and even thrive on this; others will not.

As a voluntary marketing agency, the CWB will continue to need sales and marketing staff, market analysts, logistics specialists and accounting support.  The CWB will be able to offer unique risk management tools (if it so chooses) and may need expertise in that area too.   

And like any other business that is accountable to its clients or owners, it must do all this efficiently and with the fewest resources as possible.  Logically, it won’t need as many of all these positions as it has now.  But interestingly, in a market without a single desk, the rest of the grain trade will need additional resources; and resources with experience are always preferable.

The CWB does many things other than sell grain.  These non-marketing activities by the CWB will also need to continue; things like cash advance administration, market intelligence and development, market research support and marketing education (through CIGI).  Somebody will need to do it, whether within the new CWB, CIGI or some other new organization set up to do it.


The not so harsh reality 


If you think that much of the CWB staff will be out of work without the single desk (i.e. not absorbed into the industry in some fashion), then those jobs must have been redundant in the first place.

Arguing for the retention of the single desk for the sake of these jobs in Winnipeg is arguing in favour of farmers paying for redundant resources.   Under the circumstances, it would be better to close down the single desk and then take from farmers a checkoff to keep paying for all the CWB jobs in Winnipeg.  Sounds ridiculous, but it’s less ridiculous than keeping the single desk because of the potential job loss if you don’t.  Pat Martin (NDP; Winnipeg Centre MP), take note.  

But if you think the jobs are not redundant and therefore needed and desired by the industry, then these people will be continued to be employed by the CWB or absorbed by other organizations in the industry.

Everyone from farmers to grain companies and the CWB - even CWB staff – needs to be ready to change the way they do things; if they’re willing to adjust, they need to know what they are adjusting to and what the rules and/or a new Grain Marketing Act might look like.  And they need time to make the right adjustments. 

In my view, Aug 1, 2012 is going to come faster than you might think.  

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